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Shareholder proposes alternative to sale of Oklahoma City-based Equal

Montclair Energy LLC on Friday proposed an alternative to Equal Energy Ltd’s proposed sale to Petroflow Energy Corp.
By Jay F. Marks, Business Writer Modified: April 12, 2014 at 3:00 pm •  Published: April 12, 2014
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One of Equal Energy Ltd’s largest shareholders wants the company to buy back nearly half of its outstanding stock instead of proceeding with a proposed sale.

Montclair Energy LLC on Friday proposed a levered share repurchase to boost the value of Equal’s stock.

Alabama-based Montclair previously had balked at the sale proposal Equal announced in December. It also failed in its bid to acquire the company earlier last year.

Equal’s board has signed off on the company’s acquisition by Tulsa-based Petroflow Energy Corp. Two-thirds of the Oklahoma City company’s shareholders still must approve the deal, which is worth about $230 million.

Montclair contends the Petroflow deal significantly undervalues Equal, offering a discount of up to 62 percent versus the company’s peer group.

The Alabama company also pointed out that commodity prices currently exceed projections used to justify the acquisition.

Montclair wants Equal to use its untapped credit facility to repurchase 48 percent of its outstanding shares, based on a tender price of $6 a share.

Montclair estimates the $105 million expenditure would push Equal’s stock to nearly $10 a share. Equal closed Friday at $4.68 a share, up 31 cents.

Petroflow has offered to pay $5.43 a share for all of the company’s outstanding stock.

Lawndale Capital Management LLC, another of Equal’s largest shareholders, also has expressed reservations about the Petroflow deal.

“Lawndale is giving serious consideration to favoring Montclair’s proposal, or one like it, over Equal’s current $5.43 a share buyout agreement with Petroflow,” Lawndale President Andrew Shapiro said.


“Lawndale is giving serious consideration to favoring Montclair’s proposal, or one like it, over Equal’s current $5.43 a share buyout agreement with Petroflow,” Lawndale President Andrew Shapiro said.

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