Highlights of the Offer:
- All-cash offer of $0.60 per common share for all of the shares of Suroco, providing significant, immediate and certain value and liquidity to Suroco shareholders upon closing.
- Premium of 86% to the trading price of Suroco shares prior to announcement of the Petroamerica arrangement based on the 20-day VWAP.
- Premium of 11% to Petroamerica's all-share offer based on the VWAP since announcement of the Petroamerica arrangement.
- Not subject to financing.
- Conditional upon the Petroamerica arrangement NOT proceeding or such transaction otherwise terminating.
Suroco shareholders must take immediate action by voting AGAINST the Petroamerica Arrangement on the BLUE form of proxy before noon (Calgary time) on June 20, 2014.
CALGARY, June 9, 2014 /CNW/ - Vetra Acquisition Ltd. ("VETRA"), a wholly-owned subsidiary of VETRA Holding S.a.r.l. ("VETRA Holding"), today announced that it has filed an offer, take-over bid circular and proxy solicitation supplement in connection with an all-cash offer to purchase all of the issued and outstanding common shares of Suroco Energy Inc. ("Suroco") at a price of $0.60 per common share (the "Offer").
To accept the Offer, Suroco shareholders must vote AGAINST the proposed arrangement (the "Arrangement") with Petroamerica Oil Corp. ("Petroamerica"). Suroco shareholders are urged to vote AGAINST the Arrangement on the BLUE form of proxy immediately.
VETRA's Offer is compelling and superior to the Arrangement for the following reasons, a more detailed list of which can be found in the offer, take-over bid circular and proxy circular supplement filed on Suroco's company profile on SEDAR at www.sedar.com:
Offer Provides Superior Value
- Significant Premium – The Offer to purchase all of the issued and outstanding shares of Suroco for $0.60 per common share in cash represents a premium of 86% to the trading price of Suroco shares prior to announcement of the Arrangement based on the 20-day VWAP, and a premium of 11% to Petroamerica's all-share offer based on the VWAP since announcement of the Arrangement.
- Cash Consideration and Certainty of Value – The Offer provides Suroco shareholders with immediate cash and certainty of value, allowing shareholders to de-risk their current investment and realize value for Suroco's assets in excess of the value currently being ascribed to those assets by the stock market and at a price higher than the Suroco shares have traded at any time since September 2011. Under the Arrangement, Suroco shareholders would receive shares of Petroamerica, which are highly illiquid and price is highly volatile.
Significant Risks with the Proposed Petroamerica Arrangement
- The Petroamerica Arrangement Exposes Suroco Shareholders to Significant Ongoing Risks – The Arrangement would result in ongoing risks to Suroco shareholders, including owning shares in a company with: i) limited control over investment activities; ii) lack of value creation from exploration and business development activities; iii) significant financial commitments; iv) minimal synergies; v) production declines of a principal asset; vi) forecasted declines in cash flow; vii) lack of a sustainable reserve base; and viii) lack of board representation for Suroco shareholders.
- Petroamerica and Suroco Lack Financial Capacity – Petroamerica and Suroco, on a pro forma basis, do not have the required funding to adequately develop their existing asset base or execute a significant exploration program.
- Suroco's Board of Directors has Presented Suroco Shareholders with a Single Alternative Without Pursuing Competing Proposals – Suroco's Board of Directors refused to engage with VETRA Holdings on its proposal to acquire Suroco for $0.55 per share in cash, despite representing a premium of 5.8% to the Arrangement at the time and a 70% premium to the trading price of Suroco shares prior to announcement of the Arrangement based on the 20-day VWAP and despite the preference of shareholders for certainty of a cash offer over a highly speculative stock.
- Suroco's Board of Directors Irresponsibly Disregards the Rights of the Minority – Not only has Suroco refused to pursue value enhancing bids for the company, it has taken steps to dilute the voting rights the minority in connection with the Arrangement. Suroco has applied to the TSXV and securities authorities for exemptive relief to allow Alentar Holdings Inc., a shareholder of Suroco holding more than 10% of Suroco's shares, to vote with the minority. The securities legislation from which Suroco seeks relief has been adopted to protect the rights of minority shareholders. Alentar has entered into a number of transactions concurrently with the Arrangement and will benefit if the Arrangement proceeds. Alentar's interest is clearly not aligned with the interest of the minority.
Background to the Offer
VETRA Holding, through its subsidiaries, holds significant or majority interests in three out of four of Suroco's oil and gas exploration and production properties in Colombia and is the operator of the Suroriente Block, which contains all of Suroco's reserves and is its only producing asset. Since late 2013, VETRA Holding approached Suroco's board and management to engage in a transaction with Suroco.
