Twin Butte Energy's Angry Creditors Hire Help for Better Deal

  • Bondholders looking to block company’s sale hire advisers
  • Group argues deal with Reignwood, Horizon favors shareholders

A group of dissident bondholders that’s seeking to block Twin Butte Energy Ltd.’s plans to sell itself is telling the company it believes it has enough support among creditors to nix the transaction as it stands, people familiar with the matter said.

The oil and gas producer that’s been trying to stave off a default agreed to sell itself last month to a group consisting of Hong Kong and Canadian-domiciled Reignwood Group Co. and Horizon Holding Group. Under the terms of the deal, equity holders would receive 6 Canadian cents per share, or C$21 million ($16 million), while the convertible-debt holders would receive 14 percent of the face value, or C$12 million.

A group of Twin Butte’s convertible-debt holders pushed back on the plan, saying the deal rewards equity holders at their expense, the people said, asking not to be identified because the matter is private. The bondholders have hired an adviser to seek a better deal, the people said.

August Meeting

The dissident creditors need more than a third of the votes cast at a meeting -- scheduled for Aug. 10 -- to be against the plan in order for it to be rejected. The group believes it has enough votes to sink the plan based on the 40 percent to 60 percent of bondholders who typically vote on such transactions, the people said.

Rob Wollmann, Twin Butte’s Chief Executive Officer, said in an e-mail he was yet to hear from the group’s advisers. He said the company risks going into receivership if the planned sale fails, giving rise to the probability that bondholders would receive no consideration.

“Given the facts, this offer is, in the company’s view, the best offer available for debenture holders,” he said.

Twin Butte’s board recommended both bondholders and shareholders vote in favor of the transaction, according to its proxy circular.

The company also said Wednesday it won the support of two independent proxy advisory firms, Institutional Shareholder Services Inc. and Glass Lewis & Co. ISS recommended shareholders vote for the arrangement because it may offer them “an opportunity to realize their investment in the company with no further downside risk in light of the company’s deteriorating financial position.”

The company received a fairness opinion on the matter from Peters & Co., one of the advisers on the deal. The firm recommended shareholders approve the transaction but had no explicit recommendation for bondholders.

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