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Battle for Arctic assets down to wire Canadian Oil Sands Trust reduces required shares to minimum 50.01%, had only 45% Aug. 1; Canadian Superior makes new offers By Gary Park For Petroleum News
With Canadian oil patch maverick Greg Noval continuing to stir the pot, the battle to win the Arctic natural gas assets of Canada Southern is being pushed to the limits.
A bidding war that the Canadian Oil Sands Trust has appeared on a couple of occasions to have locked up is now facing a midnight deadline on Aug. 18 for Canada Southern shareholders to decide between the trust and Canadian Superior Energy.
The contest has become so spirited that the trust decided Aug. 7 to reduce the number of shares it requires to be tendered to a bare minimum, 50.01 percent, from its earlier target of 66.66 percent.
As of Aug. 1, the trust conceded it has received only 45 percent of the shares, while Canadian Superior, with Noval as chief executive officer, has kept up its sniping with a series of revised offers which Canada Southern Chairman Richard McGinity has described as a “bridge to nowhere” for his company’s investors.
He accused Canadian Superior of building its unsolicited offer around “unsupported claims and arcane financial engineering.”
McGinity said that despite Canadian Superior’s “apparent attempts to confuse the market, our shareholders should be under no illusions.”
“There are two offers on the table for Canada Southern at this time: Canadian Oil Sands’ offer of US$13.10 per share in cash (valued at $197 million) and Canadian Superior’s original cash-and-stock offer valued at about $8.16 (based on the August 4 closing price on the American Stock Exchange).”
McGinity said Canadian Superior “has done nothing to alleviate our initial concerns regarding the lack of clarity, certainty and credibility associated with its proposed offer.” Amended offer Under its amended offer, Canadian Superior offered Canada Southern shareholders either: two shares of Canadian Superior, C$2.50 cash and one special exchangeable share for each Canada Southern share, or C$2.50 cash and 2.75 common shares of Canadian Superior for each Canada Southern share.
The special exchangeable shares have been described as special purpose shares whose value would be tied to the existing Canadian assets of Canada Southern estimated at almost 1 trillion cubic feet of gas, which Canada Southern has suggested would likely be moved to market as liquefied natural gas.
The 45 percent of common shares tendered to Canadian Oil Sands Trust by Aug. 1 represented more than 6 million shares.
Petro-Canada, operating through a wholly owned subsidiary, had previously pulled out of the bidding contest, but said at the end of July that 86,957 shares had been tendered to its offer as of the July 27 expiry.
McGinity said Canadian Superior’s offer of cash, shares and a share in what would be a new trust set up to develop the Arctic assets was “largely a non-cash, yet fully taxable transaction that contains substantially less value and more risk for our shareholders.”
Noval countered that the board of Canada Southern appears “incapable” of evaluating its own company’s upside potential.
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