Hurricane Hydrocarbons Ltd. - Initial comments on CAIH proposal

Apr 16, 2001, 01:00 ET from Hurricane Hydrocarbons Ltd.

    CALGARY, April 16 /PRNewswire/ - The Board of Directors of Hurricane
 Hydrocarbons Ltd ("Hurricane") will meet on Tuesday, April 17, 2001 to review
 the letter sent to Hurricane on Thursday, April 12, 2001 at 11:30 p.m. UK time
 by Central Asian Industrial Holdings NV ("CAIH") together with their press
 release of April 12, 2001 and prepare a formal response.
     In its letter, CAIH proposes that the Board and Management support a
 potential offer by CAIH to acquire 18,400,000 shares of Hurricane at C$10.25
 per share, which would result in CAIH owning a majority of the company's
 shares and taking over control of the company.
     At this time, CAIH has not made an offer to shareholders and shareholders
 have no specific action to take with respect to their shares. Furthermore, the
 company does not consider that an "Insider Bid" under Canadian Securities Laws
 has been issued.
     Bernard Isautier, Chairman of the Board, after consultation with all the
 independent directors and a number of shareholders including all large
 shareholders, wishes to make the following initial comments:
     "The CAIH proposal would breach the Shareholders Agreement between CAIH
 and Hurricane, which provides that CAIH's ownership cannot exceed 30% unless
 CAIH acquires shares through an offer for all shares of the company.
     An offer to shareholders, under the terms of the CAIH proposal, would
 also be a non-permitted bid under Hurricane's Shareholders Rights Plan and, if
 successful, would result in a massive dilution of CAIH's position.
     A permitted bid requires the bidder, among other conditions, to make an
 offer for all shares of the company.
     Both the Shareholders Agreement and the Shareholders Rights Plan were
 approved by Hurricane's shareholders and were essential conditions of the
 Transaction Agreement through which CAIH gained its ownership position in
 Hurricane on March 31, 2000.
     In our opinion, more than ever, it is in the best interests of
 Hurricane's shareholders to limit CAIH ownership to 30% or less and to
 maintain the requirement that any potential bidder must make an offer for all
 shares.
     This proposal, and the potential price of C$10.25 per share, which CAIH
 says it made based on public information, does not refer to ongoing
 conversations between CAIH and the Chairman of the Board of Hurricane on
 various potential initiatives seeking to correct the dramatic current under
 valuation of Hurricane shares on the stock market and create the conditions to
 realise the full operating upside potential of the company.
     In the most recent conversation held on March 15, 2001 in London, an
 understanding was reached with Nurzhan Subkhanberdin, majority owner and
 Chairman of CAIH, to study the feasibility of a large share buy back of up to
 US$200 million to be offered by Hurricane to all shareholders and to which
 CAIH would tender part of its shares to the extent required to maintain and
 limit its ownership to 30% after completion of the share buy back. Following
 the meeting, instructions were given to Senior Management of Hurricane to
 study the practical legal and financial aspects of such a share buy back.
     In any case, the potential offer price of C$10.25 per share is
 ridiculously low, an opinion shared unanimously by all contacted shareholders
 and those communicating spontaneously with the company. This price would
 translate to a value of approximately 3 times earnings per share for year
 2000.
     This price does not reflect the improved financial performance expected
 from anticipated transportation cost reductions. In that regard, CAIH is aware
 of new transportation routes being considered, which are expected to reduce
 transportation costs by about US$3 per barrel as early as May 2001 with
 further improvements in the following months.
     Furthermore, this price does not reflect the exceptional growth potential
 of Hurricane through anticipated production growth, reserve growth through
 further developments and exploration prospects, costs savings and acquisitions
 opportunities.
     In total, this proposal to take majority control of the company at a
 cheap price, outside of the terms of the agreements between CAIH and
 Hurricane, appears unprofessional in many respects and cannot be taken
 seriously."
     Hurricane's shares trade on the Toronto Stock Exchange under the symbol
 HHL.A and in the United States on Nasdaq under the symbol HHLF. The company's
 website can be accessed at www.hurricane-hhl.com.
 
     The Toronto Stock Exchange has neither approved nor disapproved the
 information contained herein.
 
