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In this October 25, 2009 file photo, workers leave the Suncor oil sands extraction facility near the town of Fort McMurray in Alberta.

MARK RALSTON/AFP / Getty Images

Suncor Energy Inc. stepped up its attack on Canadian Oil Sands Ltd., accusing the company's board and management of "misleading spin" and warning its investors that a rejection of the hostile takeover would trigger a collapse in the bid target's stock price.

In some of his sharpest criticism to date, Suncor chief executive officer Steve Williams on Thursday said the largest owner of the Syncrude Canada Ltd. project has consistently under-delivered on pledges to boost performance at the troubled oil sands mine and that its strategy now hinges almost entirely on diminishing hopes for a recovery in oil prices.

"If you take your board's advice and do nothing, you risk that Canadian Oil Sands' board and management will carry on as they do today, getting paid a significant amount of money to provide quarterly updates on what has been consistently disappointing performance of the company's single asset, over which it has little control," Mr. Williams said in a letter to the target company's shareholders under the blunt heading, "Hope is not a strategy."

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Calgary-based Suncor is openly bashing performance at the Syncrude oil-sands project as it tries to sway Canadian Oil Sands investors to accept a hostile takeover deal now valued at roughly $4.7-billion. Suncor owns 12 per cent of Syncrude and Canadian Oil Sands owns 37 per cent.

Tension between the two companies has burst into public view in recent weeks as the unsolicited offer nears its expiry date on Dec. 4.

The board of Canadian Oil Sands has rejected the hostile play and sought to buy time to stir up a competing bid, arguing the all-share deal undervalues its prospects.

It has implemented a shareholder-rights plan that requires bids to be open for 120 days, a move Suncor is seeking to have thrown out before regulators. The target company has also accused Suncor of buying support for the deal by offering fees to brokers whose clients tender their shares – a practise Suncor insists is common in Canadian takeovers.

On Thursday, Suncor touted support from "many" large Canadian Oil Sands shareholders and warned holdouts that an outright rejection could send the shares into a tailspin, pushing the stock from about $10 today to its pre-bid level of roughly $6 a share.

"Should that happen, you will be left holding shares in a company which has demonstrated negative free cash flow, about $2.3-billion in debt that is already just one notch above junk status, and a strategy based almost entirely on hope," Mr. Williams said.

Suncor, which is offering 0.25 of one of its shares for each Canadian Oil Sands share, said Thursday the deal's value has increased by about $1 per share since it was announced in early October as a result of gains in Suncor shares. It said the offer now represents a premium of 57 per cent over the prebid price of Canadian Oil Sands shares.

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Mr. Williams insists Suncor can leverage its size and proximity to the struggling Syncrude operation to smooth out performance and wring cost savings from the aging plant.

In the letter, he accused Canadian Oil Sands of misleading shareholders about the challenges the company faces should oil prices remain subdued for a prolonged stretch. He also refuted the claim levelled by CEO Ryan Kubik that Suncor is exploiting undisclosed information about cost-saving plans and operational improvements under way at the Syncrude project.

Canadian Oil Sands has been promoting such initiatives "for several years now – but it hasn't delivered," Mr. Williams said.

Earlier this year, it bumped its 2015 estimate for cost savings at the Syncrude project to $1.3-billion, from $900-million previously.

In October, Canadian Oil Sands chopped its production guidance to between 92 million and 97 million barrels, down from 96 million to 107 million barrels expected in July after a fire forced a temporary shutdown at the facility's upgrading operations.

Mr. Williams said he expects Syncrude's production targets to be similar to what was set in 2014 and early this year. "And, as history has shown, there is a significant risk that Canadian Oil Sands will under-deliver on these expectations," he said.

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Suncor plans to release its 2016 budget next week, providing a clearer picture of its expected share of Syncrude's costs and production for next year. Mr. Williams said there is nothing stopping Canadian Oil Sands from doing the same.

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