Last checked at 26 Feb 2010 07:00
Not for release, publication or distribution, in whole or in part, in, into or from any jurisdiction where to do so would constitute a violation of the relevant laws of such jurisdiction
26 February 2010
RECOMMENDED PROPOSALS RELATING TO THE ACQUISITION OF
PAN ANDEAN RESOURCES PLC
(INCLUDING THE DEMERGER OF THE NORTH AMERICAN AND BOLIVIAN INTERESTS OF
THE PAN ANDEAN GROUP)
BY
PETROMINERALES LTD.
(to be effected by means of a Scheme of Arrangement)
The boards of Pan Andean and Petrominerales announce they have agreed the terms of recommended Proposals under which Pan Andean will demerge its North American and Bolivian assets and liabilities and Petrominerales will offer to acquire the entire issued and to be issued share capital of Pan Andean.
Summary and highlights
| ·; | The terms of the final offer are unchanged from the indicative offer announced on 9 December 2009. | |
| ·; | Under the Proposals, Pan Andean Shareholders will receive £0.15 in cash and one (1) Hydrocarbon Share for every one (1) Pan Andean share held. Hydrocarbon is a newly formed company into which Pan Andean will transfer its North American and Bolivian assets and liabilities. | |
| ·; | The Proposals value Pan Andean's current issued and to be issued share capital at approximately £22,345,703, equivalent to £0.175 per Scheme Share, comprising of: | |
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| ·; | £0.15 in cash per Pan Andean Share; and |
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| ·; | £0.025 deemed valuation per Hydrocarbon Share, based on the Pan Andean Directors valuation of the North American and Bolivian assets and liabilities. |
| ·; | This implied valuation of £0.175 per Scheme Share represents: | |
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| ·; | a premium of approximately 14.8 per cent. to the Closing Price of 15.25 pence per Pan Andean Share at 24 February 2010, being the last practicable date prior to the publication of the Scheme Document: and |
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| ·; | a premium of approximately 40.0 per cent. to the Closing Price of 12.5 pence per Pan Andean Share on 8 December 2009, being the last Business Day before the announcement by Pan Andean of the proposed offer by Petrominerales. |
| ·; | The Pan Andean Directors unanimously recommend that Pan Andean Shareholders vote in favour of the resolutions to be proposed at the Court Meeting and the General Meeting, as they have irrevocably undertaken to Petrominerales to do in respect of all of their own beneficial holdings of 14,561,650 Pan Andean Shares (assuming the exercise of the Pan Andean in-the-money Options), representing in aggregate approximately 11.40 per cent. of Pan Andean's anticipated issued share capital at the Voting Record Time. | |
The Scheme Document, setting out the details of the Proposals and procedures to be followed to approve the Scheme, is being posted to Pan Andean Shareholders today. It is currently anticipated that, assuming the resolutions to be put to the Court Meeting and General Meeting proposed for 22 March 2010 in London are passed, the Proposals will become effective on 13 April 2010.
Commenting on the Proposals, John Teeling, Executive Chairman of Pan Andean, said
"I strongly recommend the Petrominerales offer to Pan Andean shareholders. The £0.15 cash portion of the offer is a fair price for our Colombian and Peruvian assets. The additional one for one share offer in Hydrocarbon Exploration gives shareholders a stake in the existing Pan Andean interests in Bolivia and the United States. These interests have been valued at £0.025 per Pan Andean share, which reflects the political and legal uncertainties surrounding the activities. The Hydrocarbon Exploration board of directors will focus on creating value from these assets.
Again, I recommend that you vote in favour of the offer, either in person at the Court Meeting and General Meeting being held on 22nd March 2010, or by proxy".
This summary should be read in conjunction with the full text of this announcement and the appendices to it.
Enquiries:
| Pan Andean Resources | +353 (0) 1 8332833 |
| John Teeling, Executive Chairman |
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| Smith & Williamson Corporate Finance Limited | +44 (0)117 376 2213 |
| Nominated Adviser - Nick Reeve/Martyn Fraser |
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| Broking - Barrie Newton |
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IMPORTANT NOTICE
The distribution of this announcement in jurisdictions other than the United Kingdom may be restricted by law and therefore any persons who are subject to the laws of any jurisdiction other than the United Kingdom into whose possession this announcement comes should inform themselves about and observe any applicable requirements. Any failure to comply with the applicable requirements may constitute a violation of the securities laws of any such jurisdiction. This announcement is not an offer to sell or an invitation to purchase or issue, or a solicitation of an offer to buy or subscribe for, shares or other securities or a solicitation of any vote or approval in any jurisdiction. This announcement and the accompanying documents have been prepared for the purposes of complying with English law and the information included may not be the same as that which would have been prepared in accordance with the laws of jurisdictions outside the United Kingdom. Prior to, but conditional upon, the Scheme becoming effective, application will be made to the London Stock Exchange to cancel the admission to trading of Pan Andean Shares on AIM. It is expected that the Court Order will be registered with the Registrar of Companies at 4.30p.m. on the Effective Date and cancellation of the admission to trading of the Pan Andean Shares on AIM will take place on the business day following the Effective Date. Application has not been, and will not be, made for the Hydrocarbon Shares to be admitted to, or to be traded on, any stock exchange. The Hydrocarbon Shares have not been nor will they be registered under the applicable laws of any jurisdiction outside the UK and in particular, they have not been and will not be registered under the US Securities Act and they have not been and will not be registered under the securities laws of any state of the United States.
