Risky business if Orchard offer rejected: Eskdale director

TAKEOVER predator Crosby Capital Partners has warned that Orchard Petroleum’s shareholders face an “uncertain future” if they do not accept its $176 million takeover offer.
Risky business if Orchard offer rejected: Eskdale director Risky business if Orchard offer rejected: Eskdale director Risky business if Orchard offer rejected: Eskdale director Risky business if Orchard offer rejected: Eskdale director Risky business if Orchard offer rejected: Eskdale director

Upon the release of its bidder’s statement on Friday, Crosby subsidiary Eskdale Petroleum reiterated it was offering a revised cash offer of 81c for each share – a 39.7% premium to OPL’s closing share price the day before the offer was made.

Since that time however, Orchard’s share price has risen dramatically and is currently trading just 2c below the offer price.

But Eskdale director Ian Gibbs said that if the offer was rejected, there was a “risk Orchard’s share price would fall significantly”.

“From [the beginning of this year] to close of business September 29, Orchard’s share price has fallen by 39.9%,” he said.

In addition, Gibbs argued the offer allowed shareholders to transfer all risks associated with Orchard’s operations – namely the South Belridge, Southeast Lost Hills and Forbes gas projects, all located in California.

“We believe our offer … represents the best opportunity for Orchard shareholders to receive a certain, attractive cash return for an investment that carries significant risks moving forward,” he said.

Last month, Orchard’s directors recommended its shareholders accept a revised version of Eskdale’s takeover offer, in which it offered 81c per share, compared with an earlier unsolicited offer of 68c a month before.

Each of Orchard’s directors, who own about 7% of Orchard’s stock, intend to accept the offer for their own holdings.

“The board has recognised that Orchard’s growth opportunities may be achieved more quickly if it is part of a larger group with greater financial resources, thus resolving ongoing funding requirements for Orchard’s development and exploration program,” executive chairman Steve Graves said at the time.

Eskdale has an interest in about 23.78 million Orchard shares, representing 11.89% of the total issued shares and 10.89% on a fully diluted basis.

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