MILL VALLEY, Calif.
June 27, 2014
/PRNewswire/ -- Lawndale Capital Management, LLC and its affiliate funds ("
") own more than 1.769 million, or more than 4.9%, of the shares of Equal Energy, Ltd. (N-EQU) ("Equal" or the "Company,") entitled to vote on matters relating to Equal's proposed acquisition by Petroflow Energy Corp for
/share (plus an additional
/share dividend) at the Company's upcoming
July 8, 2014
Over the course of the past year,
, as one of Equal's largest shareholders, has disclosed its opposition to unsolicited takeover bids by Montclair Energy ("
has also expressed concern with Equal's agreement to be completely acquired by Petroflow for only
/share vs. higher value alternatives
One of the higher value alternatives
suggested Equal's board pursue was a
/share dutch tender and leveraged recapitalization that would allow Equal shareholders continued participation in what
views as favorable prospects for Equal's vast energy resources.
subsequently published an analysis that a leveraged
/share repurchase plan would provide
/share of aggregate value to Equal shareholders. Equal's Board has rejected such a plan for undisclosed reasons.
review of the proxy for Equal's Special Meeting, it is disappointed a fairly robust auction process resulted in a low sales price. However,
believes that the sales agreement's low break-up fee did not preclude higher alternative bids.
In the absence of a credible higher-valued alternative proposal
will reluctantly vote its shares
"FOR" the proposed acquisition (Proposal #1).
If a desirable alternative proposal emerges in time,
will change its vote to oppose the current transaction.
, President of
, stated, "We believe
active involvement in this process contributed to the increased bids and minimal deal protection hurdles."
Shapiro added, "While we fail to understand why Equal's Board didn't have the company pursue a much higher-valued leveraged buyback alternative,
and other potential bidders have had ample opportunity to put forth higher, firm fully-financed offers."
will also vote
"AGAINST" the proposal to approve senior management's severance "Golden Parachute" compensation (Proposal #2)
for the following reasons: 1) In Lawndale's opinion, Equal CEO
has already been overcompensated; 2) Mr. Klapko's severance plan is tied to this very same overcompensation, and 3) the excessive severance plan creates a misaligned bias toward a complete sale of the Company vs. alternatives that allow shareholders to continue participating in Equal's future growth.
Shapiro added, "The 'Golden Parachute' proposal garners our NO vote for more compelling reasons than what caused Equal's 'Say-On-Pay' vote to go down in flaming defeat at last year's Annual Meeting. We hope the Board heeds shareholder's wishes this time around."