Not for release, publication or distribution, in whole or in part, in, into or from any jurisdiction where to do so would constitute a violation of the relevant laws of such jurisdiction
26 February 2010
RECOMMENDED PROPOSALS RELATING TO THE ACQUISITION OF PAN ANDEAN RESOURCES PLC BY PETROMINERALES LTD. (INCLUDING THE DEMERGER OF THE NORTH AMERICAN AND BOLIVIAN INTERESTS OF THE PAN ANDEAN GROUP)
1. Introduction
On 9 December 2009, Pan Andean announced that it had agreed the terms of recommended Proposals under which Pan Andean would demerge its North American and Bolivian assets and liabilities and Petrominerales would offer to acquire the entire issued and to be issued share capital of Pan Andean, by way of a Court sanctioned scheme of arrangement under Part 26 of the Companies Act involving capital reductions of the Company. Under the Proposals, Pan Andean Shareholders will receive £0.15 in cash and one (1) share of Hydrocarbon Exploration plc ("Hydrocarbon") for every one (1) Pan Andean Share held.
Hydrocarbon is a newly formed company into which Pan Andean will transfer its North American and Bolivian assets and liabilities consisting of the entire issued share capital of Endeavour Oil & Gas Limited and Bolivian Hydrocarbons Limited respectively. Additionally, Pan Andean will transfer the entire issued share capital of two dormant and nontrading subsidiaries of Pan Andean, being Pan Andean Oil & Gas Limited and Hydrocarbon Prospecting plc. On completion of the transaction, Petrominerales will own 100 per cent. of Pan Andean's exploration interests in Colombia and Peru, while the existing shareholders of Pan Andean will have received £0.15 plus a pro rata number of shares of Hydrocarbon (which will hold the North American and Bolivian assets and the dormant, non-trading subsidiaries as described above).
The Proposals require the approval of Pan Andean Shareholders at the Court Meeting and the General Meeting, all of which are to be held on 22 March 2010. The Scheme Document being posted to Pan Andean Shareholders today sets out the background to the Proposals and the reasons why the Pan Andean Directors are recommending that Pan Andean Shareholders vote in favour of the resolutions to be proposed at the Court Meeting and at the General Meeting. The Scheme Document contains details of the Proposals and notices of the meetings at which the resolutions will be put to Pan Andean Shareholders.
Irrevocable undertakings to vote in favour of the Proposals have been received by Pan Andean in respect of a total of 14,561,650 Pan Andean Shares (assuming the exercise of the Pan Andean in-the-money Options), representing in aggregate approximately 11.40 per cent. of Pan Andean's anticipated issued share capital at the Voting Record Time entitled to vote on:
(i) the resolutions in connection with the approval of the Scheme and the Demerger at the Court Meeting; and
(ii) the special resolutions in relation to the Scheme and the Demerger and other ancillary matters to be approved at the General Meeting,
more details of which are set out in paragraph 4 of Part 2 of the Scheme Document.
Details of the irrevocable undertakings are set out in paragraph 3 of Part 2 of the Scheme Document.
2. Summary of the Proposals
An Implementation Agreement was entered into on 8 December 2009 to implement the Scheme and the Demerger. Further details of the Implementation Agreement are set out in Section A of Part 5 of the Scheme Document.
The Proposals will be effected by means of the Scheme of Arrangement (including the Capital Reduction) between Pan Andean and the Pan Andean Shareholders under Part 26 of the Companies Act and the Demerger Reduction and repayment of capital under Chapter 10 of Part 17 of the Companies Act. Under the terms of the Scheme and the Demerger, if they become effective:
·; Pan Andean Shareholders will receive £0.15 in cash from Petrominerales and one (1) Hydrocarbon Share for each Pan Andean Share.
The Pan Andean Directors value the North American and Bolivian assets and liabilities at £3,192,243.
The Proposals value Pan Andean's current issued and to be issued share capital at approximately £22,345,703, equivalent to £0.175 per Scheme Share, comprising of:
(i) £0.15 in cash per Pan Andean Share; and
(ii) £0.025 deemed valuation per Hydrocarbon Share.
The Explanatory Statement in compliance with Part 26 of the Companies Act is set out in Part 2 of the Scheme Document.
