Seeking Alpha

Alabama’s Montclair Energy makes a hostile $4/share takeover proposal to Equal Energy (EQU...

Alabama’s Montclair Energy makes a hostile $4/share takeover proposal to Equal Energy (EQU +11.2%), which is quickly rejected by EQU's board; it says it will consider requisitioning a special meeting of EQU’s shareholders.
Comments (6)
  • Andrew Shapiro
    , contributor
    Comments (1941) | Send Message
     
    Lawndale Capital Management & its affiliate funds hold >1.5MM shares of EQU, or approximately 4.4% of Equal's recently increased share count. We are evaluating the proposed bid in conjunction with other strategic alternatives Equal could pursue to maximize shareholder value.
    25 Mar 2013, 03:28 PM Reply Like
  • bankstocks
    , contributor
    Comments (1549) | Send Message
     
    Looks like it's high time for someone to run the proxy fight at EQU and vote these guys out unless they agree VERY quickly to hire the I
    Bankers to "maximize shareholder value" and conduct a bid process!

     

    Funny, they spend the better part of a year doing that and it took the stock from $3 to about $3. Time and money well spent?
    26 Mar 2013, 09:30 AM Reply Like
  • Andrew Shapiro
    , contributor
    Comments (1941) | Send Message
     
    EQU press release from last night

     

    Equal Energy Responds to Unsolicited Proposal
    http://bit.ly/11J5uim

     

    "In response to Equal's receipt of the afore-mentioned Proposal and a number of verbal non-binding and conditional expressions of interest for a potential transaction, the board of directors of Equal formed a special committee (the "Special Committee") of independent directors in early March to investigate and evaluate all proposals presented to Equal. Global Hunter Securities, LLC and Scotia Waterous Inc. were engaged as financial advisors to assist the Special Committee. The Special Committee, with the assistance of its financial and legal advisors, intends to consider such expressions of interest in a deliberate and thoughtful manner with a view to the best interests of Equal before undertaking any specific course of conduct."

     

    Equal has engaged in discussions with a number of potential suitors, including Montclair, to understand the terms and conditions of their expressions of interest and the value proposition they represent. Montclair's unsolicited and conditional proposal was rejected, as Montclair requested a response prior to the completion of the Special Committee's process. Equal would be pleased to consider further proposals from Montclair as part of the Special Committee's process.
    26 Mar 2013, 06:00 PM Reply Like
  • bankstocks
    , contributor
    Comments (1549) | Send Message
     
    Mr. Shapiro:

     

    What range of value do you think EQU can sell for as is?

     

    How does it compare positive and negative with the other public Hunton play? I can't remember the name of it? Could you post back the name. .

     

    I am considering buying a few shares.

     

    Secondly, I think the one director should be looked into by the SEC for the insider trades. It was 2 trades for about 20,000 shares at $3.45. Not a lot of money but it is the principal of it.

     

    The others all giving themselves the stock plan shares after the offer came in in February I am not so sure about the law in that case.

     

    I think Anwar should make the complaint to the SEC about the insider trade and try and claim the SEC insider trading "bounty".
    It's only fair since the company sued him and Goldstein over the
    13D and free speech on-line campaigning.

     

    Clearly that director and really none of them thought Montclair Energy was actually going to go public and threaten hostilities over this offer.
    29 Mar 2013, 07:52 AM Reply Like
  • Andrew Shapiro
    , contributor
    Comments (1941) | Send Message
     
    You are referring to New Source Energy LP (NSLP) http://bit.ly/16mqcaf It is trading for a valuation multiples far higher than Equal. This despite Equal's larger production and reserves, which arguably create greater efficiencies and margins on the necessarily costly Electric and water infrastructure needed in De-watering play of the Hunton.

     

    It is a natural for NSLP to be making a bid for Equal. NSLP is loaded with newly raised (from the IPO) cash and currency from a continuing higher multiple. NSLP will have this one opportunity to seize upon such a synergistic play in its backyard. Should a larger player acquire EQU, then the relative valuation multiples between the two companies the next time may not be as favorable to NSLP. If I were a board member of NSLP I would be pounding the table to consider what accretive price (to NSLP) makes sense and enter the fray.

     

    We are preparing a letter for EQU's board that expresses our expectations and concerns over recent events and the upcoming process.
    29 Mar 2013, 12:40 PM Reply Like
  • bankstocks
    , contributor
    Comments (1549) | Send Message
     
    Andrew: Got it thanks. New Source Energy LP.

     

    JUst went public. Equal could do the same thing. Hedge it forward. Lever it up. Drill it to maintian the production. Distribute the rest in dividends. Form a MLP structure.

     

    A merger for stock with New Source would be interesting.
    The guys running new source have been around the Hunton for a while. They appear to be pretty decent operators. Very LOw LOE. Low G&A.

     

    There is no doubt they could operate EQU for much lower costs. Not even counting the synergy of a merger. NSLP is pretty heavily levered. A combo with EQU would balance it out a bit. EQU has about 8 years RLI on PD and PUD. New Source is closer to 12.
    NSLP has more oil and less gas in their prod. compared to EQU.

     

    I am sure NSLP can make a deal here that is accreative to their cash flow go forward basis. Ie...Increase their dividends
    1 Apr 2013, 08:44 AM Reply Like
DJIA (DIA) S&P 500 (SPY)
ETF Hub
ETF Screener: Search and filter by asset class, strategy, theme, performance, yield, and much more
ETF Performance: View ETF performance across key asset classes and investing themes
ETF Investing Guide: Learn how to build and manage a well-diversified, low cost ETF portfolio
ETF Selector: An explanation of how to select and use ETFs