Pensana Regulatory News (PRE)

9 Dec 2009 07:00



9th December 2009

PROPOSED ACQUISITION OF PAN ANDEAN

The board of Pan Andean Resources plc (AIM: PRE) is pleased to announce that Petrominerales Ltd (TSX: PMG), a Latin American based oil exploration and production company listed on the Toronto Stock Exchange, has agreed to acquire all of the outstanding shares of Pan Andean ("the Offer"). This will be achieved by way of a scheme of arrangement ("the Scheme").

Petrominerales has offered to buy the shares of Pan Andean from the existing shareholders of Pan Andean for GBP 0.15 and one (1) share of Hydrocarbon Exploration for every one (1) Pan Andean share held. Hydrocarbon Exploration is a newly formed company into which Pan Andean will transfer its non-Colombian and non-Peruvian assets pursuant to the Scheme. On completion of the transaction, Petrominerales will own 100% of Pan Andean, whose assets will be the exploration interests in Colombia and Peru, while the existing shareholders of Pan Andean will have received GBP 0.15 plus a pro rata number of shares of Hydrocarbon Exploration.

The Scheme is subject to customary approvals, including approval by the High Court of England and Wales and approval of Pan Andean's shareholders. The final terms of the Offer will be set out in a circular to be posted to shareholders. The transaction is expected to close by the end of February 2010.

An implementation agreement setting out the terms and conditions of the Scheme has been entered into by Pan Andean and Petrominerales. Amongst other things the agreement governs the relationship between Pan Andean and Petrominerales during the period until the Scheme becomes effective. In particular, plans to drill the Antorcha licence in Colombia before 1st May 2010 will be finalised. A summary of the principal terms and conditions of the agreement is set out below.

The Offer, if made, will not fall under the UK takeover code or the equivalent takeover regulations in Ireland.

John Teeling, Chairman, commented: 

"For some time now, we have been attempting to unlock the value of our assets. This opportunity values Peru and Colombia at roughly £18 million (equating to 15p for each Pan Andean share) whilst shareholders would also retain their interest in our Bolivian and US assets. 

Although Hydrocarbon Exploration will initially be an unlisted company we anticipate re-listing the business in due course.

The Board has agreed to unanimously recommend that Pan Andean shareholders vote in favour of the Scheme".

Contacts:

www.panandeanresources.com

A summary of the principal terms and conditions of the implementation agreement is set out below:

Implementation of the Scheme is conditional upon (among other things):

The parties are required to use reasonable endeavours to satisfy the conditions.

The implementation agreement can be terminated by either party by (among other things):

The implementation agreement contains customary non-solicitation provisions.

Pan Andean must pay Petrominerales a break fee of £122,000 if the Scheme is not approved by the requisite majority of Pan Andean Shareholders.

Pan Andean must pay Petrominerales a break fee of £500,000 if its board fail to recommend the Scheme or withdraw, modify or change any of its recommendations in a manner adverse to Petrominerales.

Petrominerales must pay Pan Andean an amount equal to Pan Andean's expenses relating to the Scheme to a maximum of £122,000 in the event Pan Andean terminates the implementation agreement following a failure by Petrominerales fulfill certain conditions relating to its obligation to implement the Scheme.

Representations and warranties have been given jointly and severally by Pan Andean and Hydrocarbon Exploration including in relation to corporate capacity, authorisation and the accuracy of certain information provided to Petrominerales.

All of the directors of Pan Andean have entered into lock-up agreements with Petrominerales to vote their shares in support of the Scheme.