whos on first When fantasizing about the prospects of an offer for CKE at 75c - 90c - as this Board is prone to do - one must understand that conventionally such an offer can only occur with the explicit or tacit consent of management. Such an offer would require detailed information on CKE's assets and operations before it can be made. If management decides not to make this information available - either by publication in corporate reports or by confidential disclosure - then the only offer one can expect is the sort of low ball offer that Velvet recently made for Iron Bridge Resources (IBR)
Judging by the comments on this Board, shareholders of CKE seem very complacent about the risk of such an offer. The general consensus seems to be that either AIM (the Alberta Investment Fund which controls 37% of the stock ) and / or Bison (which has a 11% holding) - would see the rascals off.
I don’t think this is in any way assured. Firstly AIM must be ready by now to write off their investment. Their cost basis (I think) is in excess of $3.00 a share - so whether they get 30c or 40c at this time is probably less important than just getting this woofer off their books. Then again, if the suitor is also a client of AIM - a good possibility - AIM would probably choose to stay neutral. As for Bison, an offer at about 30c would represent a slight profit on their NG investment - not to be sniffed at in the current environment.
But most troubling, for me anyway, is prospect of Bison trying to take CKE private at about 30c a share. Certainly if Velvet takes IBR down (and it is probable that IBR will be taken over one way or another), Bison will have the resources and motive to do so. It has been suggested elsewhere this was possibly an objective for Bison’s original investment in RMP (predecessor of IBR). Could the same happen here at CKE ? What concerns me is the statement supposedly made by our CFO , Jason Dranchuck, that CKE is "too little to justify being a public company due to all the costs involved, a junior producer by today's standards would be at least 10,000 boe/day or more."
The reason of course that CKE is today a sub 10 thousand boe/d producer is because of the Craft divestiture and other sales. If the 10 thousand boe/d is a significant number then why did management go ahead with the sales? And what happened to that management target of achieving 12 thousand boe/d by 2019?
The only protection independent shareholders have against being taken over (or taken private) at a low ball price, is if management is open in their reports about assets, operations and financials. In that way, outsider suitors can make an intelligent counteroffers if a takeover price is too low. For me, the way CKE presents its information can best be compared to a dog’s breakfast. There may be some meaty bits in there but I struggle to find them. For example does anyone know exactly what CKE land holdings are post the Craft divestiture? It is itemized anywhere? This information alone would be intrinsic to any meaningful outside offer.
The only real protection independent shareholders have against management putting their own interests before theirs, is the Chairperson of the company. It is the traditional duty of the Chair to protect the common shareholder. Our chair has taken her fees and chalked up her options. It is the time to see what she is going to be doing to earn her keep.