Pacific Rubiales announces cdn$1.60 per share all-cash acquisition of petromagdalena energy

abarrelfullabarrelfull wrote on 06 Jun 2012 11:38
Tags: colombia deals pacific-rubiales petromagdalena upstream

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Pacific Rubiales Energy Corp. (TSX: PRE; BVC: PREC; BOVESPA: PREB) today announced that it has entered into a definitive agreement (the "Arrangement Agreement") with PetroMagdalena Energy Corp. (TSX-V: PMD) pursuant to which the Company has agreed to acquire all of the issued and outstanding common shares in the capital of PetroMagdalena by way of a Plan of
Arrangement under the British Columbia Business Corporations Act (the "Arrangement").

PetroMagdalena, which is listed on the TSX Venture Exchange with a market capitalization of approximately CDN$187 million, is a Canadian-based oil and gas exploration and production company with working interests in 19 properties in five basins in Colombia.Under the Arrangement, shareholders of PetroMagdalena will, following closing of the transaction, receive CDN$1.60 in cash for each common share of PetroMagdalena held. In addition, holders of
PetroMagdalena's share purchase warrants (TSX-V: PMD.WT) will, following closing, receive
CDN$0.25 in cash for each unexercised warrant held. The Company intends to finance the acquisition cost (approximately CDN$253 million) using existing cash on hand.

Ronald Pantin, Chief Executive Officer of Pacific Rubiales, said, "We are very pleased to strike this deal with PetroMagdalena, which is already a key provider of light oil as diluent for our crude. We believe this acquisition is both very complementary and accretive to our existing business."

Each company's board of directors unanimously approved the terms of the proposed transaction. Both Miguel de la Campa and Serafino Iacono, directors of the Company who are also directors of PetroMagdalena, did not participate in any discussions or negotiations regarding the approval of the proposed acquisition and abstained from the boards' deliberations.

Arrangement Agreement

The Arrangement will be subject to, among other things, the approval of at least 66 2/3% of the votes cast at a special meeting (the "Meeting") of PetroMagdalena shareholders and warrantholders (voting together) to be called to consider the Arrangement. In addition, the Arrangement will be subject to certain conditions, including court approval, relevant regulatory approvals and the absence of any material adverse change with respect to PetroMagdalena. The transaction is expected to close during the third quarter of 2012.

The Arrangement Agreement contains customary non-solicitation provisions, subject to PetroMagdalena's right to consider and accept superior proposals. Pacific Rubiales has been granted the right to match competing proposals. The Arrangement Agreement contains, among other things, a termination fee of CDN$10 million payable by either party in certain specified circumstances.

Further information regarding the transaction will be contained in an information circular that PetroMagdalena will prepare and mail to its securityholders in connection with the Meeting.

PetroMagdalena securityholders are urged to read the information circular once it becomes available, as it will contain important information concerning the proposed transaction.

The Company's financial advisor is RBC Capital Markets and the Company is being advised on legal matters by Norton Rose Canada LLP.

About Pacific Rubiales Energy Corp.:
Pacific Rubiales, a Canadian-based company and producer of natural gas and heavy crude oil, owns 100 percent of Meta Petroleum Corp., a Colombian oil operator which operates the Rubiales, Piriri and Quifa oil fields in the Llanos Basin in association with Ecopetrol, S.A., the Colombian national oil company, and 100 percent of Pacific Stratus Energy Corp. which operates the La Creciente natural gas field. The Company is focused on identifying opportunities primarily within the eastern Llanos Basin of Colombia as well as in other areas in Colombia and northern Peru. Pacific Rubiales has working interests in 43 blocks in Colombia, Peru and Guatemala.

The Company's common shares trade on the Toronto Stock Exchange and La Bolsa de Valores de Colombia and as Brazilian Depositary Receipts on Brazil's Bolsa de Valores Mercadorias e Futuros under the ticker symbols PRE, PREC, and PREB, respectively.

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