Rodeo Capital II Corp.
TSX VENTURE : ROP.P

May 25, 2011 18:33 ET

Rodeo Capital II Corp. Enters Into Definitive Agreement With Shona Energy Company, Inc. and an Engagement Letter for CDN $30,000,000 Financing

CALGARY, ALBERTA--(Marketwire - May 25, 2011) -

NOT FOR DISSEMINATION IN THE UNITED STATES. FAILURE TO COMPLY WITH THIS RESTRICTION MAY CONSTITUTE A VIOLATION OF UNITED STATES SECURITIES LAW.

Rodeo Capital ll Corp. (TSX VENTURE:ROP.P) (the "Company" or "Rodeo II"), a capital pool company, is pleased to announce that, further to its initial press release dated May 12, 2011, it has signed a definitive agreement dated May 25, 2011 (the "Definitive Agreement") with Shona Energy Company, Inc. ("Shona") to complete its "Qualifying Transaction", as such term is defined in the policies of the TSX Venture Exchange (the "Exchange") (the "Transaction").

Shona, incorporated in Delaware and based in Houston, Texas, is an international oil and gas exploration, development and acquisition company that was founded in January 2005. Shona's primary business focus is on South America including, without limitation, Colombia and Peru, where management of Shona has extensive exploration, production and financial experience.

Rodeo II has entered into an engagement letter dated May 25, 2011 (the "Engagement Letter"), with AltaCorp Capital Inc. as sole bookrunner and lead agent. In connection with the Transaction, it is anticipated that Rodeo ll (or its wholly-owned subsidiary) will complete a brokered private placement of subscription receipts for aggregate gross proceeds of up to CDN$30,000,000 (the "Financing") or such other amount as the parties may agree to in writing. The agents will also be granted an option to increase the size of the Financing by up to 10%. The Financing will be completed by way of a private placement of subscription receipts of Rodeo II or its wholly-owned subsidiary (the "Subscription Receipts") with the gross proceeds from the Financing being held in escrow until closing of the Transaction. Concurrently with the closing of the Transaction, the Subscription Receipts will be automatically exchanged for common shares of the Resulting Issuer, on a one-for-one basis, on the effective date of the business combination between Rodeo II and Shona in accordance with the Definitive Agreement. The Resulting Issuer will use the proceeds to expand Shona's current oil and gas programs and for general corporate purposes.

Summary of the Qualifying Transaction

The Definitive Agreement provides that the Transaction will include a court-approved plan of arrangement under the Business Corporations Act (British Columbia) (the "Arrangement") involving the amalgamation of Shona, its wholly-owned British Columbia subsidiary ("Shona Subco") and Rodeo II's wholly-owned British Columbia subsidiary ("Rodeo ll Subco"). Under the Arrangement, holders of Shona's common shares will receive common shares in the capital of Rodeo II ("Rodeo ll Common Shares") as consideration for participating in the Arrangement. The holders of Shona's currently outstanding common shares, preferred shares, warrants and special warrants will have the right to vote on the Transaction at a special meeting of the Shona securityholders. Subject to Shona securityholder approval, the preferred shares and warrants will become outstanding preferred shares and warrants of the Resulting Issuer (as defined below) on like terms. The special warrants will be converted into common shares of Shona just prior to the Transaction taking effect. Upon completion of the Transaction, which is currently anticipated to occur on or about August 17, 2011, the current securityholders of Shona will own a majority of the issued and outstanding shares of the resulting publicly traded issuer (the "Resulting Issuer"). The Resulting Issuer will be an oil and gas issuer.

Approval of the Transaction by the shareholders of Rodeo ll is not expected to be required by the Exchange since the Transaction is not a "non arm's length transaction" pursuant to the policies of the Exchange. However, as part of the Transaction, a meeting of the shareholders of the Company will be called in order to obtain approval for (i) the consolidation of the issued and outstanding Rodeo ll Common Shares on a 3 for 1 basis; (ii) the change of the Company's name to "Shona Energy Company, Inc."; (iii) the election of the proposed directors and officers of the Resulting Issuer; (iv) the adoption of a new incentive stock option plan; and (v) the amalgamation of Rodeo II with the amalgamated entity resulting from the Arrangement.

