Interoil’s Elk-Antelope gas fields are at the centre of a disputed takeover by ASX-listed Oil Search. Photo: Stephanie Kelly
InterOil’s troublemaker investor and former chief executive Phil Mulacek has sought to put another spanner in the works of Oil Search’s $US2.2 billion-plus takeover deal for the Papua New Guinea gas player, starting legal action to postpone shareholder meetings planned before a vote on the deal.
In an action that has been dismissed by InterOil as “without merit”, Mr Mulacek is seeking to put off the June 14 meetings where shareholders would vote on board directors, until after the investor vote on the deal, which is scheduled for late July.
Mr Mulacek, who has blasted the deal as undervaluing InterOil, cited concerns that shareholders were being asked to vote on board nominees before they had full disclosure on the Oil Search deal.
The takeover would hand control of InterOil’s large Elk-Antelope gas resource in PNG to the Australian listed company, who would share the assets with French oil major Total and develop them to feed the $US15 billion Papua LNG project. The field is widely seen as among the most competitive gas reserves worldwide for use in LNG exports.
At the June 14 meetings in New York, shareholders in US-listed InterOil are due to vote on director nominations to the board, including five directors put forward by Mr Mulacek who are not endorsed by the board.
InterOil, which has no producing assets, was under pressure to sell assets or itself to a rival to relieve its stretched funding position, heading into the drilling of the Antelope-7 well at its fields, which is expected to cost about $US60 million.
In a statement released in Houston, Mr Mulacek pointed out that the InterOil board had repeatedly cited the supposed benefits of the Oil Search deal to InterOil shareholders as a reason to support the re-election of the current board. But under the terms of the takeover, the proxy circular for the shareholder meeting to vote on the transaction only needs to be mailed by June 30.
“Shareholders are entitled to review the full details contained within the arrangement proxy circular to make informed decisions about both the Oil Search transaction and election of InterOil’s board,” he said.
Many retail shareholders are incensed by the takeover and support Mr Mulacek in his efforts to extract better terms out of Oil Search and its ally Total. One shareholder contacting the Financial Review described the deal as “robbery”, pointing to the near-$US40 million payment due to InterOil chief executive Michael Hession if control of the company changed hands. He said the management was telephoning individual retail investors to try to get the deal approved.
But the views of larger investors such as Capital Group, which owns more than 11 per cent, isn’t known. Mr Mulacek and his allies represent about 7.8 per cent of the register.
On Monday, proxy adviser ISS recommended shareholders vote in support of the current board, although it criticised the pay levels of Dr Hession and board directors. A second proxy advisory firm, Egan Jones, has also recommended backing the existing board, according to InterOil.
An InterOil spokesman in Singapore described the legal action, filed in the Supreme Court of Yukon, as “yet another attempt [by Mr Mulacek] to advance his self-serving agenda at the expense of all other InterOil shareholders”.
He said InterOil had provided shareholders with “ample information and time to assess InterOil’s highly qualified nominees”, the actions the board had taken to advance shareholder value and the threats posed by Mr Mulacek’s resolutions and his “hand-picked” nominees.