Platino Energy Corp.
TSX VENTURE : PZE

Platino Energy Corp.

May 30, 2015 14:23 ET

Platino Announces Proposed Acquisition

CALGARY, ALBERTA--(Marketwired - May 30, 2015) - Platino Energy Corp. (TSX VENTURE:PZE) ("Platino" or the "Company"), is pleased to announce that it has entered into a definitive acquisition agreement (the "Acquisition Agreement") pursuant to which, inter alia, an affiliate of a fund managed by Denham Capital Management LP ("Denham") will acquire all of the outstanding common shares of Platino for consideration of C$0.25 per share (the "Transaction"). This purchase price represents an approximately 9% premium to the volume-weighted average price of the Platino common shares on the TSX Venture Exchange for the 30 trading days ended on May 29, 2015, being the last trading day prior to the date of agreement.

Background

As is the case for most junior oil and gas companies, and more fully described in Platino's financial statements and management's discussion and analysis for the quarter ended March 31, 2015 (a "First Quarter 2015 Reports"), given the capital-intensive nature of its operations, potential value-creation activities from the Company's assets require access to material external funds. In parallel with the precipitous drop in oil prices witnessed since late 2014, Platino's ability to secure such funding from the public markets has come under pressure. The drop in oil prices has also led to a reduction in Platino's borrowing ability under its existing credit facility. These issues have significantly impacted the Company's ability to continue executing on its planned operational activities (such activities being aimed at increasing oil production and associated cash flow during the year) and have culminated in the Company potentially not having sufficient funds during the balance of 2015 to cover its costs. Investors are urged to consult the more fulsome description of the Company's current operational and financial position set forth in the First Quarter 2015 Reports which have been filed under the Company's profile on SEDAR at www.sedar.com.

In response to the events noted above, Platino has been actively seeking out alternatives and has entered into discussions with various entities, including its largest shareholder, a separate fund managed by Denham, to secure the capital required to continue to execute on its business plan. This process culminated with the Company negotiating the terms of the Transaction, which the Company believes offers Platino's shareholders (other than Denham and its affiliates) a concrete opportunity to recognize the value inherent in the Company's assets.

The Transaction is proposed to be effected by way of amalgamation of the Company with the Denham fund's affiliated entity, and is subject to a number of customary conditions, including the receipt of all applicable approvals, including without limitation the approval by the TSXV and the requisite approvals of shareholders of Platino, as well as other customary closing conditions. Each of the directors and executive officers of Platino, as well as certain investment vehicles managed by Denham, representing in aggregate approximately 27% of the issued and outstanding Platino common shares (on a non-diluted basis) have committed to vote their Platino common shares in favour of the Transaction at the Platino special shareholders meeting. The Transaction will require approval of 66 2/3% of Platino shareholders voting in person or by proxy at a special meeting of Platino shareholders to be called to consider the Transaction and a "majority of the minority" as required by Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions ("MI 61-101") after excluding the votes cast in respect of Platino common shares held by Denham, its affiliates and such other persons as are required to be excluded under MI 61-101.

Under the terms of the Acquisition Agreement, Platino has agreed that it will not solicit or initiate any inquiries or discussions regarding any other business combination or acquisition proposal, subject to the fiduciary duty of its Board of Directors. In certain circumstances, Platino has agreed to pay a termination fee of C$1.0 million.

All of Platino's outstanding stock options have an exercise price of equal to C$0.25 per share and are accordingly "out-of-the-money" under the terms of the Transaction. As a result, the holders of the outstanding stock options have agreed to the termination of all such "out-of-the-money" options for nominal consideration.

Complete details of the terms of the Transaction are set out in the Acquisition Agreement, which will be filed by Platino under its profile on SEDAR at www.sedar.com. In addition, further information regarding the Transaction will be contained in an information circular, to be prepared by Platino, which will be filed and mailed in due course to the Platino shareholders in connection with the requisite shareholder approvals of the Transaction. It is expected that the Platino shareholder meeting will take place in mid-July 2015, with closing of the Transaction expected to occur shortly thereafter, but in any event on or before August 31, 2015. All shareholders are urged to read the information circular once it becomes available, as it will contain additional information concerning the Transaction.

