An Equal Energy Ltd. shareholder that has been critical of the company’s proposed sale to Petroflow Energy Corp. has decided to bless the deal.
Lawndale Capital Management LLC disclosed Friday it would vote in favor of the Petroflow acquisition “in the absence of a credible higher-valued alternative proposal.”
Lawndale owns nearly 1.8 million shares of Equal, or about 5 percent of its outstanding stock.
Petroflow’s $230 million offer for Equal must be approved by two-thirds of the company’s shareholders at a special July 8 meeting. Advisory firm Institutional Shareholder Services Inc. also endorsed the deal this week.
Equal’s board voted unanimously in December to endorse the deal, according to the proxy state filed earlier this month.
Lawndale had been critical of the proposed acquisition since it was announced in December, arguing there might be a better deal for shareholders than Petroflow’s offer of $5.43 a share.
Another large shareholder, Montclair Energy, has questioned the Petroflow deal since being outbid for Equal. Montclair proposed a stock buyback in April to boost Equal’s value rather than selling the company. The Alabama-based company has not indicated how it will vote on the Petroflow deal.
Lawndale still intends to vote against the proposed “golden parachute” compensation package for Equal’s executives.
Five Equal executives stand to receive more than $500,000 each if shareholders approve the deal, led by CEO Don Klapko at $2.8 million. Klapko also would earn an additional $2.4 million from sale of his Equal stock, according to the proxy statement, which indicates he controls about 440,000 shares.