/NOT FOR DISTRIBUTION TO A US NEWSWIRE SERVICE
OR FOR DISSEMINATION IN THE UNITED
STATES./
VANCOUVER, Jan. 25, 2017 /CNW/ - PMI Resources Ltd. (the
"Company") (TSXV: PMI) is pleased to announce that it
has entered into a letter agreement dated January 11, 2017
(the "Letter Agreement") with PentaNova Energy Corp.
("PentaNova") relating to a reverse takeover transaction
pursuant to which the Company proposes to acquire all of the issued
and outstanding shares in the capital of PentaNova (each, a
"PentaNova Share") in exchange for the issuance of common
shares in the capital of the Company (the "Transaction").
The completion of the Transaction would result in a reverse
takeover of the Company under the policies of the TSX Venture
Exchange (the "Exchange").
The parties are finalizing a definitive agreement (the
"Definitive Agreement") setting forth the detailed terms of
the Transaction and containing the terms and conditions set out in
the Letter Agreement and such other terms and conditions as are
customary for transactions of the nature and magnitude contemplated
in the Letter Agreement.
Trading in the common shares of the Company has been halted in
accordance with the policies of the Exchange and will remain halted
until such time as all required documentation has been filed with
and accepted by the Exchange and permission to resume trading has
been obtained from the Exchange.
About PentaNova
PentaNova, a private corporation incorporated under the laws of
the British Virgin Islands, is an
exploration and development company focused on oil and gas plays in
South America. PentaNova has
entered into: (i) a binding agreement of purchase and sale to
acquire an 80% working interest in the Sinu-9 ("SN9") Block,
onshore Colombia (the "SN9
Acquisition"); (ii) a binding letter of intent to acquire
an 80% working interest in the Maria Conchita Block, onshore
Colombia (the "Maria Conchita
Acquisition"); and (iii) a binding letter of intent to
acquire a 60% working interest in the Tiburon Block, onshore
Colombia (the "Tiburon
Acquisition"), together with the SN9 Acquisition,
Maria Conchita Acquisition and Tiburon Acquisition, (the
"Acquisitions"). The only holder of more than 10% of the
issued and outstanding shares in the capital of PentaNova is
PentaNova Capital Corp., a company in which Serafino Iacono is a director and
shareholder.
Maria Conchita Block
The Maria Conchita Block is located in the Guajira Basin in
Colombia's Caribbean coast and holds two development
ready field discoveries. 3-D seismic has been done over both
discoveries and the EIA permit has been granted. The Maria Conchita
Block neighbours the Chuchupa block to its north, one of
Colombia's largest fields, which
accounts for 40% of Colombia's
daily natural gas output and has been in production for 35
years.
SN-9 Block
The SN-9 Block is located in the Lower Magdalena Valley
75 km from Colombia's
Caribbean coast and holds
"in-situ" gas accumulations and an upside of additional oil
structures. The SN-9 Block has 2-D seismic and well data.
Tiburon Block
The Tiburon Block is located in the Upper Guajira on
Colombia's Caribbean coast and holds source rock with
kerogens Type III, gas prone for Tertiary sequence and Type II, and
oil prone for Cretaceous sequence. The Tiburon Block belongs to the
same basin as the Chuchupa Block to its south.
Proposed Transaction
It is contemplated that pursuant to the Transaction, the Company
will acquire all of the then issued and outstanding securities of
PentaNova on the basis of an one to one exchange ratio such that
immediately following the completion of the Transaction:
(i) PentaNova's current shareholders will hold approximately
44% of the common shares of the Company (the "Resulting
Issuer"); (ii) the subscribers under the Private
Placements (as hereinafter defined) will hold approximately 50% of
the Resulting Issuer common shares; and (iii) the current
shareholders of the Company will hold approximately 6% of the
Resulting Issuer common shares. Fiore Management & Advisory
Corp. will be issued 1.6 million shares of the Resulting Issuer at
closing of the Transaction pursuant to its agreement with the
Company.
Upon completion of the Transaction, the Resulting Issuer will
continue to carry on the business of oil and gas property
acquisition, exploration and evaluation and it is proposed that the
Resulting Issuer will change its name to "PentaNova Energy Corp."
at its next annual general meeting of shareholders.
The Transaction constitutes an Arm's Length Transaction under
the policies of the Exchange and therefore the Company is not
required to seek shareholder approval.
Proposed Private Placement
PentaNova proposes to complete a private placement of up to
C$45 million of subscription receipts
(the "Subscription Receipts") at a price of C$0.50 per Subscription Receipt (the
"Offering"), of which up to C$16.5
million will be completed by way of a brokered private
placement (the "Brokered Private Placement") and the balance
will be completed by way of a non-brokered private placement (the
"Non-Brokered Private Placement").
PentaNova has engaged GMP Securities L.P. ("GMP") and
Eventus Capital Corp. (together with GMP, collectively, the
"Agents") to act as co-lead agents in connection with the
Brokered Private Placement on a fully-marketed and "best efforts"
private placement basis. The gross proceeds of the Brokered Private
Placement and the gross proceeds of the Non-Brokered Private
Placement are to be deposited in escrow at closing pending
satisfaction of applicable escrow release conditions (the
"Escrow Release Conditions").
