Offer by Petrominerales

RNS Number : 8064D

Pan Andean Resources PLC

09 December 2009

 



9th December 2009

PROPOSED ACQUISITION OF PAN ANDEAN

●	Pan Andean has received an offer from Petrominerales Ltd (TSX: PMG);
●	Pan Andean shareholders will receive GBP 0.15 (15 pence) cash for each share they hold, plus a one for one share in Hydrocarbon Exploration, an unlisted Plc;
●	The effect of the offer is that each shareholder will receive GBP 0.15 a share for the Colombian and Peruvian assets of Pan Andean, with the US and Bolivian interests remaining with existing shareholders.

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:

Pan Andean
David Horgan, Managing Director	+ 353 87 292 3500
John Teeling, Chairman	+ 353 1 833 2833
Smith & Williamson Corporate Finance	[phone]
Nick Reeve
Barrie Newton
College Hill
Nick Elwes	[phone]

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):

●	Approval of Pan Andean shareholders
●	The sanction of the Scheme by the Court
●	Pan Andean obtaining all necessary consents and approvals necessary to implement the transactions contemplated by the Scheme
●	The warranties provided by Pan Andean to Petrominerales pursuant to implementation agreement being true and correct in all material respects at the effective date of the Scheme
●	The implementation agreement not having been terminated

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):

●	Mutual written consent of Pan Andean and Petrominerales
●	By either party if certain conditions set out in the implementation agreement are not fulfilled on or before 30th March 2010.

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.

 

END

 

 

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