Our Plan: Solve Problems and Maximize Shareholder Value
Unlike the current Eagle board, we believe the best plan for Eagle shareholders is to solve its two biggest problems: unsustainable overhead costs and too much debt. In our opinion, Eagle’s assets are high quality and are currently priced in the market at a significant discount to their reserves value due to Eagle’s cost structure. Our plan will reduce overhead costs and will reduce debt, which will unlock value.
- Replace the Board of Directors - A change of direction is required. We have nominated four highly-qualified and talented individuals for election.
- Reduce Overhead - Immediate action will be taken to reduce general and administrative expenses, including staffing and salary reductions.
- Sell Assets - The most logical and lowest-risk source of capital for Eagle is to sell assets.
- Reduce Debt - Proceeds from asset sales will be used to reduce debt. By reducing debt, we will lower the risk profile of the company, and also decrease interest payment costs.
- Maximize Value from Remaining Assets - Once Eagle is sustainable, options for the remaining assets will be evaluated. Maximum value will be obtained when the Company is not distressed
Proposed Replacement Board Slate - Committed to Maximizing Shareholder Value
- Our proposed board slate is comprised of four independent and talented individuals with varied and complementary skill sets.
- They have significant public company experience at both the management and board levels. Efficiency of operations has been a focus throughout their respective careers.
- They do not take the responsibility of stewarding a public company lightly. They will be working for shareholders.
About Daniel Gundersen, P.Eng., CFA
Mr. Gundersen has 20 years of oil & gas experience. Mr. Gundersen knows Eagle and its assets very well. In late 2015, he negotiated the sale of Maple Leaf Royalties Corp. (“Maple Leaf”) to Eagle. He was the CEO of Maple Leaf at the time. In that transaction, Maple Leaf shareholders received 7.1 million common shares of Eagle representing 16.7% of the outstanding shares. In October 2016, Mr. Gundersen submitted an offer to Eagle to purchase certain Eagle assets. The offer was at a level that was a significant premium to Eagle’s trading metrics. Eagle did not engage in discussions or offer any feedback other than to decline the offer. Mr. Gundersen remains of the view that Eagle’s assets are trading at a discount to intrinsic value because of the cost structure of the Company, and that a change of the board of directors is required to unlock that value.
About Kingsway Financial Services Inc.
Kingsway is a publicly traded merchant bank with offices in Toronto and Itasca, Illinois. Market capitalization is approximately $196.6 million. Its shares are listed on the TSX and NYSE under the symbol KFS. Larry Swets is the CEO of Kingsway and owns approximately 9% of the company. He is a Chartered Financial Analyst (CFA) charterholder. Kingsway is a value investor. In early 2016, it made its first oil investment to take advantage of the low oil price. In late 2016, Mr. Swets was introduced to Mr. Gundersen and his opinions regarding the potential of Eagle. Kingsway later made its initial investment in Eagle and could increase that investment if it had confidence in the direction of the Company.