TORONTO, June 5, 2012 /CNW/ - Pacific Rubiales Energy Corp. (TSX: PRE; BVC: PREC; BOVESPA: PREB) today announced that it has entered into a definitive agreement (the "Arrangement Agreement") with PetroMagdalena Energy Corp. (TSX-V: PMD) pursuant to which the Company has agreed to acquire all of the issued and outstanding common shares in the capital of PetroMagdalena by way of a Plan of Arrangement under the British ColumbiaBusiness Corporations Act (the "Arrangement").
PetroMagdalena, which is listed on the TSX Venture Exchange with a market capitalization of approximately CDN$187 million, is a Canadian-based oil and gas exploration and production company with working interests in 19 properties in five basins in Colombia.
Under the Arrangement, shareholders of PetroMagdalena will, following closing of the transaction, receive CDN$1.60 in cash for each common share of PetroMagdalena held. In addition, holders of PetroMagdalena's share purchase warrants (TSX-V: PMD.WT) will, following closing, receive CDN$0.25 in cash for each unexercised warrant held. The Company intends to finance the acquisition cost (approximately CDN$253 million) using existing cash on hand.
Ronald Pantin, Chief Executive Officer of Pacific Rubiales, said, "We are very pleased to strike this deal with PetroMagdalena, which is already a key provider of light oil as diluent for our crude. We believe this acquisition is both very complementary and accretive to our existing business."
Each company's board of directors unanimously approved the terms of the proposed transaction. Both Miguel de la Campa and Serafino Iacono, directors of the Company who are also directors of PetroMagdalena, did not participate in any discussions or negotiations regarding the approval of the proposed acquisition and abstained from the boards' deliberations.