SINGAPORE and
PORT MORESBY, Papua New
Guinea, May 17, 2016
/PRNewswire/ --
InterOil Corporation (NYSE: IOC; POMSoX: IOC) has mailed a
letter to shareholders regarding its response to the nomination of
directors for election to the Corporation's Board of Directors by
Phil Mulacek and certain of his
associates (collectively "Mulacek").
The Board has reviewed Mulacek's nominees and has
determined that appointing them to the Board is not in the best
interests of InterOil and of its shareholders.
The Board is urging shareholders to reject the dissident
nominees and resolutions by voting today on the WHITE proxy
as recommended by the Board.
The letter is being distributed to shareholders in
connection with the Corporation's Annual and Special Meeting of
Shareholders (the "Meeting") to be held on June 14, 2016. InterOil shareholders of record at
the close of business on April 25,
2016 are entitled to vote at the Meeting. All proxies must
be received before 8:00 PM ET on
June 10, 2016.
The full text of the letter follows:
Dear InterOil Shareholders
InterOil's Annual and Special Meeting of Shareholders (the
"Meeting") is approaching and the future of your investment in
InterOil is at stake.
As you may know, Phil
Mulacek, who served as the Corporation's Chairman and
Chief Executive Officer until 2013, and certain of his associates
(collectively "Mulacek"), has nominated five director candidates,
including Mr. Mulacek, to stand for election to InterOil's Board of
Directors at the Meeting.
Under Mr. Mulacek, InterOil had no clearly articulated
strategy and instead wasted shareholder money on infeasible
projects that conflicted with the Corporation's agreement with the
Papua New Guinea Government and risked Petroleum Retention License
15 ("PRL 15"). In addition, Mr. Mulacek has material
conflicts of interest from those of all InterOil shareholders as a
result of his significant investment in Kina Petroleum (ASX:KPL)
("Kina") and the position he holds in an entity that holds an
interest in certain InterOil wells. Mr. Mulacek's tenure as CEO was
marked by litigation that damaged InterOil's reputation and
threatened the Corporation.
Since Mr. Mulacek's departure in 2013, your Board and
management team have taken decisive actions to address the issues
created by Mulacek while he was CEO of InterOil and to execute a
strategy to unlock the value of the Corporation's assets for all
shareholders. As InterOil continues to make progress towards
participating in one of the world's lowest-cost liquefied natural
gas projects, your Board's ability to continue its efforts are now
significantly at risk.
Along with the nominations and other proposals, Mulacek is
seeking to reduce the number of directors on the Board to six.
We believe that Mr. Mulacek's attempts to reduce the size of the
Board and elect a Board composed almost entirely of himself and his
handpicked nominees is a step in Mr. Mulacek's pursuit of a
self-serving agenda to take control of InterOil's Board and thus
InterOil's future.
We urge you to protect the value of your investment in
InterOil. Vote the WHITE proxy to reject Mulacek's
resolutions and vote FOR InterOil's highly qualified
director nominees.
Your vote is very important. Please vote online, by
telephone or by signing and dating the
enclosed WHITE proxy and returning it in the postage-paid
envelope provided.
YOUR BOARD AND MANAGEMENT TEAM ARE
EXECUTING A PLAN TO MONETIZE THE VALUE OF INTEROIL'S WORLD-CLASS
ASSETS
Since Mr. Mulacek left the Corporation in 2013, your Board
and management team have taken decisive actions to unlock the value
of the Corporation's assets, which Mr. Mulacek now puts at
risk.
The Board's clear, value-enhancing strategy has
included:
- Revamping the Board and management team by bringing in
highly qualified leaders with the right skills, capabilities and
experience to steward InterOil and create value;
- Executing value-adding transactions with Total S.A.
("Total") and Puma Energy;
- Negotiating and executing a realistic monetization and
proper appraisal of the Elk-Antelope field with the full support of
the PNG Government;
- Executing an accelerated and simultaneous three-well
drilling campaign which preserved the Corporation's exploration
licenses that were due to lapse;
- Streamlining the businesses to focus purely on upstream
exploration and development;
- Reducing operating costs; and
- Strengthening InterOil's financial position.
