CALGARY, ALBERTA -- (Marketwired) -- 09/29/13 -- Petrominerales (TSX: PMG) (BVC: PMGC) announces we have entered into an agreement (the "Arrangement Agreement") with Pacific Rubiales Energy Corp. (TSX: PRE; BVC: PREC; BOVESPA:PREB) ("Pacific Rubiales") under which Pacific Rubiales will acquire all of the outstanding shares of Petrominerales by way of a plan of arrangement under the Business Corporations Act (Alberta) (the "Arrangement"). Pursuant to the Arrangement, each share of Petrominerales will be exchanged for cash consideration of C$11.00 and one share of a new Brazil-focused exploration and production company ("ExploreCo") based in Calgary, Alberta. ExploreCo will be capitalized with C$100 million cash and will hold all of Petrominerales' Brazil assets, including our talented team of technical professionals in Brazil. Concurrently, we have entered into an agreement with our partner in Brazil to acquire their entire 25% interest in certain of our Brazilian properties.
Petrominerales shareholders will receive cash consideration of C$11.00 per Petrominerales share under the Arrangement. The cash consideration (not including the value of the ExploreCo shares) represents a premium of 42% over last the closing price of the Petrominerales shares on the Toronto Stock Exchange of C$7.74 and 56% over the 20 trading day volume weighted average trading price of C$7.07. The total transaction value is approximately C$1.6 billion, including the assumption of net debt, but excluding ExploreCo's asset value and C$100 million of cash.
Highlights of the proposed transactions:
-- Cash consideration of C$11.00 per Petrominerales share;-- Petrominerales shareholders also receive one share of ExploreCo for every Petrominerales share held; and-- ExploreCo will have C$100 million cash and will hold 120,013 gross acres (119,321 net acres) focused on the Reconcavo Basin, onshore Brazil.
Board Approval and Recommendation
Following an extensive strategic review and detailed analysis of the proposed Arrangement, the Board of Directors of Petrominerales has unanimously: (i) approved the Arrangement and the entering into of the Arrangement Agreement; (ii) determined that the Arrangement is in the best interests of Petrominerales and is fair, from a financial point of view, to Petrominerales' shareholders, and (iii) determined to recommend that Petrominerales' shareholders vote in favour of the Arrangement. Petrominerales' exclusive financial advisor, TD Securities Inc., has provided a verbal opinion to the Board of Directors of Petrominerales that, as of the date hereof and subject to its review of final documentation, the consideration to be received by Petrominerales shareholders under the Arrangement is fair, from a financial point of view, to Petrominerales shareholders, and such opinion was considered by the Board of Directors in making its determinations.
The Arrangement is subject to the approval of the Petrominerales shareholders. A special meeting of the Petrominerales shareholders is expected to be held by the end of November, 2013 to consider the Arrangement, with an information circular to be mailed to Petrominerales shareholders by early November, 2013. Directors and officers of Petrominerales who collectively hold 4% of the outstanding shares of Petrominerales have entered into lock-up agreements with Pacific Rubiales supporting the Arrangement, pursuant to which they have agreed to vote their shares held in favour of the approval of the Arrangement at the meeting.