VETRA Holding was unaware that Suroco was in discussions with Petroamerica, but after learning of the Arrangement, it believed it could provide greater value to Suroco shareholders. Therefore, on May 20, 2014, VETRA Holding delivered a formal letter to the board of directors of Suroco setting forth an all cash offer to purchase all of the outstanding Suroco Shares for $0.55 per share. The letter outlined the benefits to Suroco shareholders of such a transaction, including that it constituted a superior proposal for purposes of the arrangement agreement. The letter confirmed that VETRA Holding was prepared to move forward expeditiously to close the transaction as soon as practicable with no financing condition and enter into a definitive agreement on terms substantially similar to the terms set forth in the arrangement agreement. The proposal sent to Suroco was sufficiently detailed and actionable; however, on May 23, 2014, Suroco declined the proposal.
Considering the superior nature of VETRA Holding's proposal, which was for all cash consideration that represented a premium to then-current trading price of the Suroco shares and a 5.8% premium to the consideration offered from Petroamerica, VETRA decided to bring its current proposal directly to shareholders.
Further Details on the Offer and Proxy Solicitation
The Offer constitutes an offer to purchase all of Suroco's issued and outstanding shares for $0.60 in cash per common share. The Offer is not subject to a financing condition. VETRA and VETRA Holding have sufficient cash on hand and new equity commitments to fund the entire consideration payable for the shares of Suroco.
The Offer period will formally commence on June 11, 2014 by way of a newspaper advertisement. A formal offer, take-over bid circular and proxy circular supplement has been filed and will be available on Suroco's company profile on SEDAR at www.sedar.com and will be mailed to Suroco shareholders as soon as possible. The Offer is subject to usual and customary conditions, including, among other things, that there shall have been validly deposited under the Offer and not withdrawn, at or prior to the expiry of the Offer, such number of common shares of Suroco that, together with any shares owned by VETRA and its affiliates, if any, represents not less than 50.1% of Suroco's common shares (calculated on a fully diluted basis) and Suroco shareholders shall not have approved the Arrangement at Suroco's shareholders meeting or the Arrangement shall have otherwise been terminated.
Suroco has announced a shareholders meeting to be held on June 25, 2014 for purposes of considering the proposed Arrangement. If the Arrangement is approved and the Arrangement proceeds, Suroco shareholders will not have the opportunity to accept the Offer. The solicitation of proxies to vote AGAINST the Arrangement is being made by VETRA and not by or on behalf of management or Suroco.
TIME IS OF THE ESSENCE. VOTE YOUR BLUE PROXY AGAINST THE PETROAMERICA ARRANGEMENT BEFORE JUNE 20, 2014
Proxies may be solicited by VETRA by mail, telephone, fax or other electronic means and in person, as well as by newspaper or other media advertising, the cost of which will be borne by VETRA. VETRA has engaged Kingsdale Shareholder Services as the information agent and depositary to, among other things, solicit proxies and receive deposits of certificates representing Suroco shares at no cost to Suroco shareholders. The information agent and depositary will receive reasonable and customary compensation from VETRA for its services in connection with the Offer and solicitation of proxies, will be reimbursed for certain out-of-pocket expenses and will be indemnified against certain liabilities. The proxy solicitation fees charged will be approximately $50,000 in addition to any out of pocket expenses and per call fees, and all such fees will be borne by VETRA.
Send in your Suroco shares with a completed YELLOW Letter of Transmittal that will be mailed to you to Kingsdale Shareholder Services, the information agent and depositary or call your broker now to deposit. If you have already submitted a management form of proxy in connection with the Arrangement, revoke that proxy by completing and submitting the BLUE proxy that you will receive in the mail to the information agent and depositary by 12:00 Noon (Calgary time) on June 20, 2014.
A registered holder of common shares of Suroco that gives a proxy may revoke it: (a) by completing and signing a valid proxy bearing a later date and returning it in accordance with the instructions contained in the BLUE proxy to be provided by VETRA, or as otherwise provided in the offer, take-over bid circular and proxy circular supplement, once made available to shareholders; (b) by depositing an instrument in writing executed by the shareholder or by the shareholder's attorney authorized in writing, as the case may be: (i) at the registered office of Suroco at any time up to and including the last business day preceding the day Suroco's shareholders meeting or any adjournment or postponement of the meeting is to be held, or (ii) with the chairman of the meeting prior to its commencement on the day of the meeting or any adjournment or postponement of the meeting; or (c) in any other manner permitted by law.
