CALGARY, Alberta, June 24 (Reuters) - Institutional Shareholders Services, an influential proxy advisory firm, is advising its clients to reject a planned C$2 billion ($1.6 billion) sale of Pacific Rubiales Energy Corp, a group representing a fifth of the shareholders of the Canadian oil company’s shareholders said on Wednesday.
O‘Hara Administration Co, which represents shareholders with nearly 20 percent of Pacific Rubiales shares who want to block the offer, said ISS raised a number of issues with the bid from Alfa SAB de CV and Harbour Energy Ltd for Pacific Rubiales, Colombia’s No.2 oil producer.
ISS said the offer did not match what the Canadian company said it was worth in March; it is also concerned that the board did not put the company up for auction or ascertain the market value of Pacific Rubiales and, among other issues, that the bid was based on commodity prices that have since risen.
The C$6.50 per share offer from Alfa and Harbour Energy came during difficult times for Pacific Rubiales, whose shares have plunged 75 percent over the last year as crude prices fell and the company struggled under its hefty debt-load.
The opposing shareholders have launched a proxy fight to block the deal for Pacific Rubiales, urging other investors to vote against the offer. However, the producer is seeking to disqualify O‘Hara from voting its 21.3 million shares and has said the all-cash offer maximizes value for all of its investors.
“We are confident that no amount of noise will cloud the plain truth that the proposed arrangement undervalues the common shares,” O‘Hara said in a statement.
Pacific Rubiales could not be immediately reached for comment.
Pacific Rubiales shares were down 2.7 percent to C$5.39 by late afternoon on the Toronto Stock Exchange.
$1 = 1.2395 Canadian dollars Reporting by Scott Haggett; Editing by Bernard Orr