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.