Lone Star Value Questions Antares' Asset Sale Announcement
NEW YORK, July 8, 2014
NEW YORK, July 8, 2014 /PRNewswire/ --Lone Star Value Investors, LP is open
to any and all ways to maximize value for Antares' shareholders including a
sale of all of Antares Energy Limited's (ASX: AZZ) (AZZEF) Permian Basin
assets. However, any asset sale must be done through a full and fair auction
process to the highest bidder and ALL the cash must be returned to Antares'
shareholders. Lone Star Value strongly believes its proposed nominees are
better able to maximize value for Antares shareholders and oversee an
effective sale process than are Antares' employee directors. Lone Star Value
estimates Antares' assets could be worth well in excess of US$300 million if a
robust sales process is overseen by an improved Board with Lone Star Value's
Lone Star Value has serious concerns with Antares' latest announcement that it
has received a non binding proposal from a bidder for all its Permian Basin
assets for US$300 million and questions whether or not the proceeds from an
asset sale by the current Board would result in cash ever being returned to
Lone Star Value's own valuation of Antares' Permian Basin assets – which
centres on the proven Southern Star properties – ranges from US$250 million to
US$450 million with a mid-point of $350 million. Lone Star Value believes
Antares' announcement should be treated with scepticism given the same
proposal for the exact same amount failed to materialise earlier this year.
In addition, the issuance of dilutive convertible debt at a high coupon rate
(10%) just last week appears to be at odds with a company about to sell all
its assets for cash.
Commenting on the proposed sale, Jeff Eberwein of Lone Star Value noted that
Antares CEO and Chairman, James Cruickshank, has lost credibility with the
vast majority of Antares' shareholders and should not be trusted to lead the
sales process without the oversight of a new, independent Board.
"This latest news from Antares seems to be another example in a long pattern
of random and incongruous decision-making by an unchecked CEO. We find it
extraordinary that Mr Cruickshank has trotted out the same failed deal in what
appears to be an attempt to defeat our efforts to enhance Antares' Board by
removing employee directors and adding new, independent, highly-qualified
"Mr. Cruickshank unilaterally cancelled the previous proposed transaction
after Antares' shareholders overwhelmingly approved the deal at an
extraordinary general meeting in January. The shareholders were never
informed of the identity of the buyer. All Mr. Cruickshank told shareholders
is that the asset sale for US$300 million delivered less shareholder value
than if the company were to develop these assets itself. We question what has
changed at this juncture to cause Antares to re-engage in a sale process when
its own stated plans consider an overly-ambitious and ill-conceived $979
million multi-year capital expenditure programme hatched after the previous
failed sale process."
"We are again being told that an asset sale is under consideration less than
two weeks after the company announced a highly dilutive and expensive
convertible note issue to raise $19.5 million. Why raise so much new capital
if Antares is about to sell all its assets for cash? This strategically
incoherent approach of a CEO who changes his strategy every few months is, in
our view, why Antares' stock trades at a significant discount to its asset
value. Given how shareholders were treated earlier this year, we have no
faith that this new proposed sale will be seen through to its conclusion or
properly overseen absent an overhaul of this Board, nor do we have any faith
in cash being returned to shareholders in the event that a sale actually
"If there is a qualified buyer for Antares' assets, then a stronger,
independent Board is more urgently needed than ever to run an auction process
to sell all or part of the company's assets to the highest bidder. Lone Star
Value's director candidates have the experience to run a robust auction and
are much better positioned to maximise value for all shareholders than the
incumbent Board. They also intend to use the $19.5 million proceeds from the
recent convertible issuance for a share buyback and plan to implement a full
review of the company's operations."
"We have attempted to discuss with Mr. Cruickshank our concerns about how the
company is being run and have publicly requested that no major transactions be
undertaken until Antares shareholders have had a chance to vote on the Board
they want to represent them on 22 July. Unfortunately, Mr. Cruickshank has
chosen to ignore us. He has also refused to inform us who received the latest
tranche of convertible notes and how the company plans to spend the funds
raised." Mr Eberwein said.
Lone Star Value urges all Antares shareholders to read carefully the materials
that Lone Star Value has mailed and may continue to mail to them as those
materials contain important information. Lone Star Value called on all
Antares shareholders to vote on its blue and white proxy card to improve the
Board of Antares.
For further information please visit our website, www.antaresvalue.com.au, or
call our shareholder information line, 1300 889 468 (from within Australia) or
+61 2 8022 7902 (from outside Australia).
Media enquiries please contact:
John Hurst – Cannings Corporate Communications
+61 418 708 663
Lone Star Value Management
SOURCE Lone Star Value Investors, LP
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