• Terms would give share owners bigger piece of rescue package
  • Meeting to approve sale is scheduled for Aug. 10 in Calgary

A group of dissident bond investors fighting Twin Butte Energy Ltd.’s plan to sell itself vowed to oppose the deal in court if it’s approved in a stakeholder vote because the accord puts stock owners ahead of bondholders.

The proposed sale to Reignwood Group Co. and Horizon Holding Group is "fundamentally unfair" because it doesn’t respect the priority of the oil and gas producer’s convertible debt holders, according to a letter filed Aug. 3 in the Court of Queen’s Bench of Alberta. A meeting to vote on the deal is scheduled for Aug. 10.

"Despite the company having two financial advisors, neither financial advisor was prepared to opine that the transaction is fair to the holders of debentures," the dissidents said in the letter.

Terms call for debt holders to get 14 percent of the face value of their 6.25 percent convertible unsecured subordinated debentures, while shareholders would receive 60 percent of the transaction’s value. Peters & Co., one of the advisers on the deal, did provide a fairness opinion and recommended that shareholders approve, but it had no explicit recommendation for bondholders.

Rob Wollmann, Twin Butte’s chief executive officer, didn’t immediately respond to requests for comment. The company’s board urged shareholders to support the plan in a statement earlier this week and said the debenture holders are being “misleading” by suggesting an alternative is possible.

“There is a real possibility that Twin Butte will be placed into receivership if the arrangement is not completed, and in the current commodity price environment, we are advised that it is extremely unlikely that any offers will materialize in a receivership process that will provide any value to the debentureholders or shareholders of Twin Butte,” according to the statement.

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