Sponsorship of the Qualifying Transaction

Rodeo II has applied for an exemption from the sponsorship requirements pursuant to the policies of the Exchange. If the exemption is not granted by the Exchange, then Rodeo II would be required to engage a sponsor.

Trading Halt

At the Company's request, trading in the Rodeo ll Common Shares was halted by the Exchange on May 12, 2011. Trading is expected to remain halted until, at the earliest, the completion of the Transaction.

About Rodeo Capital ll Corp.

Rodeo ll is a CPC that completed its initial public offering and obtained a listing on the Exchange in February 2011 (Trading Symbol: "ROP.P"). Prior to entering into the Definitive Agreement, Rodeo ll did not carry on any active business activity other than reviewing potential transactions that would qualify as Rodeo II's Qualifying Transaction. Rodeo II currently has 5,500,000 common shares issued and outstanding.

About Shona Energy Company, Inc.

Shona, incorporated in Delaware and based in Houston, Texas, is an international oil and gas exploration, development and acquisition company that was founded in January 2005. Shona's primary business focus is on South America including, without limitation, Colombia and Peru, where management of Shona has extensive exploration, production and financial expertise.

Rodeo ll will prepare and disseminate a subsequent Press Release including summary financial information and oil and gas reserve data of Shona.

Cautionary Note

The Transaction is subject to a number of conditions including, without limitation, approval of the Exchange, approval of the Supreme Court of British Columbia, approval of certain of the securityholders of Shona and Rodeo II, completion of the share consolidation by Rodeo ll and completion of the Financing. Where applicable, the Transaction cannot close until all required approvals have been obtained. There can be no assurance that the Transaction will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the continuous disclosure document containing full, true and plain disclosure regarding the Transaction, required to be filed with the securities regulatory authorities having jurisdiction over the affairs of the Company, any information released or received with respect to the Transaction may not be accurate or complete and should not be relied upon. The trading in the securities of Rodeo ll on the Exchange, if reinstated prior to completion of the Transaction, should be considered highly speculative.

ON BEHALF OF THE BOARD OF DIRECTORS:

Michael G. Thomson, President, Chief Executive Officer and Chief Financial Officer and Director

This press release contains forward-looking information. More particularly, this press release contains statements concerning the prospective Qualifying Transaction of the Company. The information about Shona contained in the press release has not been independently verified by the Company. Although the Company believes in light of the experience of its officers and directors, current conditions and expected future developments and other factors that have been considered appropriate that the expectations reflected in this forward-looking information are reasonable, undue reliance should not be placed on them because the Company can give no assurance that they will prove to be correct. Forward¬looking information involves known and unknown risks, uncertainties, assumptions (including, but not limited to, assumptions on the performance and financial results of Shona) and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking information. The terms and conditions of the prospective Qualifying Transaction may change based on the Company's due diligence on the respective companies and properties of Shona (which is going to be limited as the Company intends largely to rely on the due diligence of other parties of the Transaction to contain its costs, among other things and the Transaction, the success of the Financing, regulatory and third party comments, consents and approvals and the ability to meet the conditions of the Qualifying Transaction in the required timeframes. The forward-looking statements contained in this press release are made as of the date hereof and the Company undertakes no obligations to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.

Completion of the Transaction is subject to a number of conditions, including but not limited to, Exchange acceptance and if applicable pursuant to Exchange requirements, majority of the minority shareholder approval. Where applicable, the Transaction cannot close until the required shareholder approvals are obtained. There can be no assurance that the Transaction will be completed as proposed or at all.

This press release is not an offer of the securities for sale in the United States. The securities have not been registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an exemption from registration. This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in any state in which such offer, solicitation or sale would be unlawful.

Investors are cautioned that, except as disclosed in the management information circular, filing statement or other continuous disclosure document to be prepared in connection with the Transaction, any information released or received with respect to the Transaction may not be accurate or complete and should not be relied upon. Trading in the securities of a capital pool company should be considered highly speculative.

The TSX Venture Exchange Inc. has in no way passed upon the merits of the Transaction and has neither approved nor disapproved the contents of this press release.

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 press release.

Contact Information

  • Rodeo Capital ll Corp.
    Michael G. Thomson
    President, Chief Executive Officer
    and Chief Financial Officer and Director
    Vancouver Office: (604) 484-6628 or Cellular: (604) 312-4777
    tsxthomson@gmail.com