(CN) – In a haste to find a buyer just four months after emerging from bankruptcy, oil and gas company Stone Energy Corp. executives agreed to a sale to Talos Energy LLC without properly exercising other options, investors claim in a class action.
The deal stipulates that all of the outstanding shares of Stone Energy will be exchanged for shares of fellow oil and gas company Talos. Stone Energy investors will own 37 percent of the two companies combined, which is expected to have an enterprise value of approximately $2.5 billion.
The lawsuit says Stone Energy filed for Chapter 11 bankruptcy on Dec. 14, 2016, and the company’s executives began trying to sell the company “within weeks” of coming out of the bankruptcy.
Beginning in March 2017, the company’s financial advisor Petrie Partners Securities began contacting potential parties concerning “strategic transactions” ultimately engaging three companies including Talos. According to the lawsuit, “despite lesser ownership of the combined company, and without contacting Company A, Company C or any of the other parties who had conducted due diligence with Stone Energy, the board agreed to enter into an exclusivity agreement with Talos on July 1, 2017.”
Stone Energy investors claim they deserve more than 37 percent of the new company and that Petrie Partners’ own analyses found an implied equity ownership of 52 percent. In addition, while the deal was being negotiated Stone Energy’s stock value increased more than 36 percent closing at $35.49 per share on Nov, 20, 2017, but fell as low as $24.04 per share on Nov. 28, 2017, after the deal was announced.
Investors are also seeking correction to the registration statement filed with the Securities Exchange Commission in connection with the deal which they claim omits crucial information concerning the sales process, and further seek to stop the acquisition until the information is provided.
The class action was filed in Delaware Chancery Court. The class is represented by Ryan M. Ernst and Daniel P. Murray of O’Kelly Ernst & Joyce, LLC in Wilmington, Del., and Shane T. Rowley and Danielle Rowland Lindahl of Rowley Law PLLC in White Plains, N.Y.