TORONTO (miningweekly.com) – Suncor Energy has stepped-up its criticism of takeover target Canadian Oil Sands’ (COS’s) management, accusing top brass of having “almost no skin in the game”, yet advising shareholders to reject the hostile takeover offer.

“COS board members and management have almost no skin in the game, yet they want you to take a huge risk by rejecting our offer. Despite their overheated rhetoric and claims that COS would be a strong independent company, all COS board members combined (including CEO Ryan Kubik) own less than 0.1% of the company's shares,” Suncor CEO Steve Williams said in a renewed appeal to COS shareholders to accept the takeover offer before the extended deadline of January 8, at 18:00 Mountain Time, had passed.

“If they believed their own rhetoric, wouldn't they own more than that?” Williams argued.

Under terms of the offer valued at about C$4.25-billion, each COS shareholder would receive one-quarter of a Suncor share, for each share tendered.

COS held a 36.74% stake in one of the largest oil sands operations north of Fort McMurray and Suncor owned 12%.

Suncor had earlier this year, when Western Texas Intermediate oil was trading above $50/bl, unsuccessfully approached the COS board twice with friendly offers. Since April 9, when the second offer with an implied value of C$11.84 a share was lodged, oil had dropped about 26%, to close on Tuesday at $37.17/bl.

COS had defended its position, saying that the Suncor bid was inadequate, opportunistic, exploitive and failed to recognise that COS was in a strong position to withstand low oil prices and, with superior leverage to prices, with the ability to emerge with even greater value when they recovered.

“COS simply can't deliver value in the current 'lower for even longer' oil price environment,” Williams charged. Suncor said that oil price futures suggested the market will not see oil prices at $55/bl until at least 2020.

"Based on the current outlook for oil prices, we expect COS will be bleeding cash again next year, even if it could achieve its most optimistic forecasts,” Williams stated, noting that COS had demonstrated negative free cash flow in recent quarters, and had a credit profile one notch above ‘junk’ status, with an overreliance on a single asset, Syncrude, that continued to underperform.

COS had revealed in recent court documents that 25 parties other than Suncor had shown degree of interest in a deal, with four “highly credible” parties having signed confidentiality agreements. However, Williams said that there was no evidence a better offer will emerge for COS.

In an emailed statement to Mining Weekly Online Suncor CEO Kubic said that Suncor was panicking "as it is rapidly concluding what we already know: Shareholders are not interested in its offer".

"The facts are it is substantially undervalued and opportunistic and is well below what Suncor has demonstrated it is willing to pay for inferior assets with less value. If Suncor is unwilling to recognise the significant value of our upgrader, 46 year reserves and 98% correlation to oil price, shareholders are telling us they see greater value in independence. No amount of fear mongering will change that,” Kubik said.