TORONTO,
June 5, 2012 /PRNewswire/ -
PetroMagdalena Energy Corp. (TSX-V:PMD) announced today that it has
entered into a definitive agreement (the "Arrangement Agreement")
with Pacific Rubiales Energy Corp. (TSX:PRE; BVC: PREC; BOVESPA:
PREB), pursuant to which Pacific Rubiales has offered to acquire
all of the issued and outstanding common shares of PetroMagdalena
(the "Shares") by way of a Plan of Arrangement under the
British Columbia Business
Corporations Act (the "Arrangement").
Under the Arrangement, shareholders of
PetroMagdalena will receive C$1.60 in
cash for each outstanding Share, representing a premium of
approximately 38% on the 20 day volume weighted average price of
PetroMagdalena's common shares on the TSX-V as of June 4, 2012. In addition, holders of all of the
outstanding PetroMagdalena warrants (TSX-V: PMD.WT) (the
"Warrants") will receive C$0.25 in
cash for each unexercised Warrant held at closing. The Warrants had
a closing trading price on the TSX-V of C$0.215 on June 4,
2012.
PetroMagdalena's Board of Directors, after
consultation with GMP Securities L.P. ("GMP") who acted as
PetroMagdalena's exclusive financial advisor and Blake, Cassels
& Graydon LLP, PetroMagdalena's legal advisors, and based on
the recommendation of an independent committee of PetroMagdalena's
Board of Directors formed specifically to consider the offer, has
unanimously determined that the Arrangement is fair to
PetroMagdalena's shareholders and warrantholders (collectively,
"Securityholders") and recommends that PetroMagdalena's
Securityholders vote in favour of the Arrangement. Both
Miguel de la Campa and Serafino Iacono, directors of the Company who
are also directors of Pacific Rubiales, did not participate in any
discussions or negotiations regarding the approval of the proposed
acquisition and abstained from the Boards' deliberations.
Luciano Biondi,
Chief Executive Officer of PetroMagdalena, stated "We are very
pleased to receive this offer and provide shareholders with an
opportunity to realize value on their investment and provide
liquidity in a volatile market."
Arrangement Agreement Summary
The Arrangement Agreement contains customary
non-solicitation provisions, subject to PetroMagdalena's right to
consider and accept superior proposals. In the event of a superior
proposal, Pacific Rubiales will have a five business day right to
match the superior proposal. If the Arrangement is not completed as
a result of a superior proposal or for other certain specified
circumstances, a termination fee equal to C$10,000,000 will be paid by PetroMagdalena to
Pacific Rubiales. If the Arrangement is not completed, due to
certain circumstances, including a failure to receive necessary
regulatory approvals, a reverse termination fee of C$10,000,000 will be paid to PetroMagdalena by
Pacific Rubiales.
The terms and conditions of the Arrangement will
be summarized in PetroMagdalena's management information circular
which will be filed and mailed to PetroMagdalena's Securityholders
in late June 2012. Securityholders
will be asked to approve the Arrangement at a special meeting to be
held in July 2012 (the "Special
Meeting").
The Arrangement will be subject, among other
things, to the approval of at least 66 2/3% of the votes cast at
the Special Meeting of PetroMagdalena's Securityholders to be
called to consider the Arrangement. In addition, the Arrangement
will be subject to certain customary 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 in the third quarter of 2012.
GMP has provided an opinion that, based upon and
subject to the assumptions, limitations, and qualifications in such
opinion, the consideration to be received by PetroMagdalena's
shareholders and warrantholders is fair, from a financial point of
view, to PetroMagdalena shareholders and warrantholders,
respectively. A copy of the fairness opinion will be included in
the PetroMagdalena meeting materials in respect of the Special
Meeting.
PetroMagdalena is a Canadian-based oil and
gas exploration and production company, with working interests
in 19 properties in five basins in Colombia. Further information can be obtained
by visiting our website at
www.petromagdalena.com.
All monetary amounts in U.S. dollars unless
otherwise stated. Certain information contained in this news
release, including any information relating to the proposed
transaction (the "Transaction") and or future financial or
operating performance of PetroMagdalena may be deemed
"forward-looking". These statements relate to future events or
future performance and reflect PetroMagdalena's expectations
regarding the Transaction, and the future growth, results of
operations, business prospects and opportunities of PetroMagdalena,
Pacific Rubiales and the combined company. These forward-looking
statements also reflect PetroMagdalena's current internal
projections, expectations or beliefs and are based on information
currently available to each party, respectively. These
forward-looking statements are subject to a variety of risks and
uncertainties that are identified and disclosed in the Annual
Information Form of PetroMagdalena for the year ended December 31, 2011. In some cases forward-looking
information can be identified by terminology such as "may", "will",
"should", "expect", "intend", "plan", "anticipate", "believe",
"estimate", "projects", "potential", "scheduled", "forecast",
"budget" or the negative of those terms or other comparable
terminology. Assumptions upon which such forward looking
information regarding completion of the Transaction is based
include that each party will be able to satisfy the conditions to
the Transaction, that the required approvals will be obtained from
the Securityholders of PetroMagdalena, that all third party
regulatory and governmental approvals to the Transaction will be
obtained and all other conditions to completion of the Transaction
will be satisfied or waived. Although PetroMagdalena believes that
the forward-looking information contained in this news release is
based on reasonable assumptions, readers cannot be assured that
actual results will be consistent with such statements.
Accordingly, readers are cautioned against placing undue reliance
on forward-looking information. PetroMagdalena expressly disclaims
any intention or obligation to update or revise any forward-looking
information, whether as a result of new information, events or
otherwise, except in accordance with applicable securities
laws.
Neither TSX Venture Exchange nor its
Regulation Services Provider (as that term is defined in the
policies of the TSX Venture Exchange) accepts responsibility for
the adequacy or accuracy of this news release.
SOURCE PetroMagdalena Energy Corp.