The Proposals are subject to the terms and conditions set out in paragraph 3 of Part 5 of the Scheme Document. The Scheme and the Demerger will not become effective, and the Offer will not be completed, unless the Conditions have been satisfied (or, if capable of waiver, waived) by 6.00 p.m. (London time) on 30 April 2010, or such later date as Pan Andean and Petrominerales may agree and (if required) the Court may approve.
3. Background to and reasons for the Proposals
For some time now the Pan Andean Directors have been attempting to unlock the value of its assets. The Proposals value the interests of Pan Andean in Peru and Colombia at approximately £19,000,000 (equating to £0.15 for each Pan Andean Share) and allow Pan Andean Shareholders to retain their interests in the Bolivian and US assets of Pan Andean. Although Hydrocarbon will initially be an unlisted company, the Pan Andean Directors (three of whom are also the directors of Hydrocarbon) anticipate listing Hydrocarbon on AIM in due course.
The aggregate cash element of the consideration for Pan Andean Shareholders amounts to £19,153,460 (assuming the exercise of the Pan Andean in-the-money Options). In addition, the Pan Andean Directors estimate the value of Hydrocarbon will be £3,192,243, being £0.025 per Hydrocarbon Share on the basis of 127,689,733 new Hydrocarbon Shares (assuming the exercise of the Pan Andean in-the-money Options) being in issue at the Scheme Record Time. Since 26 November 2004 until 24 February 2010 being the last practicable date prior to publication of this announcement, Pan Andean Shares have not traded above the £0.175 per share now available to Pan Andean Shareholders.
In light of the factors set out above, the Pan Andean Directors unanimously recommend that Pan Andean Shareholders vote in favour of the Proposals.
4. Non-Completion Fees
As part of the Implementation Agreement Pan Andean and Petrominerales agreed non-completion arrangements to include non-completion fees. Full details on these arrangements and fees are set out in paragraph 5 of Section A of Part 5 of the Scheme Document.
5. Share Option Scheme
The holders of the Pan Andean in-the-money Options, as detailed in paragraph 7 of Part 7 of the Scheme Document, have agreed to exercise all such options prior to the Voting Record Time and to pay up the amounts due on such exercise. Accordingly, the Pan Andean Shares to be issued to the Option Holders will form part of the Pan Andean Shares acquired by Petrominerales under the Scheme. All other options granted under the Share Option Scheme will be cancelled. Pan Andean has received confirmation in writing from the holders of such options of their agreement to surrender their options, for nil consideration subject to completion of the Proposals.
6. Demerger Agreement and Demerger Reduction
Subject to the terms of the Implementation Agreement, Pan Andean agreed, by way of the Demerger Agreement, to sell and transfer its North American and Bolivian assets and liabilities to Hydrocarbon Prospecting plc in consideration for the issue of Hydrocarbon Shares to the Scheme Shareholders. Further details of the Demerger Agreement are set out in Section B of Part 5 of the Scheme Document.
For structural reasons, under the Demerger Agreement Hydrocarbon will assume all of Hydrocarbon Prospecting plc's obligations under the Implementation Agreement.
As a result of the Demerger Reduction, the entire share premium account of Pan Andean will be cancelled. £3,192,243 of the sum arising on the cancellation of share premium shall be applied in transferring in specie the entire issued share capital of Endeavour Oil & Gas Limited, Bolivian Hydrocarbons Limited, Pan Andean Oil & Gas Limited and Hydrocarbon Prospecting plc to Hydrocarbon pursuant to the terms of the Demerger Agreement on terms that Hydrocarbon shall allot and issue, credited as fully paid, one (1) Hydrocarbon Share for each Scheme Share held by a Scheme Shareholder at the Scheme Record Time. The balance of the share premium account so cancelled shall be transferred to Pan Andean's reserves as a realised profit.
7. Shareholder and Court approvals required for the Proposals
The Scheme requires, inter alia, the approval of the Scheme Shareholders at a meeting convened by the Court and also the passing of special resolutions at the General Meeting to be held immediately after the Court Meeting. It also requires the sanction of the Court.
Pan Andean will put in place such form of creditor protection (if any) required by the Court in order to satisfy it that the interests of the creditors of Pan Andean are not adversely affected by the Capital Reduction and the Demerger Reduction.
At the Court Meeting the Scheme Resolutions will be proposed. The approval required at the Court Meeting is a majority in number of those Scheme Shareholders present and voting, whether in person or by proxy, representing not less than 75 per cent. in value of the Scheme Shares held by such Scheme Shareholders.
In addition, the General Meeting has been convened for 11.15 a.m. on 22 March 2010, or immediately following the Court Meeting (if later), to consider and, if thought fit, pass the GM Resolutions (each of which is proposed as a special resolution which requires the approval of at least 75 per cent. of the votes cast) to approve:
(i) the Scheme and other related matters, including the Capital Reductions and the issue of New Pan Andean Shares to Petrominerales provided for in the Scheme, and the cancellation of the admission to trading of Pan Andean Shares on AIM;
(ii) the Demerger and the Demerger Agreement;
(iii) the Demerger Reduction; and
(iv) the repayment of capital to Scheme Shareholders to be effected by the allotment and issue of Hydrocarbon Shares.
