Estrella International Energy Services Ltd.
TSX VENTURE : EEN

Estrella International Energy Services Ltd.

January 24, 2011 09:25 ET

Estrella Completes the $15,000,000 Private Placement of Subscription Receipts and Enters Into Binding Documentation to Acquire Petroland and Zigma

CALGARY, ALBERTA--(Marketwire - Jan. 24, 2011) - Estrella International Energy Services Ltd. ("Estrella") (TSX VENTURE:EEN) is pleased to announce that it has executed formal documentation and has signed the binding agreements to acquire 49% of the issued and outstanding shares of each Petroland SAS ("Petroland"), and Zigma Colombia Petroleum Services S.A. ("Zigma"), for a purchase price (the "Purchase Price") of approximately $10.4 Million (the "Acquisition") The Purchase Price is payable in cash and is currently being held in escrow pending the completion of certain administrative actions on the part of the Vendors. Each of Petroland and Zigma are oil and gas services companies based in Colombia. As a result of this acquisition Estrella will operate an aggregate of 25 Rigs, 17 of which are located in Colombia.

Petroland is a well established oil field services company, with a primary operations base in BarrancaBermeja, Colombia. The company has six workover rigs and one drilling rig, all of which are currently operating on contracts. Zigma is a company with a reemerging presence in the Llanos basin which operates three drilling and two workover rigs. Three of these rigs are currently operating on contract. Both Petroland and Zigma are headquartered in Bogota and are managed by the same senior management team.

Estrella is also pleased to announce that it has completed a previously announced private placement (the "Private Placement") of 150 subscription receipts (the "Subscription Receipts") at price of $100,000 per Subscription Receipt for gross proceeds of $15,000,000 through Canaccord Genuity Corp. (the "Underwriter"). The proceeds of the Private Placement will be used by the Corporation to pay the purchase price for the Acquisition and for general corporate purposes.

Each Subscription Receipt issued in connection with the Private Placement entitles the holder to receive, without payment of additional consideration or further action, one unit ("Unit") at a price of $100,000 per Unit (the "Offering Price"). Each Unit consists of: (a) $100,000 par value of one 5-year convertible subordinated unsecured debentures maturing on December 31, 2015, and bearing a coupon interest rate of 12% per annum, payable semi-annually in arrears in cash or common shares (the "Convertible Debentures"); and (b) one common share purchase warrant (the "Warrant") entitling the holder to acquire 12,500 common shares of Estrella ("Warrant Shares") at $0.80 per share, exercisable for a period of 5 years from the closing date of the Offering (the "Closing Date"). All of the securities issued in connection with the Offering are subject to a hold period of four months and one day.

The principal amount of the Convertible Debentures, plus all accrued and unpaid interest, is at the option of debenture-holders, convertible into common shares of Estrella ("Common Shares") at any time at a conversion price of $1.00 per Common Share.

The principal amount of the Convertible Debentures, plus all accrued and unpaid interest, will be redeemable, in whole or in part, at the option of Estrella without penalty, provided that the weighted average trading price of the Common Shares, for the 20 consecutive trading days ending five trading days preceding the date on which notice of redemption is given, is not less than $1.50. Estrella may satisfy its obligation to repay the principal amount of the Convertible Debentures on redemption or maturity, by payment in Common Shares with a deemed issue price equal to 95% of the current market price of the Common Shares on the TSXV or the TSX as applicable.

In connection with the closing of the Private Placement, Estrella agreed to pay a fee to the Underwriter equal to 5% of the gross proceeds raised in the Private Placement.

In connection with the completion of the Acquisition, the Subscription Receipts will be exchanged for Units of the Corporation upon the delivery of a release notice executed by the Underwriter and Estrella, thereafter approximately $3.8 Million of the gross proceeds will be released to the Corporation for general corporate purposes. The balance of the proceeds will be used to pay the Purchase Price for the Acquisition, and will be held in trust with the Subscription Receipt Agent pending the completion of certain administrative actions to be taken by the vendors of the shares of Petroland and Zigma.

Warren Levy, Chairman and CEO of Estrella commented: "With the successful completion of these additional acquisitions as planned, Estrella now operates a combined fleet of 17 Rigs in Colombia, 14 of which are active on contract. We now hold a key share of the exciting and growing Colombian market, and look to use this as a springboard to further growth around the region."

Statements in this press release may contain forward-looking information, including statements regarding future financing and acquisition opportunities and receiving final Exchange approval. Any statements in this press release that are not statements of historical fact may be deemed to be forward-looking statements. Forward-looking statements are often identified by terms such as "may", "should", "anticipate", "expects" and similar expressions. Forward-looking statements in this press release include, but are not limited to, statements with respect to the future business plans and services and final Exchange approval of the Merger.

The reader is cautioned that assumptions used in the preparation of any forward-looking information may prove to be incorrect. Events or circumstances, such as future availability of capital on favourable terms, may cause actual results to differ materially from those predicted, as a result of numerous known and unknown risks, uncertainties, and other factors, many of which are beyond the control of Estrella. The reader is cautioned not to place undue reliance on any forward-looking information. Such information, although considered reasonable by management at the time of preparation, may prove to be incorrect and actual results may differ materially from those anticipated. Forward-looking statements contained in this press release are expressly qualified by this cautionary statement. The forward-looking statements contained in this press release are made as of the date of this press release, and Estrella does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as required by securities law.

THIS PRESS RELEASE, REQUIRED BY APPLICABLE CANADIAN LAWS, IS NOT FOR DISTRIBUTION TO U.S. NEWS SERVICES OR FOR DISSEMINATION IN THE UNITED STATES, AND DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO SELL ANY OF THE SECURITIES DESCRIBED HEREIN IN THE UNITED STATES. THESE SECURITIES HAVE NOT BEEN, AND WILL NOT BE, REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS, AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES OR TO U.S. PERSONS UNLESS REGISTERED OR EXEMPT THEREFROM.

Neither the 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.

Contact Information

  • Estrella International Energy Services Ltd.
    Christian Bauwens
    Chief Financial Officer
    +54 (11) 5217-5250
    or
    Estrella International Energy Services Ltd.
    Warren Levy
    Chairman & Chief Executive Officer
    +54 (11) 5217-5250
    +54 (11) 5217-5280 (FAX)
    info@estrellasp.com
    www.estrellasp.com