Each Subscription Receipt issued under the Brokered Private
Placement and Non-Brokered Private Placement will be automatically
converted for no additional consideration, and without any further
action by the holder thereof, into one PentaNova Share upon the
satisfaction of the Escrow Release Conditions as follows:
(i) all conditions to the completion of the Maria Conchita
Acquisition shall have been satisfied, and GMP shall have received
written confirmation from PentaNova to such effect; (ii) any
required shareholder and regulatory approvals in respect of the
Maria Conchita Acquisition shall have been obtained; and
(iii) a release notice shall have been delivered by the
Corporation and GMP to the subscription receipt agent confirming
that items (i) and (ii) above have been satisfied.
The Brokered Private Placement is anticipated to close on or
about January 31, 2017, or such later date as the Company and
GMP may agree upon, and the initial closing of the Non-Brokered
Private Placement is also expected to take place on or about
January 31, 2017, or such later date as is established by the
Company. If the Brokered Escrow Release Conditions are not
satisfied prior to March 31, 2017,
the aggregate subscription price for the Subscription Receipts
issued under the Private Placement will be returned to the holders
thereof on a pro rata basis.
For the Agents' services in connection with the Brokered Private
Placement, PentaNova has agreed to pay to the Agents a cash
commission equal to 6.0% of the gross proceeds of the Brokered
Private Placement and to grant to the Agents broker warrants (the
"Broker Warrants") entitling the Agents to subscribe for
that number of PentaNova Shares equal to 6.0% of the total number
of Subscription Receipts sold under the Brokered Private Placement
at $0.50 per share for a period of
two years from the closing of the Brokered Private Placement.
Pursuant to the Transaction, each Broker Warrant will be exchanged
for one broker warrant of the Resulting Issuer, which will entitle
the holder thereof to subscribe for that number of Resulting Issuer
common shares equal to the number of Resulting Issuer common shares
issued in exchange for each PentaNova Share under the Transaction
on the same terms.
To enable certain investors to invest through registered
accounts, a portion of the Non-Brokered Private
Placement will be placed directly into the Company through
subscription receipts of the Company and the funds would be
released to the Company upon closing of the RTO and shall be
subject to a four month hold.
The net proceeds from the Offering will be used to complete the
Acquisitions, conduct seismic, drilling and infrastructure
development, and for general corporate purposes.
Conditions Precedent to Completing the Transaction
The parties' obligations to complete the Transaction are subject
to the satisfaction of a number of conditions, including but not
limited to, completion of the Offering, Exchange approval,
completion of the Maria Conchita Acquisition, entering into by
PentaNova of definitive agreements in respect of each of the SN9
Acquisition and the Tiburon Acquisition and other conditions
customary for a transaction of this type.
Proposed Directors and Senior Officers of the Resulting
Issuer
It is anticipated that the initial board of directors of the
Resulting Issuer will be comprised of the following four directors:
Messrs. Jaime Perez Branger,
Serafino Iacono, Hernan Martinez and Francisco Solé. The
Chief Executive Officer of the Resulting Issuer will be
Luciano Biondi, the President will
be Gregg Vernon and the Chief
Financial Officer will be Chris
Reid.
Completion of the Transaction is subject to a number of
conditions, including but not limited to, acceptance by the
Exchange and if applicable pursuant to the Exchange requirements,
majority of the minority shareholder approval. Where applicable,
the Transaction cannot close until the required shareholder
approval is obtained. There can be no assurance that the
Transaction will be completed as proposed or at all. Completion of
the Acquisitions is also subject to a number of conditions and
there is no assurance that any of the Acquisitions will
close.
Investors are cautioned that, except as disclosed in the
management information circular or filing statement to be prepared
in connection with the Transaction, any information released or
received with respect to the Transaction may not be accurate or
complete and should not be relied upon. Trading in the securities
of the Company should be considered highly speculative.
The Exchange has in no way passed upon the merits of the
Transaction and has neither approved nor disapproved the contents
of this news release. Neither the Exchange nor its Regulation
Services Provider (as that term is defined in policies of the
Exchange) accepts responsibility for the adequacy or accuracy of
this news release.
Forward-Looking Information
Except for the statements of historical fact, this news
release contains "forward-looking information" within the meaning
of the applicable Canadian securities legislation that is based on
expectations, estimates and projections as at the date of this news
release. The information in this news release about the completion
of the Transaction described herein, the anticipated timing of
closing of the Brokered Private Placement and Non-Brokered Private
Placement, and other forward-looking information includes but is
not limited to information concerning: the intentions, plans and
future actions of the parties to the transactions described herein,
the terms of the Transaction and the Offering described
herein.
Factors that could cause actual results to differ materially
from those described in such forward-looking information include,
but are not limited to, risks related to the Company's or
PentaNova's inability to satisfy a condition precedent to the
completion of the Transaction (including obtaining necessary
regulatory approvals and completion of the Offering), other risks
related to the completion of the Transaction and risks related to
the inability of either of the Company or PentaNova to perform its
respective obligations under the Transaction.
The forward-looking information in this news release reflects
the current expectations, assumptions and/or beliefs of the Company
based on information currently available to the Company. In
connection with the forward-looking information contained in this
news release, the Company has made assumptions about: PentaNova's
ability to complete the Transaction and to perform its obligations
thereunder. The Company has also assumed that no significant events
occur outside of the Company's normal course of business. Although
the Company believes that the assumptions inherent in the
forward-looking information are reasonable, forward-looking
information is not a guarantee of future performance and
accordingly undue reliance should not be put on such information
due to the inherent uncertainty therein.
Any forward-looking information speaks only as of the date on
which it is made and, except as may be required by applicable
securities laws, the Company disclaims any intent or obligation to
update any forward-looking information, whether as a result of new
information, future events or results or otherwise.
SOURCE PMI Resources Ltd.