Each GM Resolution is subject to and conditional on passing the other GM Resolution.
The implementation of the Scheme, including the Demerger, can only take place if all of the Conditions have been satisfied or, where relevant, waived. Assuming the satisfaction, or where appropriate, waiver of Conditions, the Scheme will become effective on the date of delivery to the Registrar of Companies by Pan Andean of the Court Order sanctioning the Scheme and confirming the Capital Reduction and the Demerger Reduction or, if so ordered by the Court, the date on which the Court Order confirming the Capital Reduction and the Demerger Reduction is registered by the Registrar of Companies. Once the Scheme becomes effective, it will be binding on all Pan Andean Shareholders, including any holders who did not vote to approve the Scheme or voted against the Scheme.
Further information in relation to the Court Meeting and the General Meeting is contained in the notice of Court Meeting and the notice of General Meeting in the Scheme Document.
In order that the Court can be satisfied that the votes cast constitute a fair representation of the views of Scheme Shareholders, it is important that as many votes as possible are cast at the Court Meeting.
8. Antorcha Interim Agreement
The assets of Pan Andean in Colombia comprise exclusively of the Antorcha Block, obtained by Pan Andean through a production contract entered into by Pan Andean and the Colombian Agencia Nacional de Hidrocarburos on 30 November 2007.
In accordance with the Antorcha Interim Agreement, Petrominerales has since 8 December 2009 been acting as the designated operator of the Antorcha Block and will continue to do so until the earliest of:
(i) completion of the Proposals; or,
(ii) the date on which the transaction terminates in accordance with the provisions of the Implementation Agreement; or,
(iii) the date on which the parties substitute the Antorcha Interim Agreement and the Implementation Agreement for a farm-in agreement and a permanent joint operating agreement in relation to the Antorcha Block.
9. Cancellation of admission to trading on AIM of the Pan Andean Shares
Prior to and conditional on the Scheme and the Demerger becoming effective, Pan Andean intends to make an application to the London Stock Exchange for the cancellation of the admission of the Pan Andean Shares to trading on AIM to take effect on the business day after the Effective Date. The last day of dealings in Pan Andean Shares on AIM is expected to be on the business day reflected in the timetable on page iv of the Scheme Document (it is anticipated that the last dealing day in respect of the Pan Andean Shares on AIM will be 12 April 2010).
10. Directors, Management and Employees
Under the Implementation Agreement and the Demerger Agreement all employees and consultants of Pan Andean (other than the two employees detailed in Schedule 4 thereto) shall transfer to Hydrocarbon.
The Pan Andean Directors intend to resign following the Proposals becoming effective. No compensation shall be payable to the Pan Andean Directors on their resignation. John Teeling, David Horgan and James Finn are directors of Hydrocarbon. The terms of engagement and remuneration of the directors of Hydrocarbon will be £30,000 per annum for each of John Teeling and James Finn and £50,000 per annum for David Horgan. The directors of Hydrocarbon have entered into letters of appointment with Hydrocarbon.
Save as disclosed above, no proposal exists in connection with the Proposals that any payment or other benefit be made or given to any Pan Andean Director as compensation for loss of office or as consideration for or in connection with his retirement from office.
11. No Financing of the Offer required
Petrominerales does not require any financing to fulfill its obligations pursuant to the terms of the Implementation Agreement.
12. Overseas Shareholders
Overseas Shareholders should refer to paragraph 18 of Part 2 of the Scheme Document which contains important information for such shareholders.
13. Further Information
The Scheme Document, setting out the details of the Proposals and procedures to be followed to approve the Scheme, is being posted to Pan Andean Shareholders today. It is currently anticipated that, assuming the resolutions to be put to the Court Meeting and General Meeting are passed, the Proposals will become effective on 13 April 2010.
14. City Code
Although the Company is incorporated in England, for the purposes of the City Code the place of central management of the Company is currently located outside of the UK, the Channel Islands and the Isle of Man. Accordingly, as the Company is not one to which paragraph 3(a)(ii) of the City Code applies, the Company is not subject to the City Code and the Pan Andean Shareholders will not be afforded any protection under the City Code. If circumstances change, which could result in the Company being subject to the City Code, the Company will consult with the Panel. If the Panel determines that, as a result of such changes, the City Code becomes applicable to the Company, an announcement will be made.