Today, InterOil is operating efficiently and entering the
final stages of the Elk-Antelope appraisal program. With your
support on the WHITE proxy, your Board and management can continue
their efforts to unlock the value of InterOil's assets
for all InterOil
shareholders.
YOUR BOARD HAS THE RIGHT EXPERIENCE AND
EXPERTISE
TO UNLOCK INTEROIL'S FULL VALUE
Since 2013, InterOil has revamped its Board and management
team. Your Board's nominees are highly-qualified and proven
leaders, who are engaged and focused on taking actions that are in
the best interests of InterOil and all of its shareholders, and
have the following skills and experience.
The Extensive
Skills and Experience of InterOil's Nominees
|
OIL &
GAS
|
FINANCE/OPERATIONS
|
LEADERSHIP
|
PNG/REGULATORY
|
- Large-scale LNG
projects
- Upstream LNG
activities
- Oil and gas
exploration & development
- LNG Shipping &
marketing
|
- Finance, auditing,
accounting & capital raising
-
Engineering
- Strategic planning
and oversight
|
- Leading global oil
and gas companies
- Executive and
senior leadership positions
- Corporate
governance
|
- PNG
industry
- Government
positions
- Compliance and
regulations
|
Here are important facts about the composition of your
Board nominees:
- Six highly-qualified directors,
including the Chief Executive Officer, Dr. Michael Hession, have been added since Mr.
Mulacek's departure in 2013, bringing fresh perspectives to
your Board.
- Six of the eight Board nominees are
independent.
- Six of the Board nominees have an average of more than
30 years of experience each in energy and large-scale LNG
developments. The Board's nominees have led and
overseen projects and operations in senior executive roles at
companies such as Shell, BP, Chevron, BG Group and Woodside. The
Corporation's nominees include the former Chief Executive Officer
of BG Group, and the former Chief Financial Officers of BP's global
exploration and production business and Singapore
Power.
- Three of the Board nominees have essential
Papua New Guinea regulatory
knowledge and are Papua New Guinea
citizens. One is a former Prime Minister of
Papua New Guinea, one is a former
Governor of the Bank of Papua New
Guinea and one is the former country manager for
Chevron.
Each of your directors is extremely qualified and brings
unique experiences that are highly beneficial to InterOil.
Together, your Board's nominees have the collective skills and
expertise to drive the execution of InterOil's strategy to create
value for all
shareholders.
THE MULACEK LEGACY: THE REAL
STORY
DON'T BE MISLED BY MULACEK'S ATTEMPTS
TO RE-WRITE HISTORY
Mulacek is attacking the Corporation's strategy and
performance during a low-commodity price environment. In doing so,
Mulacek has given no indication of how he intends to create value
for InterOil shareholders and has provided no strategy for LNG
development, monetization of the Corporation's discoveries or its
exploration program.
The reality is that your Board and management team have
spent years addressing the challenges Mr. Mulacek created before he
left InterOil. Here are the
facts:
x Mr. Mulacek was embroiled in litigation that damaged
InterOil's reputation and threatened the Corporation.
Mr. Mulacek's partners in an entity he controlled, Nikiski,
Ltd. ("Nikiski") brought a lawsuit against Phil Mulacek, his controlled entities Petroleum
Independent & Exploration Corporation and P.I.E. Group, LLC,
and InterOil, after Nikiski bought a modular oil
refinery and sold it to InterOil through a series
of transactions. The lawsuit,
Todd Peters, et. al. v.
