Would Change Vote For Credible Higher-Valued Alternative
Voting Against Management "Golden Parachute" Plan
MILL VALLEY,
Calif., June 27, 2014 /CNW/ - 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