CALGARY, Alberta - Greenfire Resources Ltd. (NYSE: GFR) (TSX: GFR), a Canadian energy firm, is set to defend its shareholder protection rights plan following a recent unsolicited acquisition bid. The company, which specializes in thermal energy production in Alberta's Athabasca region, adopted the rights plan in response to agreements made by Waterous Energy Fund and other shareholders to purchase a significant portion of Greenfire's common shares.
On September 16, 2024, it was announced that Waterous Energy Fund, along with limited partnerships and directors of Greenfire, had entered into agreements to acquire 43.3% of the company's issued and outstanding common shares. This move prompted Greenfire to implement a rights plan to ensure fair and equal treatment of all shareholders and to provide the board of directors with time to evaluate value-enhancing alternatives.
The rights plan is now being challenged by the acquiring parties, who have applied to the Alberta Securities Commission to cease trade the agreement. Greenfire's board contends that the acquisition offer undervalues the company's shares compared to its industry peers and does not reflect the intrinsic value of the company.
Greenfire Resources emphasizes its position as an intermediate, cost-effective, and growth-oriented producer in the oil sands sector, with a focus on steam assisted gravity drainage extraction methods. The company prides itself on its entrepreneurial environment and significant employee ownership.
The forthcoming hearing at the Alberta Securities Commission will determine the fate of Greenfire's rights plan. The company's shares are publicly traded on both the New York Stock Exchange and the Toronto Stock Exchange under the ticker symbol "GFR". This report is based on a press release statement from Greenfire Resources Ltd.
In other recent news, Waterous Energy Fund Management Corp. (WEF Manager), which manages various limited partnerships including Waterous Energy Fund III series, has agreed to acquire a substantial stake in Greenfire Resources Ltd. The transaction involves the purchase of approximately 43.3% of Greenfire's issued and outstanding shares from key shareholders Allard Services Limited, Annapurna Limited, and Modro Holdings LLC. This acquisition, amounting to CAD$327.78 million, is expected to significantly increase WEF's influence in Greenfire, a company in which they currently do not own any shares.
Following the transaction, Greenfire directors Julian McIntyre and Venkat Siva, who control the selling entities, have agreed to resign from Greenfire's board. The deal, structured to comply with an exempt take-over bid, involves fewer than five sellers located outside Canada. The purchase price is within 115% of the market price according to the rules in National Instrument 62-104.
These recent developments highlight the dynamic nature of ownership in the energy sector and underscore WEF's strategic moves. An early warning report regarding this acquisition will be filed and made available on Greenfire's SEDAR+ profile.
InvestingPro Insights
As Greenfire Resources Ltd. (NYSE: GFR) (TSX: GFR) prepares to defend its shareholder protection rights plan, recent data from InvestingPro sheds light on the company's financial position and market performance.
Despite the ongoing acquisition bid, GFR's stock has shown resilience, with InvestingPro data indicating a 24.17% price total return over the past six months. This positive momentum is further underscored by the fact that the stock is trading near its 52-week high, currently at 92.78% of that peak.
However, investors should note that Greenfire faces some financial challenges. An InvestingPro Tip reveals that the company is not profitable over the last twelve months, with a negative P/E ratio of -4.56. This aligns with the board's assertion that the current acquisition offer may undervalue the company's potential.
On a more optimistic note, another InvestingPro Tip suggests that analysts predict the company will be profitable this year. This forecast could be a factor in the board's decision to seek value-enhancing alternatives and resist the current acquisition bid.
For those interested in a deeper analysis, InvestingPro offers 13 additional tips for Greenfire Resources, providing a more comprehensive view of the company's prospects and challenges in the current market environment.
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