/NOT FOR DISSEMINATION IN THE UNITED
STATES OF AMERICA/
CALGARY, June 20, 2014 /CNW/ - Suroco Energy Inc.
("Suroco") (TSX-V:SRN) and Petroamerica Oil Corp.
("Petroamerica") (TSX-V:PTA) are pleased to announce that
Petroamerica has increased its offer to acquire all of the issued
and outstanding common shares of Suroco ("Suroco Shares") to
a value of $0.80 per Suroco Share
(the "Revised Petroamerica Offer"). The Revised
Petroamerica Offer also entitles holders of Suroco Shares
("Suroco Shareholders") to elect to receive common shares in
Petroamerica ("PTA Shares"), a combination of cash and PTA
Shares, or all cash, as further explained below.
The Suroco board has established a special committee of
independent directors (the "Special Committee") to
review and evaluate the Vetra Offer (as defined below), the Revised
Petroamerica Offer, and any other offers that may be received by
Suroco. Upon the recommendation of the Special Committee, and based
on the verbal advice of its financial advisor, Peters & Co.
Limited, and its legal advisors, the Suroco board has unanimously
reaffirmed its recommendation in favour of the Revised Petroamerica
Offer and has concluded that the Revised Petroamerica Offer is
superior to unsolicited offers from third parties, including the
most recent proposal by Vetra Acquisition Ltd., a wholly owned
subsidiary of VETRA Holding S.a.r.l. (the "Vetra Offer").
Alentar Holdings Inc. ("Alentar"), Suroco's largest
shareholder, and all of Suroco's officers have also confirmed that
they are in favour of the Revised Petroamerica Offer. Alentar has
also confirmed its preference to receive stock of the combined
company to participate in Petroamerica's upside potential, rather
than be cashed out.
In connection with the Revised Petroamerica Offer, Suroco and
Petroamerica have entered into an amending agreement (the
"Amended Arrangement Agreement") dated June 19, 2014 which revises certain terms of the
original agreement between Petroamerica and Suroco dated
April 26, 2014 (the "Arrangement
Agreement"). Under the Amended Arrangement Agreement, the
purchase price payable by Petroamerica to Suroco Shareholders for
the Suroco Shares has been increased to a value equal to
$0.80 per Suroco Share. The Revised
Petroamerica Offer is based on the 10-day volume weighted average
trading price of PTA Shares on the TSX Venture Exchange of
$0.361, up to and including
June 18, 2014. The Revised
Petroamerica Offer represents a premium of 134% over the 10-day
volume weighted average price of the Suroco Shares on the TSX
Venture Exchange of $0.342 prior to
announcement of the signing of the original Arrangement Agreement,
and a 21% premium over the 10-day volume weighted average price of
the Suroco Shares of $0.659, up to
and including June 18, 2014. The
Revised Petroamerica Offer also represents an 11% premium over the
Vetra Offer.
Under the Amended Arrangement Agreement, Suroco Shareholders can
elect to receive either (i) 2.2161 PTA Shares (the "Share
Option"), (ii) a cash payment of $0.2079 and 1.6401 PTA Shares (the "Cash and
Share Option"), or (iii) a cash payment of $0.80 (the "All Cash Option"), for each
Suroco Share they hold. The amount of cash which will be paid out
pursuant to the Cash and Share Option and the All Cash Option will
be capped at $27 million. In the
event that the amount of cash which is elected to be received by
Suroco Shareholders who elect the All Cash Option exceeds
$27 million less cash necessary to
pay under the Cash and Share Option, such Suroco Shareholders will
receive a pro rata amount of cash and the equivalent pro rata
number of PTA Shares based on an exchange ratio of 2.2161 PTA
Shares for each Suroco Share. There is no limit on the ability
of Suroco Shareholders to make any of the aforementioned elections.
Suroco Shareholders will receive a new letter of transmittal in the
mail or through their broker pursuant to which they may make one of
the elections set forth above. The deadline for Suroco Shareholders
to make such elections is 5:00 p.m.
(Mountain Standard Time) on Friday,
July 11, 2014 (the "Election Deadline"), which is
expected to result in the depositary issuing to former Suroco
Shareholders their PTA Shares and/or cash on or about July 16, 2014. The new letter of transmittal
which provides for the elections set forth above will be made
available on SEDAR at www.sedar.com and on Suroco's website at
www.suroco.com shortly. Suroco Shareholders who do not make an
election by the Election Deadline will be deemed to have elected
the Share Option.
The holders of Suroco Warrants (as defined in the Arrangement
Agreement) are treated the same as Suroco Shareholders if they
exercise their Suroco Warrants prior to the Election Deadline and
are also entitled to make an election in respect of any of the
Share Option, the Cash and Share Option or the All Cash Option,
without limitation, upon the exercise of the applicable securities.
Except for the increase in purchase price and the offering of the
Share Option, the Cash and Share Option or the All Cash Option, the
Amended Arrangement Agreement has substantially the same terms as
the original Arrangement Agreement.
