PETRO RIO SA V.PRJ

NEW REVERSAL SPLIT 25:1

[Rzbern]

MATERIAL FACT-PETRORIO PROPOSES REVERSAL SPLIT AND COMMON SHARES BUY BACK PROGRAM TO BE APPROVED IN A SHAREHOLDERS MEETING 

Rio de Janeiro, March 21, 2016 - Petro Rio S.A. ("PetroRio" or the "Company") (BM&FBOVESPA: PRIO3, TSX-V: PRJ) hereby announces that, in a meeting held today, its Board of Directors have approved the convening of the Shareholders Annual and Special Meeting to be held on April 29, 2016 to decide, among other matters: (i) the reverse split of common shares and Global Depositary Shares (GDSs) issued by the Company at the rate of 25 (twenty five) common shares and 25 (twenty five) GDSs for 1 (one) common share and 1 (one) GDS, respectively, maintaining the same proportion currently in force of 2 (two) GDSs to 1 (one) common share and (ii) the implementation of a buyback program of up to 16,500,000 (sixteen million five hundred thousand) Company‘s common shares within 18 (eighteen) months, without capital reduction, to be held in treasury, cancellation and/or subsequent sale. The maximum amount of common shares to be acquired in the buyback program will be adjusted to reflect the reverse split mentioned in item (i) above, if it is approved. 

The proposed reverse split will mitigate the excessive risk of volatility in the price of these securities, provided that it will allow the price per share and per GDS should not be as low as minor fluctuations could represent a high percentage. Additionally, this proposed reverse split will reduce the possibility breach of the BM&FBovespa rules (Regulamento para Listagem de Emissores e Admisso Negociao de Valores Mobilirios), which do not allow stock prices quoted below R$ 1.00 (one real). 

The Management believes that the buyback program to be voted in such Shareholders Annual and Special Meeting aims to provide that market price of the shares shall reflect more appropriately the Company’s intrinsic value. In view of the involved amount in the proposed buyback program compared to the Company‘s cash availability history and considering the general evaluation from Management regarding PetroRio’s financial situation, it is understood that the share buyback shall not affect the compliance with creditors or the payment of mandatory dividends. 

PetroRio, one of the most important emerging companies in the Brazilian oil and gas industry, is focusing in the development of a solid growth platform aiming at generating value for its shareholders. 

https://ri.petroriosa.com.br/conteudo_en.asp?idioma=1&tipo=32124&conta=44&id=223718