Lexpert Magazine

12 LEXPERT MAGAZINE | NOVEMBER/DECEMBER 2017 | RECENT DEVELOPMENTS IN BUSINESS LAW | LEXPERT: Was the contingency as stress- inducing as it sounds? Johnson: While the contingency did create an element of uncertainty, there was a high degree of confidence that the acquisition would be completed. Corbett: It was certainly stress-inducing from Trilogy's end to try to keep track of the transaction terms and diligence for the Apache deal, and the impact that transac- tion would have on Paramount, all while trying to complete an already complex transaction between Paramount and Tril- ogy. I can only imagine it was doubly so for Paramount's counsel. Jay Reid, Burnet, Duckworth & Palmer (for Paramount's Special Committee): To be honest, we just had to dutifully go about our business on the assumption that the Apache Canada deal would take place. LEXPERT: What kind of regulatory re- quirements came into play in the merger? Corbett: Each side had to strike a special committee, retain an independent valu- ator and have the minority shareholders bless the deal. e real tension came from the fact that the Paramount minority shareholders could reject the deal if they felt that Trilogy got too good of a deal, and vice versa. at really put a spotlight on the independent valuator's work and the role of the special committees. e Riddell family couldn't be seen to favour one side or the other. e independent valuator and the special committees helped provide that separation. LEXPERT: Was there concern about minor- ity shareholder dissent? Johnson: ere is always some uncertainty about shareholder reaction but there was confidence in the fairness of the exchange ratio, the integrity of the process and that the shareholders of both companies would recognize that they would be better off with the merger than without. Reid: I think the benefits and synergies to be realized by the transactions and the signifi- cant combined land positions made it rela- tively easy for shareholders on both sides — the analysts covering the companies and the proxy advisory firms — to see the value equation associated with the completion of the transactions. Having said that, it's al- ways possible that a particular shareholder may have a bee in their bonnet. LEXPERT: Given the unique requirements, was the process particularly demanding? Corbett: Prior to the transaction, I think many would have agreed that the Para- mount and Trilogy shareholders would be better off if the two companies were to re- combine. In getting to that point, though, the major players in the transaction had almost identical and diametrically opposed duties to the Paramount and Trilogy share- holders. It put them in a tough spot. Reid: Certainly there were points in the ne- gotiations where things did become stress- ful and required reflection, but all parties at the table were professional. LEXPERT: Do these deals highlight a trend toward homegrown ownership? Reid: I think you've hit the nail on the head. When commodity prices are down and governments, both Provincial and Federal, make operating in the Canadian energy business less attractive by way of regulatory and other initiatives, inter- national companies, and particularly the larger ones, will leave our jurisdiction. Ac- cordingly, we should expect, at least during this part of the "cycle," that homegrown ownership in the Canadian energy sector will continue. Corbett: My guess is that trend will con- tinue. I think some stability in commodity prices will give players more confidence on which to make investment decisions. With the almost instantaneous supply re- sponse that tight oil and gas producers can provide, the industry is adjusting to prices that won't get near $100 for a long time. ON THE TREND Where Canada Acquires Energy Assets The previous year has seen a repatriation of energy assets as domestic acquirers fill the void left by foreign investors pulling out of the oil sands. As the graphic below shows, this turn of events follows a couple of extraordinary years of acquisition abroad, where approximately three-quarters of Canadian energy purchases were foreign. GRAPHIC BY DAVID DIAS; SOURCE: THOMSON REUTERS

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