InterOil Founder Calls for Insider-Trading Probe of Directors

(Bloomberg) - InterOil Corp. founder and former Chief Executive Officer Phil Mulacek called on U.S. and Canadian regulators to investigate his claims that several directors may have engaged in insider trading during talks with Exxon Mobil Corp. that resulted in a takeover offer worth as much as $3.6 billion.

An outside spokesman for InterOil declined to immediately comment or make available the company’s directors for comment.

Mulacek said on a conference call he hosted Tuesday with investors and analysts that several InterOil directors amassed shares in the Papua New Guinea-focused natural gas explorer during the first quarter, when competing bids from Exxon and Oil Search Ltd. were underway. He pointed to public disclosures of purchases by directors.

“Thus, it appears these directors were in the market at the time they were in possession of material inside information,” Mulacek wrote in a slide presentation that accompanied the conference call. “We believe the Alberta or Ontario Securities Commission and the New York Stock Exchange should review the facts in this matter to determine whether potential securities law violations occurred.”

The Ontario Securities Commission and Alberta Securities Commission did not immediately respond to calls seeking comment. A spokeswoman for the New York Stock Exchange declined to comment.

Mulacek, who founded InterOil in the 1990s and led it until he stepped down in 2013, remains the company’s third-largest holder with a 5.35 percent stake. He conducted the conference call to highlight his objections to the offer Exxon announced last week and which has already been accepted by InterOil’s board as superior to an earlier Oil Search offer.

On Monday, Mulacek released a statement calling Exxon’s deal for the South Pacific gas driller “vastly inadequate,” urging Exxon to sweeten the offer. Exxon declined to comment on the criticism.

Exxon struck a deal last week to pay between $45 and $71.87 per share of InterOil, depending on how much gas InterOil’s Elk-Antelope field holds, in what will be the oil major’s biggest acquisition since a 2009-2013 shale buying spree. Exxon plans to process InterOil’s gas through its $19 billion liquefied natural gas complex on the Papuan coast for export to Asia and other markets.

Mulacek launched an effort to shrink the InterOil board in March and to install a slate of five directors that included himself. The effort was defeated by InterOil shareholders at their June 14 annual meeting.

- With assistance from Rachel Adams-Heard. To contact the reporter on this story: Joe Carroll in Chicago at jcarroll8@bloomberg.net To contact the editors responsible for this story: David Marino at dmarino4@bloomberg.net Anne Riley, Jim Efstathiou Jr.

Copyright 2016 Bloomberg News.

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