 
 

SOURCE Hurricane Hydrocarbons Ltd.
    CALGARY, April 16 /PRNewswire/ - The Board of Directors of Hurricane
 Hydrocarbons Ltd ("Hurricane") will meet on Tuesday, April 17, 2001 to review
 the letter sent to Hurricane on Thursday, April 12, 2001 at 11:30 p.m. UK time
 by Central Asian Industrial Holdings NV ("CAIH") together with their press
 release of April 12, 2001 and prepare a formal response.
     In its letter, CAIH proposes that the Board and Management support a
 potential offer by CAIH to acquire 18,400,000 shares of Hurricane at C$10.25
 per share, which would result in CAIH owning a majority of the company's
 shares and taking over control of the company.
     At this time, CAIH has not made an offer to shareholders and shareholders
 have no specific action to take with respect to their shares. Furthermore, the
 company does not consider that an "Insider Bid" under Canadian Securities Laws
 has been issued.
     Bernard Isautier, Chairman of the Board, after consultation with all the
 independent directors and a number of shareholders including all large
 shareholders, wishes to make the following initial comments:
     "The CAIH proposal would breach the Shareholders Agreement between CAIH
 and Hurricane, which provides that CAIH's ownership cannot exceed 30% unless
 CAIH acquires shares through an offer for all shares of the company.
     An offer to shareholders, under the terms of the CAIH proposal, would
 also be a non-permitted bid under Hurricane's Shareholders Rights Plan and, if
 successful, would result in a massive dilution of CAIH's position.
     A permitted bid requires the bidder, among other conditions, to make an
 offer for all shares of the company.
     Both the Shareholders Agreement and the Shareholders Rights Plan were
 approved by Hurricane's shareholders and were essential conditions of the
 Transaction Agreement through which CAIH gained its ownership position in
 Hurricane on March 31, 2000.
     In our opinion, more than ever, it is in the best interests of
 Hurricane's shareholders to limit CAIH ownership to 30% or less and to
 maintain the requirement that any potential bidder must make an offer for all
 shares.
     This proposal, and the potential price of C$10.25 per share, which CAIH
 says it made based on public information, does not refer to ongoing
 conversations between CAIH and the Chairman of the Board of Hurricane on
 various potential initiatives seeking to correct the dramatic current under
 valuation of Hurricane shares on the stock market and create the conditions to
 realise the full operating upside potential of the company.
     In the most recent conversation held on March 15, 2001 in London, an
 understanding was reached with Nurzhan Subkhanberdin, majority owner and
 Chairman of CAIH, to study the feasibility of a large share buy back of up to
 US$200 million to be offered by Hurricane to all shareholders and to which
 CAIH would tender part of its shares to the extent required to maintain and
 limit its ownership to 30% after completion of the share buy back. Following
 the meeting, instructions were given to Senior Management of Hurricane to
 study the practical legal and financial aspects of such a share buy back.
     In any case, the potential offer price of C$10.25 per share is
 ridiculously low, an opinion shared unanimously by all contacted shareholders
 and those communicating spontaneously with the company. This price would
 translate to a value of approximately 3 times earnings per share for year
 2000.
     This price does not reflect the improved financial performance expected
 from anticipated transportation cost reductions. In that regard, CAIH is aware
 of new transportation routes being considered, which are expected to reduce
 transportation costs by about US$3 per barrel as early as May 2001 with
 further improvements in the following months.
     Furthermore, this price does not reflect the exceptional growth potential
 of Hurricane through anticipated production growth, reserve growth through
 further developments and exploration prospects, costs savings and acquisitions
 opportunities.
     In total, this proposal to take majority control of the company at a
 cheap price, outside of the terms of the agreements between CAIH and
 Hurricane, appears unprofessional in many respects and cannot be taken
 seriously."
     Hurricane's shares trade on the Toronto Stock Exchange under the symbol
 HHL.A and in the United States on Nasdaq under the symbol HHLF. The company's
 website can be accessed at www.hurricane-hhl.com.
 
     The Toronto Stock Exchange has neither approved nor disapproved the
 information contained herein.
 
 
 SOURCE Hurricane Hydrocarbons Ltd.