Estrella International Energy Services Ltd.
TSX VENTURE : EEN

Estrella International Energy Services Ltd.

September 06, 2011 10:35 ET

Estrella Reaches Final Agreement to Complete the Acquisition of 100% of Petroland and Zigma

BUENOS AIRES, ARGENTINA--(Marketwire - Sept. 6, 2011) -

NOT FOR DISSEMINATION IN THE UNITED STATES OR THROUGH U.S. NEWSWIRES

Estrella International Energy Services Ltd. ("Estrella") (TSX VENTURE:EEN) is pleased to announce that it has renegotiated the final business terms with Eagle Transportes S.A., Colmaquinas Ltda, Transportes Montejo Ltda, Veristeel Ltd and Petroil Investments S.A. (collectively the "Sellers") and has executed a binding amending agreement (the "Amending Agreement") to complete the acqusition of 100% of the issued and outstanding shares of each Petroland SAS ("Petroland"), and Zigma Colombia Petroleum Services S.A. ("Zigma") (collectively the "Acquisition"). The Amending Agreement further amends the terms and conditions of the share purchase agreements made between Estrella and the Sellers dated January 22, 2011 as amended March 8, 2011 (the "Original Agreements") and takes Estrella's ownership position of each of Petroland and Zigma from 49% to 100%.

The purchase price for the Acquisition (the "Purchase Price") is approximately US$10.7 Million and the assumption of approximately US$13.5 Million of debt, some of which the Company may decide to repay at the time or shortly after consolidation. Upon completion of the Acquisition Estrella will hold a 100% interest in each of Petroland and Zigma.

Pursuant to the terms of the Amending Agreement the Purchase Price will be payable as follows:
  • US$1.5 Million in cash;

  • US$2.7 Million in net receivables of Petroland and Zigma

  • 6.25 Million common shares in the capital of Estrella with a deemed issue price of US$0.48; and

  • 4.5 Million preference shares with a deemed issue price of US$1.00. The holders of the preference shares will be entitled to a 6% cumulative dividend payable semi annually. Estrella may, at its sole option, elect to convert the preference shares into common shares, in the event that the 20 consecutive trading day closing price of the common shares of Estrella, is greater than or equal to US$1.00. The conversion rate shall be 1 common share of the Company for each preference share. The preference shares will be automatically convertible into common shares on the fifth anniversary of the date of issuance.

Closing of the transaction is subject to regulatory approval, and the completion of certain administrative actions on the part of the Vendors customary with this type of transaction.

The Amending Agreement includes a number of significant amendments in comparison to the Original Agreements, including the following key changes

  • a substantial reduction of the total number of common shares to be issued to the Sellers

  • issuance of common shares with a deemed value at a 33% premium to the current market price

  • the issuance of convertible preference shares with a deemed purchase price of $1 to the Sellers in lieu of additional common shares or cash

The resulting effect is a lowering of the overall purchase price and a substantial reduction in the total number of shares to be issued to the Sellers to close the acquisition.

Each of Petroland and Zigma are oil and gas services companies based in Colombia. As a result of this acquisition Estrella will continue to consolidate its position as one of the leading oil and gas service companies in Colombia.

Warren Levy, Chairman & CEO of Estrella commented: "Completing the acquisitions in Colombia is a crucial milestone in our regional expansion strategy. The full ownership gives us the freedom to make sound medium and long term decisions and move the operations up to the Estrella standard in a more timely fashion. On a consolidated basis, Estrella now operates 17 rigs in Colombia, making us one of the largest rig operators in this exciting and dynamic market. With over four hundred motivated employees in Colombia, we are well positioned to build off this strong foundation with additional growth around Latin America."

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 of Estrella.

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

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