Gran Tierra Energy Inc. (Gran Tierra) has entered into an agreement to acquire PetroLatina Energy Ltd. (PetroLatina) for cash consideration of $525 million, consisting of an initial payment of $500 million at closing, subject to closing adjustments, and a deferred payment of $25 million prior to December 31, 2016. PetroLatina is a private, independent exploration and production company with assets primarily in the Middle Magdalena basin of Colombia.
"The Acquisition represents a unique material opportunity in Colombia in terms of scale and upside potential, and will add a new core area for Gran Tierra in the prolific Middle Magdalena Basin," commented Gary Guidry, Gran Tierra's President and CEO, "The combination of Gran Tierra's strong, positive cash-flowing asset base and PetroLatina's attractive portfolio of development opportunities will create a premier Colombia-focused exploration and production company."
The Acquisition is expected to be funded through a combination of Gran Tierra's current cash balance, available borrowings under Gran Tierra's existing credit facilities, a new $130 million debt facility, and a private placement of up to $173.5 million of subscription receipts ("Subscription Receipts") priced at $3.00 per Subscription Receipt entitling each holder thereof to one share of common stock in the capital of the Corporation ("Common Shares"). The pricing reflects a 7.9 percent discount from the five day volume weighted average price of $3.26.
"Our balance sheet and financial strength along with low cost operations allow us to execute on our growth strategy in a low oil price environment," said Guidry. "We are acquiring significant proved, probable and possible reserves in a new core area in the Middle Magdalena basin which we expect to enhance our long-term growth strategy and to be an excellent fit with Gran Tierra's current reserves and resources base in the Putumayo basin."
