trending Market Intelligence /marketintelligence/en/news-insights/trending/zyfzw4_il8rqwg3t7dg2nw2 content esgSubNav
In This List

Canadian producer Iron Bridge says Velvet Energy's bid 'undervalues' company

Podcast

Next in Tech | Episode 49: Carbon reduction in cloud

Blog

Using ESG Analysis to Support a Sustainable Future

Research

US utility commissioners: Who they are and how they impact regulation

Blog

Q&A: Datacenters: Energy Hogs or Sustainability Helpers?


Canadian producer Iron Bridge says Velvet Energy's bid 'undervalues' company

The Calgary, Alberta-based producer Iron Bridge Resources Inc. responded to an all-cash proposal by Velvet Energy Ltd. to buy out all its outstanding common shares for C$120 million, saying that the offer "significantly undervalues" the company.

In its May 22 response, Iron Bridge said that Velvet Energy's offer ignored the company's successful restructuring and would deny shareholders of its portfolio's upside value potential, including a 49,600 net-acre position in the Gold Creek area of the Montney oil play that yielded enhanced well production rates as of May 17.

"This is nothing more than a transaction that transfers all the upside to Velvet Energy at the expense of Iron Bridge's shareholders," said Iron Bridge CEO Rob Colcleugh.

Velvet Energy earlier proposed to buy Iron Bridge's common shares for 75 Canadian cents per share in cash, representing a 58% premium to Iron Bridge's closing price on May 11, the trading day before Velvet submitted its proposal to Iron Bridge's board of directors on May 13. The deal value is equivalent to a multiple of 12.2x Iron Bridge's 2018 consensus EBITDA.

Iron Bridge noted that it has the support of shareholders holding about 30% of total shares outstanding. The company advised its shareholders not to make decisions on the Velvet Energy proposal until its board of directors reviews all aspects of the deal, after which it would provide a recommendation to the shareholders.

Cormark Securities Inc. is acting as financial adviser to the company, while Torys LLP is acting as legal adviser and Gagnier Communications as strategic communications adviser.