CALGARY, A.B. — Total Energy Services followed through on its threat of a hostile takeover of Savanna Energy Services on Friday, despite Savanna trying to close a debt restructuring deal with a pension fund manager owned by the government of Alberta.
The Financial Post is reporting that the Calgary-based oilfield service provider announced its intention to launch a hostile bid for the heavily indebted driller in a widely criticized move back in November, before formally launching its all-share offer last Friday worth $164 million plus debt.
The timing of the offer puts Savanna’s management and board of directors into a difficult situation, as the company is trying to raise money and restructure its debts after a deal was announced on Nov. 22. The Calgary-based company is raising almost $19 million through a share offering plus another $219 million worth of debt and equity from the Alberta Investment Management Corp., known as AIMCo.
Total president and CEO Daniel Halyk said it would be difficult for Savanna’s board to argue his offer, which amounts to $1.82 per share, isn’t fair when the target company is currently trying to close a money-raising deal at a value of $1.45 per share.
“Clearly, the board of Savanna believes $1.45 is a fair price, otherwise they wouldn’t agree to issue 31 per cent more stock at that price,” Halyk said in an interview. “They’ll have to answer that question of why $1.45 cash is good and $1.82 with upside is bad.”
Savanna president and CEO Chris Strong said he wanted to comment, but was unable to discuss any offer because the company is actively trying to raise money and it’s capital-raising deal is scheduled to close next week.