MILL VALLEY, Calif.,
June 27, 2014 /PRNewswire/
-- Lawndale Capital Management, LLC and its affiliate funds
("Lawndale") 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 $5.43/share (plus an additional
$0.05/share dividend) at the
Company's upcoming July 8, 2014
Special Meeting.
Over the course of the past year, Lawndale, as one of Equal's largest
shareholders, has disclosed its opposition to unsolicited takeover
bids by Montclair Energy ("Montclair") of $4, $4.75 and
$4.85 per share. Lawndale has also expressed concern with
Equal's agreement to be completely acquired by Petroflow for only
$5.43/share vs. higher value
alternatives Lawndale considers
possible.
One of the higher value alternatives Lawndale suggested Equal's board pursue was a
$6/share dutch tender and leveraged
recapitalization that would allow Equal shareholders continued
participation in what Lawndale
views as favorable prospects for Equal's vast energy
resources. Montclair
subsequently published an analysis that a leveraged $6/share repurchase plan would provide
$7.01-$9.97/share of aggregate value
to Equal shareholders. Equal's Board has rejected such a plan for
undisclosed reasons.
Based on Lawndale's review of
the proxy for Equal's Special Meeting, it is disappointed a fairly
robust auction process resulted in a low sales price.
However, Lawndale 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, Lawndale will reluctantly vote its shares
"FOR" the proposed acquisition (Proposal #1). If a
desirable alternative proposal emerges in time, Lawndale will change its vote to oppose the
current transaction.
Andrew Shapiro, President of
Lawndale, stated, "We believe
Lawndale's 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, Montclair and
other potential bidders have had ample opportunity to put forth
higher, firm fully-financed offers."
Lawndale 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 Don Klapko 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."
About Lawndale Capital Management, LLC
Lawndale Capital Management, a San
Francisco Bay Area-based investment advisor, has managed
activist hedge funds focused on creating and unlocking shareholder
value in small- and micro-cap companies for over 21 years.
Lawndale applies a private equity
approach through active and relational ownership of public company
securities. In most investments, Lawndale plays a constructive relational role
by actively working with boards and management teams to help them
achieve their strategic and operating goals. In other instances,
Lawndale is a direct
value-unlocking catalyst, utilizing a range of tools that include
aggressively promoting improvements in a company's governance and
operational structures, proxy actions, asserting shareowner's legal
rights and taking active roles in restructuring and buyout proposal
negotiations.
Contact:
Andrew Shapiro,
415-389-8258 or
aeshapiro@lawndalecap.com
SOURCE Lawndale Capital Management, LLC