TORONTO, June 5, 2012 /CNW/ - 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
SOURCE PetroMagdalena Energy Corp.
For further information:
Chief Financial Officer