Bonterra board of directors says Obsidian takeover bid more of a ‘take-under’ bid

Bonterra board of directors says Obsidian takeover bid more of a ‘take-under’ bid

CALGARY — Bonterra Energy Corp. says a hostile buyout offer by Calgary-based rival Obsidian Energy Ltd. is more of a “take-under” than takeover bid because it’s out of step with its market value.

In a firm rejection of the offer to pay two Obsidian shares for each Bonterra share, the target company’s board of directors notes that holders of 30 per cent of its shares have committed to not tender their stock, including all of its directors and management.

“The hostile bid is highly opportunistic and timed to deprive shareholders of recent positive market changes and value-increasing initiatives achieved to date and that are being pursued by Bonterra,” the company said in a news release.

The share price of Bonterra has consistently been greater than two times the Obsidian share price on the Toronto Stock Exchange since the idea of a merger was put forward in the form of a letter to Bonterra chairman and CEO George Fink in August.

On Tuesday, Bonterra’s stock rose three cents to close at $1.13 and Obsidian fell by half a penny to 47.5 cents.

Obsidian says the merger would pay off by creating a “Cardium champion” from the two companies’ assets in regions prospective for that oil and gas-bearing underground formation, while providing financial strength to add to that base by buying other Cardium lands.

But such arguments are dependent on commodity prices that are higher than the current forward strip and “questionable” given the debt burden of both companies, said analyst Christopher Jones of Haywood Capital Markets in a report to investors.

He and analyst Cody Kwong of Stifel FirstEnergy both pointed out that financing commitments from government business lending programs give Bonterra more time to consider its options.

The company recently received a $45-million Business Development Bank of Canada term facility, along with a reserve-based lending commitment from Export Development Canada of up to $38.4 million.

It also reported its vendors have been approved for $21 million of funding through Alberta’s Site Rehabilitation Program to reclaim inactive wells and pipelines, thus reducing those liabilities on its balance sheet.

Bonterra says investment firm Peters & Co. Ltd. has delivered a written opinion to the board that the offer is financially inadequate.

This report by The Canadian Press was first published Oct. 6, 2020.

Companies in this story: (TSX:BNE, TSX:OBE)

Dan Healing, The Canadian Press

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

RCMP. (Black Press File Photo)
Calgary man dies in two-vehicle collision near Sylvan Lake

A semi truck collided with a SUV just east of Hwy. 781 on Hwy 11.

FILE - A Tim Hortons employee hands out coffee from a drive-through window to a customer in Mississauga, Ont., on March 17, 2020. THE CANADIAN PRESS/Nathan Denette
Tim Hortons to test deposit program for returnable coffee cups and packaging

Test program to start at select Toronto restaurants

FILE - U.S. President Donald Trump, center left, and Canadian Prime Minister Justin Trudeau chat before a round table meeting of NATO leaders in Watford, Hertfordshire, England, Wednesday, Dec. 4, 2019. THE CANADIAN PRESS/AP-Evan Vucci
US NATO allies still short on defence spending aims

None of the 30 allies owes NATO or its members money

Alberta Premier Jason Kenney arrives for an announcement at a news conference in Calgary, Alta., Tuesday, Sept. 15, 2020.	Kenney is isolating at home after one of his ministers tested positive for COVID-19. THE CANADIAN PRESS/Todd Korol
Alberta premier isolating after minister tests positive for COVID-19

Alberta Premier Jason Kenney is isolating at home

COVID-19. (Image courtesy CDC)
Temporary COVID-19 testing sites coming to Wetaskiwin and Ponoka

The Wetaskiwin location will open Oct. 23, 2020 and the Ponoka location will open Oct. 29.

ACC President and CEO Ken Kolby spoke to Ponoka Chamber of Commerce members over Zoom on Oct. 20. (Image: screenshot)
Alberta chambers are ‘411’ to members, government: ACC president

Changes to government supports, second wave and snap election

world affairs
British brinkmanship leaves little hope of a Brexit trade deal

The British pantomime is a traditional Christmas entertainment in which stock characters… Continue reading

Smartphone showing various applications to social media services and Google. (Pixabay photo)
National media calling for level playing field with Google, Facebook

In Canada, Google and Facebook control 80 per cent of all online advertising revenues

Red Deer city council will hold a public hearing on Oct. 28 about whether to take the future expansion of Molly Banister Drive off the table. (Photo by MAMTA LULLA/Advocate staff).
Opinion: Molly Banister extension isn’t as important as quality of life

Citizen opposition to the Molly Banister Drive extension has grown since the… Continue reading

Email letters to editor@interior-news.com
I ask myself: ‘What the hell’ has happened to Red Deer?

I moved to Red Deer on Nov. 1, 2001, and I fell… Continue reading

Canada goalkeeper Erin McLeod wipes tears from her eyes after losing 2-1 to England during a FIFA Women’s World Cup quarterfinal soccer game in Vancouver, B.C., on Saturday June 27, 2015. THE CANADIAN PRESS/Darryl Dyck
Canadian ‘keeper Erin McLeod happy in Iceland, looks to help others stay positive

Orlando loaned McLeod to Iceland’s Ungmennafelag Stjarnan in August

Most Read