TORONTO, Aug. 21, 2016 /CNW/ - Smoothwater Capital
Corporation ("Smoothwater") responded to the proposed plan of
arrangement announced by Alberta Oilsands Inc. ("AOS") and Marquee
Energy Ltd. ("Marquee"). Smoothwater (together with a joint actor)
is the largest shareholder of AOS holding over 16.6% of the issued
and outstanding shares of AOS. Smoothwater holds no shares of
Marquee.
Smoothwater will not support the proposed merger by way of a
plan of arrangement as it would significantly destroy value for all
AOS shareholders by effectively using its risk free cash to bailout
a distressed junior energy company with little prospects of success
unless energy prices increase dramatically.
Smoothwater believes that an immediate cash dividend of all AOS
cash, net of reasonable reserves, is in the best interests of all
AOS shareholders as it treats all shareholders equally and provides
shareholders with the option to invest those proceeds as they
wish.
"Why would AOS shareholders trade a certain cash distribution of
about $0.15 per share for a highly
speculative, volatile junior oil stock?", said Stephen Griggs, CEO of Smoothwater. "There is
tremendous uncertainty about Marquee's own business and volatile
oil prices – cash is by far the better option. If an AOS
shareholder really wants to own junior oil shares, there are many
other options available".
Demand for AOS Shareholder Vote
"What is most disturbing about this proposed arrangement is the
complete lack of respect for AOS shareholders. The AOS board
intentionally structured this in a way that they wrongly believe
does not require the approval of two thirds of AOS shareholders – a
basic corporate law and governance expectation," continued Griggs.
"The board refused to consult Smoothwater on this transaction, but
we made it clear to them and to Marquee multiple times over the
last two weeks that we would not support a transaction of this
kind."
Based on calls and emails to Smoothwater, the vast majority of
shareholders strongly disapprove of this arrangement.
Smoothwater has had a number of meetings with the Chair and CEO
of AOS over the last six months to discuss the wind up of the
company as requested by most shareholders, including Bruce Mitchell. In discussions about the
Marquee arrangement, the Chair and CEO repeatedly stated that any
transaction with Marquee would be taken to AOS shareholders for
approval. On July 28 2016, the CEO
emailed Smoothwater: "If entered into, this transaction [the merger
with Marquee Energy] will be taken to the shareholders for
approval. We are not certain whether it requires a simple majority
or special majority without comment from the TSXV."
Counsel to Smoothwater has contacted the Venture Exchange to
ensure that the exchange requires a vote of two thirds of the
shareholders of both AOS and Marquee to approve the
arrangement. Smoothwater also intends to appear before the
Alberta Court of Queen's Bench to
request an AOS shareholder vote as a key determinant of the
fairness of the arrangement.
"Smoothwater intends to defend the legitimate rights of all AOS
shareholders from this board, its Chair and CEO. These are
fundamental governance rights that must be maintained. We have the
resources and expertise to defend all AOS shareholders from this
abusive board and transaction," Griggs continued. "This arrangement
is ill-conceived and was clearly rushed over a few weeks. With an
inexperienced board and a CEO with no industry experience, how
could AOS possibly have done appropriate due diligence over a few
days? This deal was jammed in at the last minute because they
have run out of time".
Neither company has been able to release their June 30 2016 financial results to shareholders
and the companies have failed to file the arrangement agreement as
required by law. "How can shareholders possibly be asked to
consider this transaction with a complete lack of
information? This shows that either the AOS board and
management are hiding important facts from shareholders or are
incompetent – or both".
For more information and updates, including a copy of this press
release and other documents please visit
www.smoothwatercapital.com.
About Smoothwater Capital:
Smoothwater Capital Corporation is a leading Canadian
activist investor, focusing on investing in small to midcap
Canadian public companies where there is an identifiable path to
significantly improve shareholder value. Smoothwater works to
effect change in targeted companies, often collaboratively with
institutional and other like-minded investors who hold material
positions but are not able to take on the time consuming and costly
activist role.
SOURCE Smoothwater Capital Corporation