Appendix I
| Expected timetable of principal events |
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| EVENT | TIME/ DATE |
| Latest time for lodging blue Forms of Proxy for the Court Meeting | 11.00 a.m. on 20 March 2010 |
| Latest time for lodging pink Forms of Proxy for the General Meeting | 11.15 a.m. on 20 March 2010 |
| Voting Record Time | 11.00 a.m. on 20 March 2010 |
| Court Meeting | 22 March 2010 |
| General Meeting | 22 March 2010 |
| Last day of dealings in Pan Andean Shares | 12 April 2010 |
| Scheme Record Time | 6.00 p.m. on 12 April 2010 |
| Court Hearing to approve and sanction the Scheme (including the Capital Reduction and the Demerger Reduction) | 13 April 2010 |
| Effective Date | 13 April 2010 |
| Date of registration of the Court Order with the Registrar of Companies | 13 April 2010 |
| Cancellation of admission to trading on AIM of Pan Andean Shares | 14 April 2010 |
| CREST accounts credited with cash consideration | 27 April 2010 |
| Latest date of dispatch of certificated Hydrocarbon Shares | 27 April 2010 |
| Latest date for dispatch of cheques | 27 April 2010 |
The Court Meeting and the General Meeting will be held at 11.00 a.m. and 11.15 a.m. respectively, on 22 March 2010.
The dates listed above are based on current expectations and may be subject to change. If any of the expected dates change, Pan Andean will give notice of the change by issuing an announcement through a Regulatory Information Service.
Appendix II
Conditions to the implementation of the Proposals
The obligations of the Parties to implement the Scheme of Arrangement are subject to the fulfilment of each of the following conditions, each of which may only be waived in writing by the mutual consent of the Parties in the case of paragraph (A) below, by Petrominerales in paragraph (B) below and Pan Andean in paragraph (C) below:
(A) - Mutual Consent
The obligations of each Party to implement the Proposals are subject to the fulfilment of each of the following conditions:
(i) Pan Andean and Hydrocarbon Prospecting plc shall have entered into the Demerger Agreement and the Demerger Agreement shall have become unconditional;
(ii) Pan Andean shall have received any consents or approvals or waivers of any rights of pre-emption required from any Person;
(iii) the Assignment Agreements shall have been executed by all the Parties thereto;
(iv) approval of the Scheme Resolutions shall have been given by a majority in number, representing 75 per cent or more in value, of the Scheme Shareholders present and voting, either in person or by proxy, at the Court Meeting;
(v) approval of the GM Resolutions shall have been given by the requisite majority of the Pan Andean Shareholders at the General Meeting;
(vi) the sanction of the Scheme of Arrangement by the Court;
(vii) delivery to the Registrar of any office copy of the Order sanctioning the Scheme and, in relation to the Demerger Reduction, if the Court so orders, the registration of the Order by the Registrar;
(viii) no action shall have been taken under any applicable law that makes illegal or otherwise enjoins or prohibits the Scheme of Arrangement or other transactions contemplated by the Implementation Agreement; and
(ix) the Implementation Agreement shall not have been terminated in accordance with its terms.
(B) - Consent of Petrominerales
The obligations of Petrominerales to implement the Proposals are subject to the fulfilment of each of the following conditions:
(i) Pan Andean shall have provided Petrominerales with certified copies of resolutions duly passed by the Board and the board of directors of Hydrocarbon Prospecting plc approving the Implementation Agreement and any other agreement to be entered into by Pan Andean or Hydrocarbon Prospecting plc, as appropriate, pursuant to the Implementation Agreement;
(ii) the Pan Andean Warranties shall, subject to the matters in the Disclosure Letter, be true and correct in all material respects;
(iii) Pan Andean shall have complied in all material respects with such covenants under the Implementation Agreement as apply prior to the Effective Date; and
(iv) at Completion (as defined in the Implementation Agreement) Pan Andean shall have zero Working Capital and shall have no assets or liabilities other than the Retained Assets and Liabilities.
(C) - Consent of Pan Andean
The obligations of Pan Andean to implement the Proposals are subject to the fulfilment of each of the following conditions:
(i) Petrominerales shall have provided Pan Andean with certified copies of resolutions duly passed by the board of directors of Petrominerales approving the Implementation Agreement and any other agreement to be entered into by Petrominerales pursuant to the Implementation Agreement;
(ii) the Petrominerales Warranties shall be true and correct in all material respects; and
(iii) Petrominerales shall have complied in all material respects with such covenants under the Implementation Agreement as apply prior to the Effective Date.
If any of the Conditions set out at (A) above shall not be fulfilled on or before the Long-Stop Date, then any Party may by written notice to the other Parties rescind and terminate the Implementation Agreement; provided that the failure of such Condition to be complied with or satisfied is not attributable to any breach of the Implementation Agreement by the Party intending to so terminate.
If any of the Conditions set out in clauses (B) and (C) above shall not be fulfilled or waived by the Party or Parties for whose benefit such Conditions are provided on or before the Long-Stop Date, then a Party for whose benefit the Condition is provided may by written notice to the other Parties rescind and terminate the Implementation Agreement; provided that the failure of such Condition to be complied with or satisfied is not attributable to any breach of the Implementation Agreement by the Party intending to so terminate, and provided further that, the Party intending to so terminate has followed the proper notice procedures as outlined in the Implementation Agreement.