Accordingly, Suroco and Petroamerica are proceeding with the
Revised Arrangement Agreement and the arrangement involving Suroco
and Petroamerica as amended by the Revised Petroamerica Offer (the
"Arrangement").
The meeting (the "Suroco Meeting") for the Suroco
Shareholders to approve the Arrangement Agreement and the
Arrangement will be convened as previously announced, on
June 25, 2014. Suroco Shareholders of
record on May 20, 2014 are entitled
to vote at the Suroco Meeting. Information reflecting the amended
terms of the Arrangement will be mailed to Suroco shareholders in
connection with the Suroco Meeting. Assuming Suroco shareholders
approve the Arrangement and satisfaction of all other conditions
precedent, including the approval of the TSX Venture Exchange of
the revised terms of the Arrangement in respect of each of Suroco
and Petroamerica, completion of the Arrangement is expected to
occur on or about June 26, 2014.
As a result of the Revised Petroamerica Offer, Suroco will be
waiving the currently scheduled proxy cut-off time of 10:00 a.m. (Mountain Standard Time) on
Monday, June 23, 2014 and accepting
proxies until the time set for the Suroco Meeting, being
10:00 a.m. (Mountain Standard Time)
on Wednesday, June 25, 2014, in order
to provide Suroco Shareholders who may have voted the blue proxy
against the Arrangement with additional time to submit a later
dated MANAGEMENT FORM OF PROXY or MANAGEMENT VOTING INSTRUCTION
FORM in favour of the Arrangement.
The Arrangement creates a combined company with a production
base of approximately 9,000 barrels of oil equivalent per day (net
before royalty) ("boepd") holding interests in eleven
exploration and production contracts focused on high netback light
and medium oil exploration and production in the Llanos and
Putumayo Basins in Colombia. The Arrangement allows the
combined company to position itself to become a leading
Colombia-focused exploration and
production player targeting oil production upwards of 30,000 boepd
and a sustainable reserve life of more than 5 years. The combined
asset base of both companies provides the potential to achieve
these goals over a 2 to 3 year time frame. It is also
expected that the combined company will be opportunistic in its
pursuit of additional acquisitions in its Llanos and Putumayo basin
core areas.
Petroamerica and Suroco together urge Suroco Shareholders to
vote IN FAVOUR of the Arrangement.
Suroco will be distributing a Directors' Circular and Supplement
to the Information Circular (the "Supplemental
Circular") that will be mailed in due course to each of
Suroco's Shareholders in compliance with applicable securities laws
and filed with Canadian securities regulatory authorities. The
Supplemental Circular will be available on SEDAR at www.sedar.com
and on Suroco's website at www.suroco.com. Shareholders are
advised to read the Supplemental Circular carefully and in its
entirety, as it will contain important information regarding
Suroco, the Vetra Offer and the Revised Petroamerica Offer. If
Suroco Shareholders have any questions or require more information,
they are encouraged to contact Suroco's proxy solicitation agent,
Georgeson Shareholder Communications Canada, Inc.
("Georgeson"), toll-free at 1-888-605-7641 or outside
North America, collect at
781-575-2422 or by email at askus@georgeson.com.
How to Vote IN FAVOUR of the Arrangement with
Petroamerica.
Any Suroco Shareholder that has already voted IN FAVOUR
of the Arrangement need not take any action, as their votes will be
counted. Any Suroco Shareholder who has voted AGAINST the proposed
combination transaction is encouraged to change its vote and vote
IN FAVOUR of the Arrangement.
Registered shareholders of Suroco are requested to complete,
date, sign and return the MANAGEMENT FORM OF PROXY that
accompanied the Information Circular and Proxy Statement of Suroco
dated May 27, 2014 (a copy of which
can also be found on Suroco's profile on SEDAR at www.sedar.com and
which was filed on May 30, 2014) or
the Supplemental Circular. To be valid, the form of proxy must be
signed and forwarded so as to reach, or be deposited with, Suroco's
transfer agent, Computershare Trust Company of Canada, 8th Floor, 100 University Avenue,
Toronto, Ontario, M5J 2Y1,
Attention: Proxy Department, by fax to (866) 249-7775, by internet
at www.investorvote.com or by telephone by calling (866) 732-8683
(toll free) (international direct dial (312) 588-4290), so that it
is received not later than the time of the Suroco Meeting,
currently scheduled for 10:00 a.m. (Mountain
time) on Wednesday June 25,
2014.
Non-registered shareholders (i.e. beneficial) should only use
the MANAGEMENT VOTING INSTRUCTION FORM to vote. Such holders
should carefully follow the instructions in the voting instruction
form. The deadline of 10:00 a.m.
(Mountain time) on Wednesday, June
25, 2014 also applies to receipt of voting instructions.
If you have any questions that are not answered by the
Information Circular or Supplemental Circular, or would like
additional information, you should contact your professional
advisors. You can also contact Georgeson, the proxy solicitation
firm retained by Suroco, toll-free at 1-888-605-7641 or outside
North America, collect at
781-575-2422 or by email at askus@georgeson.com
should you have any questions regarding voting of your
shares.