A non-registered holder of common shares of Suroco will be entitled to revoke a form of proxy or voting instruction form given to an intermediary at any time by written notice to the intermediary in accordance with the instructions given to the non-registered holder by its intermediary. It should be noted that revocation of proxies or voting instructions by a non-registered holder can take several days or even longer to complete and, accordingly, any such revocation should be completed well in advance of the deadline prescribed in the form of proxy or voting instruction form to ensure it is given effect in respect of the meeting.
Further details concerning the Offer will be included in the advertisement, formal offer, take-over bid circular and proxy circular supplement. The Offer will be open for at least 35 days following its commencement. VETRA expects to mail the formal offer, take-over bid circular and proxy circular supplement and related documents in the coming days.
Proxy Voting Instructions
Regardless of how many Suroco shares you own, it is important you vote your BLUE proxy. Even if you have already voted your shares in favour of the arrangement using the Suroco form of proxy, you can still change your vote by voting the BLUE proxy, as only the latest dated proxy will be counted at the meeting.
We encourage shareholders to vote the control number found on your BLUE proxy AGAINST the Petroamerica Arrangement, no later than 12:00 p.m. (Calgary time) on Friday June 20, 2014.
For more information or assistance in voting your BLUE proxy, please contact Kingsdale Shareholder Services at 1-855-682-8087 (toll-free), 416-867-2272 (outside North America), or by email at [email protected]
FirstEnergy Capital Corp. is acting as financial advisor to VETRA in connection with the proposed take-over offer, Goodmans LLP as VETRA's Canadian legal counsel and Debevoise & Plimpton LLP as VETRA's U.S. counsel.
The offeror is Vetra Acquisition Ltd., a wholly-owned subsidiary of VETRA Holding S.a.r.l., a holding company whose primary operating subsidiary is Vetra Exploración y Producción Colombia, S.A.S., a multinational company engaged in the business of exploration, extraction and production of hydrocarbons, primarily in Colombia and Peru. Neither VETRA nor any of its and its associates or affiliates own any shares of Suroco.
Suroco is focused on the identification and evaluation of opportunities for the acquisition of interests in oil and gas properties, corporations, assets or businesses, primarily in Colombia, and once identified and evaluated, negotiating acquisitions thereof or participation therein. Suroco is a public corporation that is listed on the TSXV under the symbol "SRN" and its public filings are available on www.sedar.com.
Suroco's registered office is at Suite 1600, 421 – 7th Avenue, S.W., Calgary, Alberta, T2P 4K9 and its principal business office is at Suite 810, 940 – 6th Avenue S.W., Calgary, Alberta, T2P 3T1.
This press release contains 'forward looking statements" and "forward looking information" (collectively, "forward looking information") within the meaning of applicable Canadian securities legislation. All information contained in this press release, other than statements of current and historical fact, is forward looking information. Often, but not always, forward looking information can be identified by the use of words such as "plans", "expects", "budget", "guidance", "scheduled", "estimates", "forecasts", "strategy", "target", "intends", "objective", "goal", "understands", "anticipates" and "believes" (and variations of these or similar words) and statements that certain actions, events or results "may", "could", "would", "should", "might" "occur" or "be achieved" or "will be taken" (and variations of these or similar expressions). All of the forward looking information in this press release, is qualified by this cautionary note.
VETRA has no intention to update this forward looking information, except as required by applicable securities law. This forward looking information should not be relied upon as representing VETRA's views as of any date subsequent to the date of this press release.
Except as otherwise expressly indicated herein, the information concerning Suroco and Petroamerica contained in this press release has been taken from and is based solely upon their respective public disclosure, including disclosure on file with the Canadian securities regulatory authorities. Neither VETRA nor any of its directors or officers has verified, nor do they assume any responsibility for, the accuracy or completeness of such information or statements or for any failure by Suroco or Petroamerica to disclose events or facts that may have occurred or that may affect the significance or accuracy of any such information or statements but that are unknown to VETRA.
Suroco shareholders with questions about the Offer and how to vote AGAINST the Arrangement and deposit shares to the Offer, should contact VETRA's information agent and depository, Kingsdale Shareholder Services, toll-free within North America: 1-855-682-8087 or Call Collect: 416-867-2272, by fax: 416-867-2271 or 1-866-545-558 or e-mail: [email protected]
SOURCE: Vetra Acquisition Ltd.
For further information: Media Inquiries: Kingsdale Shareholder Services, 416-867-2357