Someone (I believe an attorney) posted this on DUNRQ at Yahoo. I tot to share: I believe we will get another bid from EOS or the $5 million.
******************
Two legal reasons why EOS may still buy DUNRQ or pay the $5Million termination fee
1. The express terms of EOS' tender offer as announced in October 9th, 2014 PR does not contain any financing condition. As such, EOS cannot exit obligation by claiming that it could not finance the deal.
2. More importantly, the agreement prevented Dune from actively soliciting other acquisition proposals. Because EOS caused Dune not to actively solicit acquisition proposals from October 2014 through the first week of march 2015, it is my understanding that EOS cannot validly walk away from the obligation to purchase Dune.
Accordingly, I believe that EOS will have to pay Dune the $ 5 million merger break-up fee or specifically complete the deal. Now this is my interpretation and is not intended to be a legal advice for anyone, although I believe that would be the legal position in this case. I am long Dune prior to the bk and still hold the shares.
A LITTLE MORE WRITE UP: see my conclusion from "HOWEVER" below.
This is what EOS had to say: "Despite our good faith, best efforts to renegotiate the terms of the acquisition, the boards of Eos Petro and Dune Energy were unable to reach an agreement that could be properly financed after the drop in the price of oil," said Martin Oring, CEO of Eos. "Negative outside market forces beyond either companies' control rendered the original terms of the acquisition unworkable, and Eos therefore believes that it has not breached its obligations under the terms of the merger agreement."
On September 17, 2014, the day Dune and Eos entered into a formal merger agreement for the commencement of the tender offer, WTI crude oil prices were $94.33 per barrel. Today, over five months later, oil prices are approximately 40% lower and down approximately 54% from summer peak prices. The resulting reduced profit potential and weakened credit statistics directly impacted Dune's financial forecasts and valuation, to the point that the terms for the acquisition of Dune originally proposed on September 17, 2014 were rendered untenable.
HOWEVER, the fact that oil prices lowered is not enough force for EOS allow the tender offer to expire. The agreement was signed in September 2014 and there was enough time to consummate it. There was no financing condition to performance. A steep decline in oil prices simply made the contract onerous for EOS. The fact that the merger was onerous for EOS, did not equate to ‘impossible’. Financial inconvenience could in no way allow EOS to rely on any force majeure claim. CONCLUSION: Dune will get specific performance from EOS or get the $5 break-up fee - NO TWO WAYS ABOUT IT.
NOTE AGAIN: This is not a legal opinion for anyone.