Special Committee and Financial Advisor

The board of directors of Platino established a special committee (the "Special Committee") of independent directors to review the proposed Transaction. CIBC World Markets Inc. ("CIBC") acted as financial advisor to the Special Committee with respect to the Transaction and has provided the Special Committee with the opinion that, as of the date of approval of the Acquisition Agreement and subject to the assumptions, limitations and qualifications set forth therein, the consideration to be received by Platino shareholders pursuant to the Acquisition Agreement is fair, from a financial point of view, to the Platino shareholders other than Denham and any of its affiliates.

Board of Directors Recommendation

The Board of Directors of Platino, on the recommendation of the Special Committee, has unanimously approved (with each interested director abstaining) the Transaction and, based in part on the verbal fairness opinion from CIBC, has unanimously determined that the Transaction is in the best interests of Platino and is fair to the Platino shareholders (excluding Denham and its affiliates) and has resolved to recommend that the Platino shareholders vote in favour of the Transaction.

About Platino

Platino is a Calgary, Alberta headquartered resource company engaged in the exploration for, and the acquisition, development and production of hydrocarbons in Colombia.

Forward-Looking Statements

Certain statements contained in this news release constitute forward-looking information and statements within the meaning of applicable Canadian securities laws (collectively, "forward looking information"). The use of any of the words "estimated", "potentially", "will", and similar expressions are intended to identify forward-looking information. In particular, but without limiting the foregoing, this news release contains forward-looking information pertaining to, among other things: (a) the Company's expectations respecting its ability to cover costs for the balance of 2015; (b) the timing of the Platino shareholder meeting and expected closing date of the Transaction; (c) the benefits of the Transaction to Platino and its shareholders; and (d) other expectations, beliefs, plans, goals, objectives, assumptions, information and statements about possible future events, conditions, results of operations or performance.

Various material factors, expectations and assumptions were used in drawing the conclusions or making the forecasts and projections contained in the forward-looking information throughout this news release including, without limitation, expectations and assumptions relating to: (a) productivity estimates from the Company's wells; (b) future industry and economic conditions and areas for growth and development; (c) commodity prices, foreign currency exchange rates and interest rates; (d) capital expenditure programs and other expenditures; (e) the ability of the Company to access funds under its current credit facility in the future; (f) Platino's future operating and financial results; and (g) treatment under governmental regulatory regimes and tax, environmental and other laws; (h) the receipt of all necessary regulatory and third party approvals in respect of the Transaction; (i) the receipt of shareholder approval in respect of the Transaction; (j) that all conditions to the completion of the Transaction will be satisfied or waived in the manner and on the timelines contemplated in the Acquisition Agreement; and (k) the intentions of counterparties, including Denham and its affiliates.

The forward-looking information included in this news release is not a guarantee of future performance and should not be unduly relied upon. Such information involves known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking information including, without limitation: (a) volatility in market prices for oil and natural gas; (b) volatility in exchange rates for the U.S. dollar relative to other world currencies; (c) liabilities and risks inherent in the oil and gas industry; (d) well work-over efforts may not have the impact currently anticipated by the Company and may not be successful; (e) changes in general economic, market and business conditions in Colombia and worldwide; (f) actions by governmental or regulatory authorities (both domestic and foreign), including changes in tax laws and the risk of nationalization and expropriation of assets; (g) the impact of adverse weather on the operations of Platino and its subsidiaries; and (h) increases and overruns in operating costs. The Transaction is subject to a number of conditions and third party and regulatory approvals. The impact, outcome and timing of the proposed Transaction may differ from that currently anticipated by Platino and regulatory, third party and requisite shareholder approvals may not be obtained on the timelines anticipated or at all. Platino cautions that the foregoing list of assumptions, risks and uncertainties is not exhaustive.

Additional information on these and other factors that could affect the operations or financial results of Platino are included in the Listing Application (Form 2B) of Platino filed with the TSXV, which has been filed with applicable securities regulatory authorities and may be accessed through the SEDAR website www.sedar.com. The forward-looking information contained in this news release is made as of the date hereof and Platino undertakes no obligation to update publicly or revise any forward-looking information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.

The TSXV has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this press release. Neither the TSXV not its Regulation Services Provider (as that term is defined in the policies of the TSXV) accepts responsibility for the adequacy or accuracy of this release.

Contact Information

  • Platino Energy Corp. - Bogota
    Tomas Villamil
    President & Chief Executive Officer
    +57(1) 235-0007

    Platino Energy Corp. - Calgary
    Rafi Khouri
    Vice President, Business Development
    +1(403) 262-6046