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Iron Bridge Resources Inc. is urging its shareholders to reject a $116-million hostile offer from privately held Velvet Energy Ltd., saying the suitor aims to wrest potentially big production from its key property on the cheap.

In a formal response to the bid, launched last month, Iron Bridge said it is evaluating offers from lenders to fund development of the Gold Creek property in Alberta, which is in an oil-rich part of the Montney formation. Velvet has been assembling a land position in the area for a number of years.

Velvet, which is backed by Warburg Pincus LLC, Trilantic Capital Partners, 1901 Partners Management LP and Canada Pension Plan Investment Board, has offered 75 cents a share for Iron Bridge, a company that recently underwent a restructuring and name change. It used to be known as RMP Energy.

“The all-cash offer deliberately strips Iron Bridge’s shareholders of their ability to maintain exposure to the growth upside of the company’s Gold Creek Montney asset and the improvement in the commodity sector,” Iron Bridge said in its rejection letter. “It also does not reflect the fact that acquirers typically pay a higher premium to fairly compensate a company that is not actively seeking offers to sell.”

Besides evaluating the offers from lenders to develop the Gold Creek property, Iron Bridge is also starting to explore other alternatives, including bids from potential white knights.

It also took issue with Velvet’s legal counsel for the offer, Bennett Jones LLP. Iron Bridge said it had retained the same lawyer in talks with Velvet 12 months ago that did not end with a deal.

“At that time, the law firm had access to confidential and commercially sensitive information. The same partner who previously advised the board is now the lead legal adviser for the hostile offer,” Iron Bridge said, adding it would consider its legal options.

Ken Woolner, Velvet’s chief executive officer, took issue with the assertion, saying the company was assured by Bennett Jones that the lawyer acting for Velvet had no knowledge of Iron Bridge.

Mr. Woolner pointed out that Iron Bridge had only land at Gold Creek a year ago. “What strategic secrets could anybody allegedly leak to somebody? It’s basically a land play,” Mr. Woolner said. “It’s just trumped up to kind of create bad will, I guess.”