We Will Get More than Current Offer What has me convinced of making such a statement are the following facts:
1. Bonterra balance sheet is in rough shape in comparison to its committed dividend payout at today's oil prices.
2. Spartan balance sheet is in pristine shape. It can expand its Pembina oil battery using EXISTING CASH FLOW (not debt) and continue to drill up to 7,500 boepd or more with relative ease, even at today's oil prices. The PROVEN value of the company will eventually hit $800M + as I calculate it.
3. I seen that only 23.1% of Spartan insider shares are committed to make this deal go forward. This is not very much. See the following just issued:
'The Spartan Board has unanimously approved the Bonterra Arrangement Agreement, and, based on a fairness opinion provided by TD Securities Inc., determined that the consideration to be received by Spartan Shareholders pursuant to the Bonterra Arrangement is fair to Spartan Shareholders, determined that the Bonterra Arrangement is in the best interests of Spartan, and unanimously resolved to recommend that Spartan Shareholders vote in favour of the Bonterra Arrangement. Management and directors of Spartan holding approximately 23.1% of the issued and outstanding Spartan Shares have entered into support agreements to vote their Spartan Shares in favour of the Bonterra Arrangement at the Spartan Meeting.'
4. This deal is highly accretive to Bonterra. They are trying to buy Spartan, whose average netback is $15/barrel higher than their own (roughtly $50 vs $35).
5. TD Waterhouse is acting as an advisor to Spartan. What is interesting about this is that TD (house 7)were huge buyers of Spartan shares in the last month at prices in the high $4's and $5's. Believe me or not, but I watch the tape and they were sucking up a lot of shares at these prices. So this deal going at $4.96 is going to do nothing for these new shareholders. My summation is that they will vote and will be looking for a better price.
6. Finally, ask yourself this, if Bonterra are eager enough to make an unsolicited offer and destroy an existing deal, don't you think they are willing to pay another 10%? I certainly do. If you wanted to buy something pretty badly, wouldn't you pay 10% more.
To me, this deal is begging to go another 10% higher. And I would bet my bottom dollar that the Spartan insiders are hoping we all vote no to make this happen.
Thanks for reading,
Larsen6