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Equal Energy Rejects Offer From Montclair Energy

OKLAHOMA CITY, Aug. 20, 2013 /PRNewswire/ - After careful consideration, the board of directors (the "Board") of Equal Energy Ltd. (the "Company" or "Equal") (NYSE:EQU) (TSX:EQU.TO) today unanimously rejected the non-binding expression of interest (the "New Proposal") received on August 14, 2013 from Montclair Energy, LLC ("Montclair").  As discussed in Equal's press release of August 15, 2013, the New Proposal revised Montclair's previous unsolicited and conditional expression of interest dated February 27, 2013. In deciding to reject the New Proposal, the Board considered the recommendation of the Company's Special Committee and advice from its financial and legal advisors.

Principal among the many factors considered by the Board in concluding that the New Proposal is not in the best interests of Equal and its stakeholders are that:

  • the price indicated in the New Proposal does not adequately value the unique strategic opportunity that Equal represents, particularly in light of the significant year-to-date drilling results, the 25% increase in reserves disclosed in the Company's recent regulatory filings, the strong financial position of Equal and Conway propane prices moving above $1.00/gallon;
  • the requirement for approval by the holders of two-thirds of the Company's convertible debentures of the offer to exchange the outstanding 6.75% publicly-listed convertible debentures for 7.75% non-convertible, seven year notes that will be subordinate to senior financing utilized to acquire the Company and introduces significant and unacceptable transaction risk;
  • the New Proposal attempts to fetter the fiduciary duties of the Board by placing a limitation on what can constitute a "superior proposal"
  • the additional 60 day due diligence and exclusivity period following the negotiation of a letter of intent unduly impedes the resolution of the Company's strategic process;
  • the lack of a reciprocal break-fee, if a transaction were not consummated as a result of Montclair being unable to move forward, to compensate the Company for its reasonable costs and potential lost opportunities while engaging exclusively with Montclair; and
  • the value of the New Proposal is lower than premiums typically paid in take-over offers and represents a premium of only 7% over the closing price on August 14, 2013, prior to the New Proposal being publicly announced and only 10% over the 20 day volume weighted average trading price ending on August 14, 2013.




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