Lenders balk at Sceptre bid to acquire ailing Oakwood

Calgary-based Sceptre Resources (TSE) is still waiting for approval from a number of creditors before going ahead with its plan to acquire the assets of debt ridden Oakwood Petroleums (TSE) Sceptre must get court, creditor and shareholder approval before going ahead with a $273-million takeover plan that would combine the two companies into one of Canada’s largest oil firms.

The takeover bid that was scheduled to go before the Court of Queen’s Bench of Alberta Dec 16, follows a 2-year effort by Oakwood affiliates to restructure the company’s $320-million debt load.

While at least four lenders with $105 million in notes are against Sceptre’s proposed plan of arrangement, Oakwood President Richard Gusella refused to comment on the court hearings. Opponents include the Hong Kong Bank of Canada and Bank of America Canada.

Under the terms of the plan, Oakwood creditors would receive $192 million in cash, $21 million worth of Sceptre 10% subordinated unsecured debentures repayable in 10 years. Creditors would also receive seven million Sceptre common shares.

Oakwood’s preferred shareholders, common and Class A non- voting common shareholders would receive 3.95 million Sceptre common shares and under certain conditions five million one-for-one Sceptre share purchase warrants at $5 per share for up to five years.

Each Oakwood Series A preferred share will receive 0.879 Sceptre common share and 1.098 Sceptre warrants; each Oakwood Series B preferred share will receive 0.986 Sceptre common share and 1.233 Sceptre warrants; each Oakwood Series C share will receive 0.271 Sceptre common share and 0.339 Sceptre warrant; each Oakwood Series D preferred share will receive 0.425 Sceptre common share and 0.531 Sceptre warrant.

Oakwood common and Class A common shares will be treated equally when they vote on the proposed arrangement. Each Oakwood common and Class A non-voting shares will receive 0.279 Sceptre common share and 0.230 Sceptre warrant.

The minority shareholders of 89%-owned Oakwood subsidiary New York Oils Ltd. would receive 46,259 Sceptre common shares in exchange for the 863,881 New York common shares not owned by Oakwood.

More hearings were scheduled to take place on Dec 22.