Americas Petrogas Inc. has closed the previously announced sale transaction pursuant to which Tecpetrol International S.A. and Tecpetrol Internacional S.L. (Unipersonal) acquired all of the issued and outstanding common shares of Americas Petrogas Argentina S.A. ("APASA"), a wholly-owned subsidiary of the Company, and assumed certain intercompany indebtedness owing by APASA to the Company and its other subsidiaries, for an aggregate cash purchase price of US$59.8 million (approximately Cdn$79.4 million based on the noon exchange rate, as reported by the Bank of Canada) after an initial working capital adjustment in accordance with the terms of the purchase and sale agreement entered into between the Purchasers and the Company. The final Purchase Price is subject to any post-closing adjustments in accordance with the terms of the Sale Agreement. As part of the sale of the APASA shares, the Purchasers also assumed the third party financial debt of APASA in the amount of approximately US$2.5 million.
The Company retains its 89% ownership interest in GrowMax Agri Corp., which holds phosphate, potash interests, and other minerals in Bayovar, Peru.
Mr. Barclay Hambrook, President & CEO, stated "Management is pleased to conclude this transaction with Tecpetrol after a long and extensive strategic process. The Transaction strengthens the Company's balance sheet and will allow Americas Petrogas to implement a new sustainable business plan. Going forward, the Company will restructure itself, re-evaluate the exploration and development of retained assets, and consider new investment opportunities in the Americas with a focus on generating sustainable cash flows."
Pursuant to the terms of the Sale Agreement, following closing of the Transaction, the first US$4,000,000 of proceeds from the Argentina Oil Plus program or any substitution thereof ("Oil Plus Benefits") collected by APASA (net of any third party collection costs, payments to partners and pre-existing entitlements by third parties to such proceeds, "Net Oil Plus Amounts") shall accrue for the benefit of the Purchasers. Thereafter, the Purchasers will pay to the Company 50% of any additional Net Oil Plus Amounts collected during the earlier of (a) eighteen (18) months following receipt of the first US$4,000,000 of Net Oil Plus Amounts set out above; and (b) twenty-four (24) months after the closing. As previously disclosed by Americas Petrogas, on July 13, 2015, the Government of Argentina announced the issuance on July 6, 2015 of Decree No. 1330/2015 which acknowledges that Oil Plus related debt of US$784 million is payable to certain oil companies and which authorizes the Government of Argentina to satisfy the debt through the issuance of US dollar-linked government bonds (BONAD 2018) and US dollar-denominated government bonds (BONAR 2024). The Government of Argentina subsequently confirmed that, until December 31, 2016, there will be a restriction on the transfer or sale of more than 2% per month of any BONAR 2024 government bonds received in payment of Oil Plus Benefits related debt. Accordingly, any payment of BONAR 2024 government bonds by the Purchasers to the Company will be subject to this restriction on transfer until December 31, 2016, following which any unpaid balance of BONAR 2024 government bonds collected by APASA following closing will be payable to the Company by the Purchasers. The Company will be entitled to any interest earned on any such BONAR 2024 government bonds prior to their payment to the Company.