If any of the Conditions becomes incapable of being fulfilled and a Party gives notice in writing to the other Parties of the same the Implementation Agreement shall terminate.
Appendix III
Definitions of terms used
In this announcement the following words and expressions have the following meanings, unless the context requires otherwise:
| "Act" or "the Companies Act" | the Companies Act 2006, as amended or as modified from time to time;
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| "AIM" | the AIM market operated by London Stock Exchange plc;
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| "Antorcha Block"
| that area of 35,362.5952 hectares of land in Colombia over which Pan Andean has exclusive rights of exploration and production by virtue of the Antorcha Exploration and Production contract entered into by and between the Colombian Agencia Nacional de Hidrocarburos and Pan Andean on 30 November 2007;
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| "Antorcha Interim Agreement"
| an interim operating agreement dated 7 December 2009 between Pan Andean and Petrominerales in relation to the Antorcha Block, as more particularly described in paragraph 8 of Part 1 of the Scheme Document;
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| "Board" | the board of directors of Pan Andean, whose names are set out on page iii of the Scheme Document;
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| "Business Day"
| a day (excluding Saturdays, Sundays and UK public holidays) on which banks are generally open for business in the City of London;
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| "Capital Reduction"
| the proposed reduction of the share capital of Pan Andean under Part 26 of the Companies Act by cancellation of the Scheme Shares to be effected as part of the Scheme;
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| "CCP Liability" | certain monies due from Pan Andean to Compania Consultora De Petroleo S.A. pursuant to an agreement dated 8 February 2008 as disclosed in Appendix C of the Disclosure Letter;
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| "certificated" or "certificated form" | in relation to a share or other security not in uncertificated form, that is not held in CREST;
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| "City Code"
| the City Code on Takeover and Mergers; |
| "Closing Price" | the closing middle-market quotation of a Pan Andean Share as derived from the Daily Official List;
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| "Conditions" | the conditions to the implementation of the Proposals (including the Scheme), which are set out in paragraph 3 of Section A of Part 5 of the Scheme Document;
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| "Court" | the High Court of Justice in England and Wales;
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| "Court Hearing" | the hearing by the Court of the application to sanction the Scheme, to confirm the Capital Reduction and the Demerger Reduction;
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| "Court Meeting" | the meeting of the holders of Scheme Shares (including any adjournment thereof) convened pursuant to an order of the Court under Part 26 of the Companies Act, to be held at 90 High Holborn, WC1V 6XX on 22 March 2010, for the purpose of considering and, if thought fit, approving the Scheme (with or without amendment) of which notice is set out in Part 8 of the Scheme Document;
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| "Court Order" | the order of the Court sanctioning the Scheme (and confirming the Capital Reduction) under Part 26 of the Companies Act and confirming the Demerger Reduction and repayment of capital under Chapter 10 of Part 17 of the Companies Act;
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| "CREST" | the relevant system (as defined in the CREST Regulations) in respect of which Euroclear is the Operator (as defined in the CREST Regulations);
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| "CREST Regulations" | the Uncertificated Securities Regulations 2001 (SI 2001/3755) as amended from time to time;
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| "CREST Manual" | the CREST Manual published by Euroclear;
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| "Daily Official List"
| the Daily Official List published by the London Stock Exchange;
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| "Demerger"
| the proposed demerger of the Excluded Assets and the Excluded Liabilities on the terms and subject to the conditions set out in the Demerger Agreement to be effected as part of the Scheme;
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| "Demerger Agreement" | the share and asset purchase agreement dated 24 February 2010 made between Pan Andean, Hydrocarbon and Petrominerales, more particularly described in Section B of Part 5 of the Scheme Document;
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| "Demerger Reduction"
| the proposed reduction of the entire share premium account of Pan Andean under Chapter 10 of Part 17 of the Act by cancellation of the entire share premium account of Pan Andean and the repayment of capital to Pan Andean Shareholders to be effected as part of the Scheme;
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| "Disclosure Letter" | the letter from Pan Andean and Hydrocarbon to Petrominerales dated as of the date of the Implementation Agreement which sets out certain disclosures against the Pan Andean Warranties; |
| "Effective Date" | the date on which the Scheme becomes effective in accordance with its terms;
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| "Euroclear"
| Euroclear UK & Ireland Limited; |
| "Excluded Assets" | all property, rights and assets of Pan Andean other than the Licence Interests but to include (without limitation) the entire issued share capital of the Excluded Subsidiaries and the inter company loans due by the Excluded Subsidiaries to Pan Andean; |
| "Excluded Liabilities"
| all liabilities and obligations of Pan Andean and the Excluded Subsidiaries other than the Licence Liabilities including, without limitation, any and all liabilities and obligations to employees, directors or officers of Pan Andean or the Excluded Subsidiaries (other than those employees and consultants detailed in Schedule 4 to the Implementation Agreement) whether arising by law or under a contract; |
