Here is full text. Sounds to me that if Equal does not do the right thing, Montclair is going to propose a list of directors (that is good news that they are in our court).
BIRMINGHAM, AL, Dec. 6, 2013 /PRNewswire via COMTEX/ -- Montclair Energy, LLC ("Montclair") today expressed its concerns about the ongoing strategic process being conducted by the Board of Directors of Equal Energy Ltd. /quotes/zigman/51044/delayed/quotes/nls/equ EQU -2.36% /quotes/zigman/51061/realtime CA:EQU -2.05% ("Equal Energy" or the "Company").
Montclair first expressed an interest in acquiring Equal Energy in February, 2013. Montclair's expression of interest followed the conclusion of the strategic review process carried out by the Equal Energy Board in 2012 that had failed to result in a sale transaction for the Company. Collectively, the principals of Montclair are the Company's largest shareholder and most of the Company's assets in the Hunton formation of Oklahoma (which constitute the principal assets of the Company) were initially explored, owned and operated by Montclair's principals. Following the conclusion of the 2012 strategic review, Montclair recognized that existing management was not effectively operating the Company's assets and that there was considerable room for the creation of value by taking the Company private. These efforts to acquire the Company, were rejected by the Board. On November 18, 2013, the Company announced that its Board continues to carry out a strategic review process that was initiated following Montclair's offer to acquire the Company and that it is in exclusive negotiations with a party that has made a proposal. The Company has yet to provide any details about a proposed transaction.
Montclair is concerned that the Company's current strategic process is not being effectively conducted, and, like the strategic review conducted in 2012, could fail to maximize shareholder value or even fail to result in presentation of a transaction to shareholders for consideration. Montclair notes that although the Company's share price has risen since Montclair initially expressed its interest, these gains have largely been fueled by shareholder anticipation of an acquisition transaction rather than renewed confidence in management.
As one of Equal Energy's largest shareholders, Montclair continues to consider all of its strategic options. Should the Company's strategic review process fail to produce a value maximizing transaction for shareholders in the near term, Montclair will consider exercising its rights as a shareholder to propose a slate of independent directors for election to the Equal Energy Board of Directors.
So lets play a guessing game on when equal will make an announcement.
I think maybe this weekend.
With the big jump yesterday on big volume, they are scrambling to complete the deal ASAP as word is leaking out. So after todays close or this weekend when all the T's get crossed and all the I's get dotted.
Stock at $5.40.
April and July 2014 $5 call options traded at $.75.
This is $.10 more than when options were at .65 and stock was at $5.10.
So maybe $5.70 - $5.80 range based on options trading.
I can think of two things from this:
1) long lived assets means this could be good for a MLP
2) maybe with the expensive water disposal infrastructure, this could be why profit margins for Equal are lower than most and why values for assets are not as high as most think
Co announces that its strategic alternatives process was successful, resulting in a suitable option for the Company to consider. Equal is presently pursuing exclusive negotiations with the party presenting this proposal. The exclusive negotiation and diligence period will continue until early December 2013, as the terms, conditions and structuring details of any potential transaction are being finalized. There can be no assurances or guarantees that these negotiations will result in a definitive agreement. Further updates in respect of the Company's strategic alternatives process can be expected in due course.
So the question is:
1) Montclair? If so then it will have to be more than $4.85 per share since company turned that offer down.
2) somebody new? I think that this is more likely since Montclair was not part of the "strategic alternatives process" and there are the terms "suitable option" which have not been used before. It just never seemed like Montclair was "suitable" based on companies comments.
Wish they had a CC to clarity.
You can go to web site and find a presentation that says they had "8,800 acres of undeveloped land with 50+ locations". Today they report they spent $2.8 million to buy land. Now at 9,000 acres.
So did they buy 200 acres for $2.8 million?
they are not broke, just asset rich and cash poor.
Strictly a cash flow problem not a bankruptcy problem.
Kind of like the person who has a million dollar house with a $250K mortgage, loses his job and cant make the monthly. He is not a candidate for bankruptcy. Just needs time to sell asset and pay off debt and keep what is left over. yes he might have to put a few monthly mortgage payments on a high interest credit card before sale goes through.
This is all about the probability of the deals going through. You make up your mind and play the stock that way.
They have spent the borrowed money.
They don't have a line of credit that they can access.
They are not getting any dividends out of Petrodelta.
They have no cash flow.
They have obligations to run the company and also pay expenses in Gabon.
The sale of these shares could tide them over till the debt deal goes through or they expect one of the sales to go through reasonably quickly.
One reason for the value discrepancy could be that Equal does not have many drilling locations (about 2 years worth), while there could be substantial drilling locations on the acreage associated with the Gastar purchase. That along with the much higher oil weighting.