IN THE NEWS / Blue Range Resources Slams Big Bear Exploration Claims
Hostile takeover bid
The Financial Post
CALGARY -- Hostile takeover target Blue Range Resource Corp. said yesterday its attacker, Big Bear Exploration Ltd., is the one with a credibility problem because of its "dismal" financial performance.
Contrary to claims by Big Bear that it has a better management team to run Blue Range's natural gas assets, Big Bear's financial statements released Friday show a loss of $19.4-million for the nine months ended Sept. 30, 1998, and an accumulated deficit of $20-million from a very small asset base, Gordon Ironside, Blue Range president, charged.
He pointed out that the existing management of Big Bear previously ran Stampeder Exploration Ltd., a company acquired in late 1997 for $1-billion by Gulf Canada Resources Ltd., which recently announced a $465-million writedown of assets, 75% related to the Stampeder acquisition.
"If you are going to talk credibility, there is an old saying: People in glass houses shouldn't throw stones," Mr. Ironside said.
"We are talking fire sale here and there is no fire. Who is causing the fire? A company that needs something to look credible. They haven't been able to make a decent oil and gas acquisition since they have taken over [Big Bear last December].... They are not making any money."
Big Bear last week launched a hostile takeover for Blue Range, a natural gas producer five times its size, for a total of $194-million in shares and $105-million in assumed debt.
The bid is backed by five institutional shareholders with 33% of the stock unhappy with Blue Range's performance.
They are: Mutual fund manager Altamira Financial Services Ltd., which holds the shares in several funds; Kaiser-Francis Oil Co., a U.S. oil company that invests in Canadian oil companies as passive investments; Leith Wheeler Investment Counsel, a Vancouver-based investment management company; AGF Financial Group; and Global Strategy Financial Inc.
Some shareholders said they have grown unhappy with Blue Range because of its lagging stock price, missed production targets and high costs. Some are also concerned about conflicts of interests seen as leading to the personal benefit of some officers and directors, rather than their company.
Blue Range continues to buy engineering services, at market value, from a private company controlled by a director. There is also some cross ownership of assets with private companies controlled by officers and directors. Mr. Ironside said the assets involved are small and are not material.
"We have heard concerns raised about Humble Petroleum Marketing," said Calgary-based Andrew Hogg, oil and gas analyst, First Marathon Securities Ltd. The market typically worries about cross-ownership of properties as there is a risk decisions are being made to benefit the personal interests of officers and directors, he said.
Mr. Ironside said he has received expression of interest from potential white knights. He said he expects to get in the range of $8 a share. Hogg has valued the bid at $5.50 a share .
Mr. Hogg said there's a good chance Blue Range will line up a white knight.
The company has attractive and focused assets, he said. "Even if one was to discount the asset value that was reported in the annual report, there is value above the bid," he said. |