| "Excluded Subsidiaries" | Endeavour Oil & Gas Limited and its subsidiary Endeavour Oil & Gas Inc., Bolivian Hydrocarbons Limited and its subsidiary Petrolex S.A., Pan Andean Oil & Gas Limited and Hydrocarbon Prospecting plc; |
| "Explanatory Statement" | the explanatory statement relating to the Scheme, as set out in Part 2 of the Scheme Document which together with the documents incorporated therein constitute the explanatory statement relating to the Scheme as required by Part 26 of the Companies Act;
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| "Forms of Proxy" | either or both of the blue form of proxy for use at the Court Meeting and the pink form of proxy for use at the General Meeting, as the contexts requires;
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| "General Meeting"
| the general meeting of the Pan Andean Shareholders (and any adjournment thereof) to be convened for the purposes of considering and, if thought fit, approving the GM Resolutions and to be held at 90 High Holborn, WC1V 6XX on 22 March 2010;
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| "GM Resolutions" | the resolutions to approve, inter alia, the Capital Reduction and the Demerger Reduction at the General Meeting as set out in the notice of General Meeting at Part 9 of the Scheme Document; |
| "Hydrocarbon" | Hydrocarbon Exploration plc, a public limited company incorporated in England and Wales with registered number 07159135;
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| "Hydrocarbon Shares" | ordinary shares of £0.01 each in the capital of Hydrocarbon;
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| "Implementation Agreement" | the agreement dated 8 December 2009 between Petrominerales, Pan Andean and Hydrocarbon Prospecting plc, more particularly described in Section A of Part 5 of the Scheme Document;
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| "Licences"
| the licences or contracts granting to Pan Andean or by or through which Pan Andean has the right to explore for, develop and produce hydrocarbons in Colombia and Peru being a Colombian Licence in respect of the Antorcha Block, Middle Magdelena Basin and Peruvian Licences in respect of Blocks 114, 131 and 161 in the Ucayali Basin and Block 141 in the Titicaca Basin; |
| "Licence Documents" | the Licences and related commercial agreements; |
| "Licence Interests"
| (i) the direct or indirect, undivided legal and beneficial interest of Pan Andean in the Licences and (ii) the relevant percentage right, title and interest of Pan Andean in and under the Licence Documents including in all jointly owned property and equipment owned in relation thereto and (iii) the Security Deposits; |
| "Licence Liabilities" | all liabilities and obligations that relate to the period following the Effective Date (but to include the CCP Liability and the Pre Approved Funds) arising under or in relation to the Licence Interests or the Licence Interest Documents (including in relation to those employees and consultants detailed in Schedule 4 to the Implementation Agreement); |
| "London Stock Exchange" | London Stock Exchange plc;
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| "Long-Stop Date"
| 30 April 2010 or such later date (if any) that the Parties may agree in writing and (if required) the Court may allow;
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| "Meeting(s)" | the Court Meeting and/or the General Meeting, as the case may be;
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| "New Pan Andean Shares" | the new Pan Andean Shares to be created in accordance with the Scheme;
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| "Offer" | the recommended offer being made by Petrominerales as a result of which Petrominerales is to acquire the entire issued and to be issued share capital of Pan Andean, which offer is to be effected by way of the Scheme, and where the context requires, any subsequent revision, variation, extension or renewal of such offer;
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| "Option Holders" | holders of Pan Andean in-the-money Options as at 1 October 2009;
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| "Overseas Shareholders" | persons resident in, or citizens of, jurisdictions outside the UK or the Republic of Ireland;
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| "Panel" | the Panel on Takeovers and Mergers;
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| "Pan Andean" or the "Company" | Pan Andean Resources plc, a public limited company incorporated in England and Wales with registered number 02231725;
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| "Pan Andean Directors" | the individuals whose names are set out on page iii of the Scheme Document;
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| "Pan Andean Group"
| Pan Andean and its subsidiaries and subsidiary undertakings and, where the content permits, each of them;
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| "Pan Andean in-the-money Options"
| the outstanding options to acquire Pan Andean Shares granted under the Share Option Scheme with an exercise price per Pan Andean Share of less than £0.15 and which are vested and exercisable in accordance with the rules of the Share Option Scheme;
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| "Pan Andean Non-Completion Fee" | has the meaning given to it in paragraph 5 of Section A of Part 5 of the Scheme Document;
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| "Pan Andean Shares" | ordinary shares of £0.01 each in the capital of Pan Andean;
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| "Pan Andean Shareholder(s)" | holders of Pan Andean Shares;
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| "Pan Andean Warranties"
| the warranties of Pan Andean and Hydrocarbon set out in Part 1 of Schedule 2 to the Implementation Agreement; |
| "Parties"
| parties to the Implementation Agreement, being Petrominerales, Pan Andean and Hydrocarbon and "Party" being any one of these;
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| "Person"
| any individual, firm, partnership, joint venture, association, trust, trustee, administrator, body corporate, Governmental Entity or other entity having legal status or not;
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| "Petrominerales" | Petrominerales Ltd, a company incorporated in the Bahamas under the International Business Companies Act, 2000 (Bahamas) on 20 April 2006
