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InterOil Corporation Message Board

  • pickboone pickboone Apr 23, 2013 6:47 AM Flag

    InterOil CEO departure precursor to immediate deal announcement

    This morning, InterOil announced the long overdue retirement of CEO Phil Mulacek. Chairman Gaylen Byker will be his temporary replacement until completion of the sell-down. Many investors and potential partners believed that Phil's stubbornness and desire to have InterOil operate the Gulf LNG project was responsible for prolonging the sell-down process and the commercialization of Elk/Antelope and that Gaylen Byker and remainder of the Board were strong advocates of delegating such responsibilities to a major operator. There are two major implications of today's announcement:

    1) Phil's departure was almost certainly a precondition to closure of the sell-down (requirement by the major partner), and it is likely an immediate precursor to a deal to be signed imminently. In fact, there are two references in the press release indicating that the deal is about to be closed ("work to finalize our LNG partnership arrangements with the PNG Government and an internationally-recognized LNG operator", "now working towards the final selection of our LNG partner").

    2) The company is now clearly in play, and subsequent to completion of a sell-down, majors involved in the bidding process who are left without a stake in the company's assets will perceive a takeover of InterOil to be more feasible than they would have if Phil were at the helm.

    All of the top shareholders with whom I speak believe that there is a significant discount in the stock related to Phil's being at the helm, so this announcement will come as a welcome surprise. The company's top shareholder, for instance, reportedly had an aversion to Phil running the company, so it wouldn't be surprising if today's announcement results in his fund's acquiring additional stock. Phil's obstinance has also been one of the primary factors around which the short case revolved, as many believed that majors would refuse to partner with Phil. I think this is the clearest signal yet of imminent deal closure.

    Sentiment: Strong Buy

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