How to REJECT the Vetra Offer and Withdraw Tendered
Shares
To reject the Vetra Offer, you should do nothing. Suroco
Shareholders who have already tendered their shares to the Vetra
Offer can withdraw them at any time before they have been taken up
and accepted for payment by Vetra. Suroco Shareholders holding
shares through a dealer, broker or other nominee should contact
such dealer, broker or nominee to withdraw their Suroco Shares.
Suroco Shareholders may also contact the proxy solicitation firm
retained by Suroco, Georgeson, toll-free at 1-888-605-7641 or
outside North America, collect at
781-575-2422 or via email at askus@georgeson.com.
See Suroco's Information Circular and Proxy Statement dated
May 27, 2014 that has been sent to
Suroco Shareholders, which can be found on Suroco's profile on
SEDAR at www.sedar.com, and the June 11,
2014 press releases, and other subsequent press releases, of
each of Suroco and Petroamerica. A copy of the Amended Arrangement
Agreement will also be posted on Suroco's profile on SEDAR in due
course.
About Suroco
Suroco is a Calgary-based
junior oil and gas company, which explores for, develops,
produces and sells crude oil, natural gas liquids and natural
gas in Colombia. The Corporation's
common shares trade on the TSX Venture Exchange under the symbol
SRN.
About Petroamerica
Petroamerica Oil Corp. is a Canadian oil and gas exploration and
production company with activities in Colombia. Petroamerica currently produces more
than 6,500 boe per day and has interests in five blocks, all
located in Colombia's Llanos
Basin. Petroamerica's shares are listed on the TSX Venture Exchange
under the symbol "PTA". A summary of the Company property holdings,
including maps of the above noted acquisition, has been included in
the current presentation located at www.PetroamericaOilCorp.com.
Forward Looking Statements:
This news release includes information that constitutes
"forward-looking information" or "forward-looking statements". More
particularly, this news release contains statements concerning
expectations regarding the timing and successful completion of the
Arrangement, the timing of the meeting of shareholders of Suroco to
consider and vote on the Arrangement, the receipt of all necessary
regulatory approvals to give effect to the Arrangement, the timing
of closing of the Arrangement, the anticipated timing of the
delivery of the cash component and the PTA Shares under the
elections described herein, the combined company's drilling and
exploration plans, production growth of the combined
company, anticipated reserve life of the combined company's assets,
potential future acquisitions and other statements, expectations,
beliefs, goals, objectives, assumptions and information about
possible future events, conditions, results of operations or
performance. Readers are cautioned not to place undue
reliance on forward-looking statements, as there can be no
assurance that the plans, intentions or expectations upon which
they are based will occur. By their nature, forward-looking
statements involve numerous assumptions, known and unknown risks
and uncertainties, both general and specific, that contribute to
the possibility that the predictions, estimates, forecasts,
projections and other forward-looking statements will not occur,
which may cause actual performance and results in future periods to
differ materially from any estimates or projections of future
performance or results expressed or implied by such forward-looking
statements.
Material risk factors include, but are not limited to: the
inability to obtain regulatory approval for any operational
activities, inability to get all necessary approvals for completion
of the Arrangement, the risks of the oil and gas industry in
general, such as operational risks in exploring for, developing and
producing crude oil and natural gas, market demand and
unpredictable shortages of equipment and/or labour; potential
delays or changes in plans with respect to exploration or
development projects or capital expenditures; fluctuations in oil
and gas prices, foreign currency exchange rates and interest rates,
and reliance on industry partners and other factors, many of
which are beyond the control of Petroamerica and
Suroco. You can find an additional discussion
of those assumptions, risks and uncertainties in Petroamerica's and
Suroco's Canadian securities filings.
Neither Petroamerica nor Suroco nor any of their respective
subsidiaries nor any of their respective officers, directors or
employees guarantees that the assumptions underlying such
forward-looking statements are free from errors nor do any of the
foregoing accept any responsibility for the future accuracy of the
opinions expressed in this document or the actual occurrence of the
forecasted developments.
Readers should also note that even if the drilling program as
proposed by Petroamerica following completion of the Arrangement is
successful, there are many factors that could result in production
levels being less than anticipated or targeted, including without
limitation, greater than anticipated declines in existing
production due to poor reservoir performance, mechanical failures
or inability to access production facilities, among other
factors.
Use of 'boe'
Throughout this press release, the calculation of barrels of
oil equivalent ("boe") is at a conversion rate of 6,000 cubic feet
("cf") of natural gas for one barrel of oil and is based on an
energy equivalence conversion method. Boe may be misleading,
particularly if used in isolation. A boe conversion ratio of 6,000
cf: 1 barrel is based on an energy equivalence conversion method
primarily applicable at the burner tip and does not represent a
value equivalence at the wellhead.
The TSX Venture Exchange Inc. has in no way passed upon
the merits of the Arrangement or the Vetra Offer and has neither
approved nor disapproved the contents of this press
release.
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 release.
SOURCE Petroamerica Oil Corp.