Bonterra urges shareholders to ignore extended hostile takeover bid by Obsidian

Image: Bonterra Energy

Bonterra Energy Corp. says it remains steadfastly opposed to a hostile takeover bid by Calgary oil and gas rival Obsidian Energy Ltd. after the latter extended its share tender deadline on Monday.

The target company says in a news release the extension to Jan. 25 from Jan. 4 shows how unsuccessful the offer to issue two Obsidian shares for each Bonterra share has been since it was proposed in August.

Bonterra adds that Obsidian's announced reduction of the minimum number of tendered shares needed to complete the transaction to 50 per cent from two-thirds acknowledges a lack of shareholder support.

Obsidian said Monday recent consolidation by other players in the energy sector is a trend that should be followed, noting a combined Obsidian-Bonterra entity could save $50 million in the first year and a total of $100 million in the first three years.

Bonterra, however, says those cost savings are “uncertain,'' adding Obsidian has not achieved lender consent for the deal and would bring higher oilfield retirement obligations to a merged company.

In November, Obsidian shareholders voted to approve the issuance of up to 72.3 million shares to buy Bonterra despite strong resistance from the target company, which has dubbed the offer a “take-under bid'' based on relative stock prices.

© 2020 The Canadian Press

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