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| "Petrominerales Directors"
| the directors of Petrominerales as at the date of this announcement, as set out in paragraph 2.4 of Part 7 of the Scheme Document;
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| "Petrominerales Group"
| Petrominerales and its subsidiaries and subsidiary undertakings and, where the context admits, each of them;
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| "Petrominerales Non-Completion Fee"
| has the meaning given to it in paragraph 5 of Section A of Part 5 of the Scheme Document; |
| "Petrominerales Shares" | common shares without par value in the capital of Petrominerales;
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| "Petrominerales Warranties" | the warranties of Petrominerales set out in Part 2 of Schedule 2 of the Implementation Agreement; |
| "Pre Approved Funds"
| funds which have been approved in writing by an operational committee established by Pan Andean and Petrominerales in accordance with the Antorcha Interim Agreement;
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| "Proposals" | the Offer, the Scheme, the Demerger and the other matters to be considered at the Meetings, more details of which are set out in Part 1 and Part 2 of the Scheme Document;
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| "Registrar" or "Registrar of Companies" | the Registrar of Companies in England and Wales;
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| "Restricted Jurisdiction"
| any jurisdiction in relation to which the extension or acceptance of the Offer to such jurisdiction would be unlawful, or which Petrominerales and Pan Andean agree would be likely to involve disproportionate complexity or risk;
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| "Restricted Overseas Shareholder"
| an Overseas Shareholder who is resident in, or a citizen of a Restricted Jurisdiction (or any custodian nominee or trustee for such persons);
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| "Retained Assets and Liabilities"
| together the Licence Interests and the Licence Liabilities; |
| "Scheme" or "Scheme of Arrangement" | the scheme of arrangement under Part 26 of the Companies Act between Pan Andean and the Scheme Shareholders and the Capital Reduction and the Demerger Reduction and repayment of capital under Chapter 10 of Part 17 of the Companies Act, as set out in Part 4 of the Scheme Document in its present form or with or subject to any modification, addition or condition agreed between Pan Andean and Petrominerales and approved or imposed by the Court;
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| "Scheme Document" | The document being posted to Pan Andean Shareholders today setting out the details of the Proposals and procedures to be followed to approve the Scheme;
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| "Scheme Expenses"
| all reasonable and properly incurred expenses incurred by Pan Andean in relation to the Implementation Agreement and its implementation, plus any value added or other sales tax payable thereon;
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| "Scheme Record Time"
| 6.00 p.m. on the last Business Day immediately prior to the Effective Date; |
| "Scheme Resolutions"
| the resolutions to be proposed at the Court Meeting in connection with, inter alia, the approval of the Scheme and the sanctioning of the Capital Reduction and the Demerger Reduction and repayment of capital, as set out in the notice of Court Meeting at Part 8 of the Scheme Document;
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| "Scheme Shareholders" | a registered holder of Scheme Shares and any person entitled thereto by transmission;
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| "Scheme Shares"
| Pan Andean Shares:
(a) in issue at the date of this announcement, namely 119,227,733; (b) (if any) issued after the date of this announcement and prior to the Voting Record Time in respect of the Court Meeting; and (c) (if any) issued on or after the Voting Record Time and at or prior to the Scheme Record Time either on terms that the original or any subsequent Scheme Shareholders thereof shall be bound by the Scheme or in respect of which the Scheme Shareholder thereof shall have agreed in writing to be bound by the Scheme,
save for any Pan Andean Shares held (whether legally or beneficially) by Petrominerales or its nominee(s);
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| "SEC"
| the United States Securities and Exchange Commission;
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| "Security Deposits" | the deposit in the amount of US$70,000 in respect of an operator's bond for Block 161, Peru and the deposit in the amount of $163,230.49 in respect of the Colombia work programme, or in such other amounts as are agreed between the Parties;
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| "Share Option Scheme" | the Pan Andean unapproved share option plan adopted on 12th September 1988;
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| "uncertificated" or "uncertificated form" | in relation to a share or other security, title to which is recorded in the relevant register of the share or security as being held in uncertificated form in CREST, and title to which, by virtue of the CREST Regulations, may be transferred by means of CREST;
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| "United Kingdom" or "UK" | the United Kingdom of Great Britain and Northern Ireland;
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| "United States" or "US"
| the United States of America, its territories and possessions, any state or political sub-division of the United States of America and the District of Columbia and all the other areas subject to its jurisdiction;
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| "US Securities Act"
| the United States Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder;
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| "Voting Record Time"
| the time fixed by the Court and Pan Andean for determining the entitlement to vote, respectively, at the Court Meeting and the General Meeting as set out in the respective notices thereof; and |
| "Working Capital"
| current assets minus current liabilities (other than the Scheme Expenses, the CCP Liability and the Pre Approved Funds) determined pursuant to generally accepted accounting principles in United Kingdom.
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