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InterOil Corporation Message Board

  • pickboone pickboone Mar 19, 2013 8:37 AM Flag

    Confidentiality of the bidding process

    Those who subscribe to the efficient market hypothesis are very likely going to be surprised by how positive and near the outcome of InterOil's bidding process will be. The company's intentionally pulling its conference call forward to the day on which bids were due was clearly a function of the necessity that it didn't divulge any bid related information to the market once the proposals were received, as the breach of confidentiality agreements could jeopardize closure. My understanding is that management, the BOD and the bankers are the only people aware of the bids, and they have agreed not to even communicate with anyone outside of these groups. Hence portfolio managers, investors, etc.. who have relationships with management have been unable to even discuss issues unrelated to the sell-down with management. It's been an air tight process.

    My understanding is that Wayne Andrews is the only individual at the company who is authorized to communicate with investors, and though he apparently won't say a word about the details of the bids or potential terms of a deal, one fund manager yesterday described his general enthusiasm as "greater than I've ever heard in my 5 years of talking to the guy". With the public disclosure of "several bids" from confirming parties on the table and the stock trading near $0.60 per mcf, I believe the stock could easily double on a deal announcement, which could literally happen any day. I believe the gas and condensates are worth well $2 per mcf, and the stock has consolidated in a range for 3 years while huge additions to the resource have been registered, majors have become interested in the project and the Gulf area, the LNG market has tightened, global equities have surged, and cash balances among IOC's potential bidders have never been higher. Also, recall that InterOil announced the February 28 deadline was for "binding" bids - hence it's likely that final steps are simply signing a final contract and informing PNG.

    Sentiment: Strong Buy

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