Assets sold-now what? -11-25 07:09 ET - News Release
Mr. Ron MacMicken reports
SANTA MARIA PETROLEUM INC. DISPOSES OF ITS PARTICIPATION INTEREST IN THE INVESTMENTS, INCOME AND REVENUES OF THE LLANOS 27 PROJECT IN THE LLANOS BASIN IN COLOMBIA
On Nov. 21, 2013, Santa Maria Petroleum Inc. entered into a share purchase agreement with Global Oil & Gas Services Ltd., a company incorporated pursuant to the laws of Dubai, United Arab Emirates, by which Global will acquire all of the shares of a newly incorporated wholly owned subsidiary of Santa Maria (Newco). Through a reorganization to be completed by Dec. 18, 2013, Santa Maria shall transfer to Newco the assets and liabilities of its Colombian branch, including its participation interest in the investments, income and revenues of the Llanos 27 project in the Los Llanos basin in Colombia, subject to a working capital adjustment. Under the working capital adjustment, Newco will have a cash balance of $450,000 (U.S.), and all amounts receivable, including refundable value-added-tax and income tax amounts, will be paid to Santa Maria. Santa Maria will pay all outstanding trade liabilities incurred to the closing date.
Under the share purchase agreement, Global shall replace the $1.85-million (U.S.) letter of credit that had been provided by Santa Maria to the Agencia Nacional de Hidrocarburos in order to guarantee the operator's work commitments on this project. This letter of credit is currently secured by a guaranteed investment certificate. When the letter of credit is released and the working capital requirement is financed, the remaining funds, approximately $1.4-million, will be transferred to the company's general cash balances.
The foregoing transaction constitutes a sale of all or substantially all of the property and assets of the company. The share purchase agreement is subject to various conditions, including, but not limited to, receiving the approval of the company's shareholders and the TSX Venture Exchange. Notice of a special shareholder meeting will be made in due course.
Following the sale of Newco and the effective transfer of its interest in the project, Santa Maria will have disposed of all its interests in Colombia and will have no further work commitments or financial obligations arising from its former interests in Colombia. Management will assess the options for the company upon closing of the Global transaction.