Pacific Rubiales shareholders urged to accept takeover bid

Canada’s Pacific Rubiales Energy, an oil company with assets in Latin America, has entered into a definitive takeover agreement with ALFA, S.A.B. de C.V. and Harbour Energy Ltd. and Harbour Energy, L.P. The company’s board has endorsed the bid and recommended shareholders do the same.

Under the agreement, a newly formed joint venture company between ALFA and Harbour Energy will buy all of the outstanding common shares of Pacific Rubiales by way of a court-approved Plan of Arrangement under the Business Corporations Act (British Columbia).

Pursuant to the Arrangement, each Common Share of Pacific Rubiales not already owned by ALFA will be acquired by the Purchaser for cash consideration of $6.50 Canadian dollars per share. ALFA currently owns 59,897,800 Common Shares (representing approximately 18.95% of the Common Shares).

As for the acquisition price, it represents a 39% premium to the closing price of the Common Shares on the Toronto Stock Exchange on May 4, 2015, the day prior to the announcement by the Company that it had entered into exclusive discussions with ALFA and Harbour Energy in respect of a possible transaction and an 81% premium to the 30-day volume weighted average price of the Common Shares on the TSX as at such date.

Furthermore, the transaction has received the unanimous approval of the board of directors of the Company, acting on the advice of a committee of independent directors.

The Board has recommended that shareholders of the company vote in favour of the arrangement at the upcoming special meeting of Shareholders to be held early in June.

To be effective, the Arrangement must be approved by a resolution passed at the shareholder meeting by not less than two-thirds (66 2/3%) of the votes validly cast by shareholders, and also by a simple majority of the votes validly cast by “minority” shareholders, present in person or by proxy at the meeting.

Subject to the satisfaction of all of the conditions to closing set out in the Arrangement Agreement, it is expected that the Arrangement will close in the third quarter of 2015.

Opposition

O’Hara Administration Co., a group of Venezuelan investors, has said that, together with other investors, it is opposing the proposed takeover of Pacific Rubiales.

O’Hara, with its joint actors, owns 19.50% of the issued and outstanding common shares of Pacific Rubiales.