Phil Mulacek et. al., which
included allegations of, among other things, fraud, self-dealing,
investor oppression and conspiracy, could have resulted in material
damages that jeopardized InterOil's future. In an attempt to avoid
paying damages, Mr. Mulacek attempted to put Nikiski into
bankruptcy. The court ultimately determined that Mulacek had filed
the bankruptcy in subjective bad faith and that "Mulacek intended
to benefit
himself."[1]
x During Mr. Mulacek's tenure, the Corporation failed
to maintain adequate internal controls. In 2008,
the Ontario Securities Commission directed InterOil to review its
option granting practices from January 1,
2001 to 2008. A Special Committee conducted the review
and determined that irregularities in InterOil's administration of
certain historical stock options grants were the result of a lack
of adequate internal controls. [2]
x Mr. Mulacek's interests conflict with those of
InterOil and its shareholders. Mr.
Mulacek is the president of PNG Drilling Ventures ("PNGDV"),
an entity that holds an interest in Raptor, Bobcat, Triceratops and
also has a carried interest in future exploration wells. Mr.
Mulacek also owns an approximate 20% interest
in Kina, a PNG-based company with exploration licenses
adjacent to InterOil's licenses. Additionally, Mr.
Vance, one of the Mulacek nominees, sits
on Kina's board. If Mr. Mulacek were to gain
representatives on the InterOil Board, he would have access to
material non-public information about the properties and, given his
large ownership interest in Kina and position at
PNGDV, could use such information to his personal
advantage.
x With Mulacek as CEO, the Corporation had no clearly
articulated strategy. Contrary to creating a
credible development plan for InterOil's gas discovery, Mr. Mulacek
instead insisted that the Corporation would develop the gas itself
using modular and/or floating technology. Under Mr. Mulacek's
leadership, the Corporation pursued these non-feasible plans at
significant cost and were in conflict with the 2009
Project Agreement with the PNG Government. Mr.
Mulacek announced the execution of several heads of agreements for
LNG sales - but none of the agreements were binding or led to any
LNG sales.
x Mr. Mulacek's failure to comply with the terms of the
2009 Project Agreement threatened PRL 15. As
a result of Mr. Mulacek's actions, the PNG Government commenced
action against InterOil to terminate the agreement, which would
likely have led to the termination of PRL15. We believe
that it is only because of actions taken by InterOil's current
management team that a resolution was reached with the
government. Dr. Hession and the management team took decisive
steps that facilitated the resolution, including signing a
strategic agreement with Total and outlining a credible path to
development of the discovered resource.
x Mr. Mulacek's activities in the industry following
his departure from InterOil have involved significant shareholder
value destruction. Notably, the share price
of Kina has decreased by more than 80%
since the announcement of Mr. Mulacek becoming a "cornerstone
investor."[3]
This is a critical time for InterOil as it begins the
final stages of the Elk-Antelope appraisal program, enters the
development stage of the Papua LNG Project and continues
implementing strategies to monetize the Corporation's other gas
discoveries. InterOil cannot afford to bring back Mr. Mulacek
and his self-serving agenda to benefit
himself.
MULACEK'S HANDPICKED NOMINEES HAVE NO
LNG EXPERIENCE
AND ARE MULACEK'S EMPLOYEES
AND BUSINESS ASSOCIATES
If Mulacek succeeds in shrinking the size of the Board and
replacing almost all of InterOil's experienced directors with its
own nominees, Mulacek will have taken operating control of
InterOil. Your Board has thoroughly reviewed Mulacek's nominees
and has determined that appointing them to the Board is not in the
best interests of InterOil or all of its shareholders.
In making its decision, the Board considered among other
things:
x Mulacek's nominees are not independent.
Three of them are Mr. Mulacek's employees and one is a
previous business associate of his. We
believe they would likely take actions intended to further Mr.
Mulacek's personal agenda, instead of acting in the best interest
of all InterOil shareholders.
x Mulacek's nominees are simply not qualified to
serve on the InterOil Board.
x Mr.
Cammon works for Mr. Mulacek as the Drilling and Engineering
Manager at PIE Operating
LLC,
of which Mr. Mulacek is President. Mr. Cammon
has NO experience serving on the
board
of a public company.
x
Mr. Overstreet works for Mr. Mulacek as the Operations Manager at
PIE Operating LLC of
which
Mr. Mulacek is President. Mr. Overstreet
has NO experience
serving on the board
of a
public company.
x Mr.
