An employee of the Pacific Rubiales Petroleum Company stands next to oil excavation pipes at Campo Rubiales field in Meta, eastern Colombia.JOSE MIGUEL GOMEZ/Reuters
A group of investors that opposes a $2-billion takeover of Pacific Rubiales Energy Corp. is calling the company's governance and public messaging into question ahead of a conference call that managers are hosting to explain the deal.
O'Hara Administration Co. SA, which is led by Venezuelan businessman Leopoldo Alejandro Betancourt Lopez, said the $6.50-a-share bid from Mexico's Alfa SAB and private-equity-backed Harbour Energy undervalues the company, and appears to be less than what Pacific Rubiales's president said it was worth as recently as March.
At the time, Jose Francisco Arata told investors in a conference call that the company was worth the equivalent of $9.22 a share, O'Hara said.
Mr. Betancourt's consortium of mostly South American investors has been adamant that the cash bid is "opportunistic and oppressive," but has not floated an alternative transaction. The group owns 19.82 per cent of the stock in the company, which is best known for operations in Colombia.
Pacific Rubiales has scheduled a conference call for Tuesday to discuss the takeover circular, which it mailed to investors last week.
The company has said that rejecting the offer from Alfa could mean a severe drop in the price of the shares, which had been under severe pressure as oil markets weakened.
O'Hara said on Monday that the contention goes against what Pacific Rubiales's managers had previously said about its prospects, which they described as bright.
The group also criticized what it called "outlandish deal protections" afforded to Alfa, a Mexican-based firm that has a slightly small interest in the company than O'Hara. In particular, it questioned a $100-million break fee, which is equal to 5.94 per cent of the deal's equity value.
The group said it plans to file its own proxy circular, urging minority shareholders to vote against the offer.
Jeffrey Jones