An employee of the Canadian Pacific Rubiales Petroleum Company walks next to oil excavation pipes at Campo Rubiales field in Meta, eastern Colombia April 21, 2010.JOSE MIGUEL GOMEZ/Reuters
The battle for control of Pacific Rubiales Energy Corp. has intensified.
The South American-focused energy producer's shares surged 4 per cent after the group proposing a $2-billion cash takeover offer postponed an investor vote in the face of a heated proxy battle that threatens the deal.
Pacific Rubiales said late Thursday that Mexico's Alfa SAB and private-equity-backed Harbour Energy Ltd., which have offered $6.50-a-share for the company, requested the special meeting slated to be held in Vancouver be pushed back to July 28 from July 7.
A spokesman for Alfa declined to say if the suitors were reconsidering any aspects of their bid. Pacific Rubiales's managers have been adamant that it represents the best option for shareholders because the company's high debt would otherwise constrain its ability to expand operations.
"What I can tell you is that we exercised a right under the arrangement agreement and asked Pacific Rubiales to postpone the meeting until July 28 so that ... shareholders have more time to consider our offer," Alfa's Enrique Flores wrote in an e-mail.
The move came as O'Hara Administration Co., which is leading a group of dissident shareholders that control 19.8 per cent of the shares, said its own tally of proxies showed that the Alfa/Harbour bid was unlikely to win the day. To pass, the proposed arrangement must win the approval of holders with two-thirds of all shares and a majority of shares held by investors other than Alfa and Harbour. The duo has 19 per cent of the stock.
According to figures from Panama-based O'Hara, more than 86 per cent of the votes already cast, excluding Alfa and Harbour's shares, oppose the takeover.
The postponement adds a thick layer of uncertainty to a deal that O'Hara, led by Venezuelan businessman Alejandro Betancourt Lopez, has fought hard to scuttle.
The group says the bid undervalues Pacific Rubiales, arguing it doesn't even reflect the value the company's management said as recently as March was hidden in the assets. It says the contention is backed by proxy voting firms Institutional Shareholder Services and Glass Lewis & Co.
But the dissidents have not proposed an alternative that would immediately boost value for investors, whose holdings are worth about 75 per cent less than a year ago.
The skid has been against a backdrop of the collapse in oil prices and the impending end of a contract to operate Colombia's most prolific oil field. The company is also saddled with about $5-billion of debt.
Pacific Rubiales, meanwhile, has called O'Hara's motives into question, and have applied to a British Columbia court to have votes attached to the group's stake disqualified , alleging it broke securities laws.
Shares in Pacific Rubiales had risen 34 cents to $5.38 on the Toronto Stock Exchange in early afternoon trading, still well below the bid price, suggesting investors remain skeptical that the Alfa/Harbour bid will be successful.
"One of the reasons I've kept an 'underperform' [rating] on this stock all the way through this is because of the potential for deal risk," said Darren Engels, an analyst at FirstEnergy Capital Corp.
Mr. Engels said he is surprised that shareholders may be poised to vote down the bid, as his calculations put net asset value for the company at about $3.75 a share, partly due to the mountain of debt.
That debt outweighs the per-share value of the proved plus probable reserves, he said.
Jeffrey Jones