Vance works for Mr. Mulacek as the Upstream Counsel at Asian Oil
& Gas Pte of which
Mr.
Mulacek is Chairman. Mr. Vance has never been on a public company
board other than at
Kina
where he was appointed by Mr. Mulacek. Mr. Mulacek is also the
largest shareholder of
Kina
with approximately a 20% interest.
x Mr.
Lasco is a business associate of Mr. Mulacek and he owns an
interest in an entity that
owns
an interest in the PRL15 license, as well as a direct interest in
the Raptor, Bobcat and
Triceratop discoveries. Mr. Lasco is the CEO of a commercial
real estate firm that focuses
primarily on retail malls in the U.S. Mr. Lasco has
NO experience serving on the board of
a
public
company.
x
Replacing your directors with Mulacek's
nominees would remove critical expertise
and would
give Mr. Mulacek and his associates control of
InterOil during the final stage of Elk-Antelope
appraisal
and monetization strategies that are key to the continued execution
of InterOil's strategy.
In stark contrast to your highly-qualified, independent
Board, Mulacek's nominees are tied to Mr. Mulacek and bring neither
the experience nor expertise to achieve InterOil's goals or to
further our path to unlocking the value of our assets.
We believe that InterOil is best served by a truly
independent board that is comprised of directors who are qualified
and committed to serving the interests of the Corporation and all
of its shareholders. We therefore urge you to
reject the Mulacek agenda, and to discard any proxy materials you
may receive from Mulacek in the mail.
PROTECT YOUR INTEROIL
INVESTMENT
BY VOTING THE WHITE PROXY TODAY
We are confident that your Board and management team have
taken the right steps to move InterOil in the right direction
beyond the Mulacek era. Today, the Corporation is poised to
monetize its assets for the benefit of all InterOil
shareholders.
With your support -- and your vote on the enclosed
WHITE proxy card -- we can keep the Mulacek era behind
us and devote our full efforts to realizing value for our
shareholders.
Vote TODAY online, by telephone or by signing and
dating the enclosed WHITE proxy and returning it in the
enclosed postage-paid envelope by 8:00PM ET on
June 10, 2016.
On behalf of your Board and the management, thank you for
your continued support.
Sincerely,
Chris
Finlayson
Chairman
|
Dr Michael
Hession
Chief Executive
Officer
|
THE BOARD AND MANAGEMENT OF INTEROIL CORPORATION
UNANIMOUSLY RECOMMEND VOTING ONLY THE ENCLOSED WHITE PROXY
FORM:
|
AGAINST
|
EACH of the DISSIDENT RESOLUTIONS
|
FOR
|
The Election of ALL OF the INTEROIL NOMINEES TO THE
BOARD
|
FOR
|
THE APPROVAL OF THE 2016 STOCK INCENTIVE
PLAN
|
FOR
|
THE APPOINTMENT OF Pricewaterhousecoopers, chartered
accountants as our auditors
|
FOR
|
THE rejection OF THE mulacek
expenses
|
YOUR WHITE PROXY MUST BE RECEIVED BY COMPUTERSHARE
INVESTOR SERVICES INC. OR MACKENZIE PARTNERS, INC. BEFORE
8:00 P.M. (EASTERN TIME) ON JUNE 10,
2016.
|
If you have any questions, require assistance
with
voting your WHITE
proxy card or need additional copies of the proxy materials, please
contact:
Mackenzie Partners, Inc.
105 Madison Avenue
New York, NY 10016
iocproxy@mackenziepartners.com
(212) 929-5500 (Call Collect)
Or
TOLL-FREE (800) 322-2885
About InterOil
InterOil Corporation is an independent oil and gas
business with a sole focus on Papua New
Guinea. InterOil's assets include one of Asia's largest undeveloped gas fields,
Elk-Antelope, in the Gulf Province, and exploration licenses
covering about 16,000sqkm. Its main offices are in Singapore and Port
Moresby. InterOil is listed on the New York and Port
Moresby stock exchanges.
