Pace merger opponent claims more support

An activist investment company leading the battle against a three-way merger involving Pace Oil & Gas Ltd. says it has the backing of seven of Pace’s largest shareholders.

Nova Bancorp Securities Ltd. of Vancouver said the seven, which it did not identify, have agreed to oppose the merger with AvenEx Energy Corp. and Charger Energy Corp.

“Nova Bancorp has spoken with eight of Pace’s largest shareholders. Seven of these eight shareholders have advised us that they intend to vote against the Pace arrangement,” it said in a news release. “In addition, Nova Bancorp has received unsolicited reports from other Pace shareholders who also intend to vote no.”

Last week, Nova Bancorp reported the Canada Pension Plan Investment Board would vote against the deal, a report confirmed on the CPP website. It’s unclear how many shares CPP has as it’s not listed on a Bloomberg database which is often out of date.

The database lists New York investment fund BlackRock Inc. with 14 per cent as Pace’s largest shareholder. A spokesman sa i d last week it would not comment on its voting intentions.

Bruce Mitchell, with about nine per cent, is the only other listed investor with more than five per cent of the stock.

An analyst who asked not to be identified said the stock is so widely held that it will be difficult to put together enough opposition to defeat the merger, which must be supported by two-thirds of the shares to be carried.

He added shareholders aren’t exactly thrilled about the deal but most see no better options for Pace.

Nova Bancorp claims that Pace’s sale process was too limited, that the merger undervalues its stock, that its proposed dividend is not sustainable and that the arrangement won’t improve management of Pace assets.

Tom Buchanan, slated to be chief executive of the resulting Calgary intermediate Spyglass Resources Corp., has defended the deal as fair and said he’s heard mainly support for it in his meetings with other investors.

Nova Bancorp says affiliates have had Pace shares since 2010 and currently own 108,200 shares, .23 per cent of the 46.9 million outstanding.

Seven of these eight shareholders have advised us that they intend to vote against the Pace arrangement NOVA BANCORP SECURITIES LTD.