Orbit in reappraisal to fend off takeover, Thursday, December 4, 1997
By CLAUDIA CATTANEO
Calgary Bureau Chief The Financial Post
Orbit Oil & Gas Ltd. said yesterday it's moving at the speed of "Santa Claus and his reindeer" to have its assets reappraised so it can start looking at new offers to top a hostile bid from Sunoma Energy Corp.
But Sunoma, which sent its takeover bid by courier yesterday to registered shareholders, said it expects to win the acrimonious battle.
Response from shareholders has been very positive, said Sunoma president Rick MacDermott.
Sunoma now holds 6.9% of Orbit's shares and its offer is conditional on obtaining the shares it doesn't already own.
The private company, funded by capital from U.S. energy funds, has given Orbit shareholders until Jan. 7 to vote on the all-cash bid of $1.70 a share, for a total value of more than $95 million, including net debt.
"We think it's ample time for shareholders to make a fair decision," said MacDermott.
Before the offer expires Sunoma plans to apply to the Alberta Securities Commission to have Orbit's shareholders' rights plan declared unenforceable on grounds it's keeping shareholders from exercising their right to sell their shares.
But Orbit said Sunoma doesn't stand a chance with the commission.
"Making a bid between Christmas and New Year's, when the Asian markets are melting down and the oil and gas index is dropping to its 52-week low, can only be called opportunistic," said Orbit's financial adviser, Thomas Budd, managing partner of corporate finance at Griffiths McBurney & Partners. "That's exactly what a shareholders' rights plan is to defend against."
Under the plan, Orbit can take 60 days to find another deal.
MacDermott said he's still willing to talk to Orbit management to discuss a friendly transaction.
Budd said Sunoma's low-ball bid has little chance of success, given the stock's recent trading values and volumes.
Orbit shares (ORB/TSE) closed at $1.77 yesterday, down 1›.
"Looks, from the way the stock is trading, [like] the bid is deep under water," said Orbit chairman Bob Lamond.
Said Budd: "Obviously, everybody who has bought the stock in the last three days over $1.70 isn't going to suffer an automatic loss at the end of 35 days, and give the stock back to Sunoma at $1.70."
The reserves' re-evaluation is expected to be completed next week.
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