Investor Contacts
Singapore
|
Singapore
|
United States
|
Michael Lynn
Senior Vice President
Investor Relations
|
David Wu
Vice President
Investor Relations
|
Cynthia Black
Investor Relations
North America
|
T: +65 6507 0222
E: michael.lynn@interoil.com
|
T: +65 6507 0222
E: david.wu@interoil.com
|
T: +1 212 653 9778
E: cynthia.black@interoil.com
|
Media Contacts
Singapore
|
United States
|
Ann Lee
Communications
Specialist
|
James Golden/ Aaron Palash
Joele Frank, Wilkinson Brimmer
Katcher
|
T: +65 6507 0222
E: ann.lee@interoil.com
|
T: +1 212 355 4449
E:
ioc-jf@joelefrank.com
|
Legal Notice
This press release should be read in conjunction with and
serves as a supplement to the Management Information Circular of
InterOil dated April 25, 2016 and
incorporates by reference the Management Information Circular as
required.
This press release contains "forward looking statements"
as defined in U.S. federal and Canadian securities laws. Such
statements are generally identifiable by the terminology used such
as "may," "plans," "believes," "expects," "anticipates," "intends,"
"estimates," "forecasts," "budgets," "targets" or other similar
wording suggesting future outcomes or statements regarding an
outlook. We have based these forward looking statements on our
current expectations and projections about future events. All
statements, other than statements of historical fact, included in
this press release are forward looking statements. Forward looking
statements include, without limitation, statements regarding the
cost and competitiveness of the Papua LNG Project, payments from
Total in connection with the Elk-Antelope fields appraisal, the
ability of InterOil to meet its demands under the Papua LNG Project
and other exploration goals across its portfolio, benefits
associated with the development of the Papua LNG Project, the
intentions of Mulacek regarding various matters, InterOil's
corporate strategy and InterOil's position in the low-commodity
price environment. Readers are cautioned not to place undue
reliance on forward-looking statements which involve known and
unknown risks material risks and uncertainties that may cause our
actual results, performance or achievements to be materially
different from any future results, performance or achievements
expressed or implied in such forward-looking statements.
The forward-looking statements in this press release are
based on certain assumptions and analysis made by us in light of
our experience and perception of historical trends, current
conditions and expected future developments, as well as other
factors we believe appropriate in the circumstances. All of
the forward-looking statements are qualified by the assumptions
that are stated or inherent in such forward-looking statements. The
key assumptions that have been made in connection with such
forward-looking statements include, among other things, assumptions
regarding anticipated financial conditions and performance,
business prospects, strategies, regulatory developments, future
hydrocarbon commodity prices, the ability to secure adequate
capital funding, the ability to obtain equipment and qualified
personnel in a timely manner to develop resources, the ability to
obtain financing on acceptable terms, and the ability to develop
reserves and production through development and exploration
activities.
Although we believe that the assumptions underlying our
forward looking statements are reasonable, any of the assumptions
could be inaccurate, and, therefore, we cannot assure you that the
forward looking statements will eventuate. In light of the
significant uncertainties inherent in our forward looking
statements, the inclusion of such information should not be
regarded as a representation by us or any other person that our
objectives and plans will be achieved. Some of these assumptions
and other risks and uncertainties that could cause actual results
to differ materially from such forward looking statements are more
fully described under the heading "Risk Factors" in our annual
information form for the year ended December
31, 2015. Further, the forward looking statements contained
in this press release are made as of the date hereof and, except as
required by applicable law, we will not update publicly or revise
any of these forward looking statements. The forward looking
statements contained in this press release are expressly qualified
by this cautionary statement.
[1]
Bloomberg, "InterOil Drops Most in Nine Months After Report
on Court Ruling," March 26, 2010.
Full details are disclosed in the InterOil Annual Information Form
2008.
[2] Details are
disclosed in InterOil's Annual Information Form 2008
[3] Source: Bloomberg. From 11/6/14 to
05/13/2016
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/interoil-responds-to-mulacek-board-nominees-300269801.html
SOURCE InterOil Corporation