PetroMagdalena announces all-cash offer by Pacific Rubiales

    




 TORONTO, June 5, 2012 /CNW/ - PetroMagdalena Energy Corp.  announced today that it has entered into a definitive  agreement (the "Arrangement Agreement") with Pacific Rubiales Energy  Corp. , pursuant to which Pacific Rubiales  has offered to acquire all of the issued and outstanding common shares  of PetroMagdalena (the "Shares") by way of a Plan of Arrangement under  the British Columbia Business Corporations Act (the "Arrangement"). 

 Under the Arrangement, shareholders of PetroMagdalena will receive  C$1.60 in cash for each outstanding Share, representing a premium of  approximately 38% on the 20 day volume weighted average price of  PetroMagdalena's common shares on the TSX-V as of June 4, 2012. In  addition, holders of all of the outstanding PetroMagdalena warrants   (the "Warrants") will receive C$0.25 in cash for each  unexercised Warrant held at closing. The Warrants had a closing trading  price on the TSX-V of C$0.215 on June 4, 2012. 

 PetroMagdalena's Board of Directors, after consultation with GMP  Securities L.P. ("GMP") who acted as PetroMagdalena's exclusive  financial advisor and Blake, Cassels & Graydon LLP, PetroMagdalena's  legal advisors, and based on the recommendation of an independent  committee of PetroMagdalena's Board of Directors formed specifically to  consider the offer, has unanimously determined that the Arrangement is  fair to PetroMagdalena's shareholders and warrantholders (collectively,  "Securityholders") and recommends that PetroMagdalena's Securityholders  vote in favour of the Arrangement. Both Miguel de la Campa and Serafino  Iacono, directors of the Company who are also directors of Pacific  Rubiales, did not participate in any discussions or negotiations  regarding the approval of the proposed acquisition and abstained from  the Boards' deliberations. 

 Luciano Biondi, Chief Executive Officer of PetroMagdalena, stated "We  are very pleased to receive this offer and provide shareholders with an  opportunity to realize value on their investment and provide liquidity  in a volatile market." 

 Arrangement Agreement Summary 

 The Arrangement Agreement contains customary non-solicitation  provisions, subject to PetroMagdalena's right to consider and accept  superior proposals. In the event of a superior proposal, Pacific  Rubiales will have a five business day right to match the superior  proposal. If the Arrangement is not completed as a result of a superior  proposal or for other certain specified circumstances, a termination  fee equal to C$10,000,000 will be paid by PetroMagdalena to Pacific  Rubiales. If the Arrangement is not completed, due to certain  circumstances, including a failure to receive necessary regulatory  approvals, a reverse termination fee of C$10,000,000 will be paid to  PetroMagdalena by Pacific Rubiales. 

 The terms and conditions of the Arrangement will be summarized in  PetroMagdalena's management information circular which will be filed  and mailed to PetroMagdalena's Securityholders in late June 2012.  Securityholders will be asked to approve the Arrangement at a special  meeting to be held in July 2012 (the "Special Meeting"). 

 The Arrangement will be subject, among other things, to the approval of  at least 66 2/3% of the votes cast at the Special Meeting of  PetroMagdalena's Securityholders to be called to consider the  Arrangement. In addition, the Arrangement will be subject to certain  customary conditions, including court approval, relevant regulatory  approvals and the absence of any material adverse change with respect  to PetroMagdalena. The transaction is expected to close in the third  quarter of 2012. 

 GMP has provided an opinion that, based upon and subject to the  assumptions, limitations, and qualifications in such opinion, the  consideration to be received by PetroMagdalena's shareholders and  warrantholders is fair, from a financial point of view, to  PetroMagdalena shareholders and warrantholders, respectively. A copy of  the fairness opinion will be included in the PetroMagdalena meeting  materials in respect of the Special Meeting. 

 PetroMagdalena is a Canadian-based oil and gas exploration and  production company, with working interests in 19 properties in five basins in Colombia. Further information can be  obtained by visiting our website at www.petromagdalena.com. 

 All monetary amounts in U.S. dollars unless otherwise stated. Certain  information contained in this news release, including any information  relating to the proposed transaction (the "Transaction") and or future  financial or operating performance of PetroMagdalena may be deemed  "forward-looking". These statements relate to future events or future  performance and reflect PetroMagdalena's expectations regarding the  Transaction, and the future growth, results of operations, business  prospects and opportunities of PetroMagdalena, Pacific Rubiales and the  combined company. These forward-looking statements also reflect  PetroMagdalena's current internal projections, expectations or beliefs  and are based on information currently available to each party,  respectively. These forward-looking statements are subject to a variety  of risks and uncertainties that are identified and disclosed in the  Annual Information Form of PetroMagdalena for the year ended December  31, 2011. In some cases forward-looking information can be identified  by terminology such as "may", "will", "should", "expect", "intend",  "plan", "anticipate", "believe", "estimate", "projects", "potential",  "scheduled", "forecast", "budget" or the negative of those terms or  other comparable terminology. Assumptions upon which such forward  looking information regarding completion of the Transaction is based  include that each party will be able to satisfy the conditions to the  Transaction, that the required approvals will be obtained from the  Securityholders of PetroMagdalena, that all third party regulatory and  governmental approvals to the Transaction will be obtained and all  other conditions to completion of the Transaction will be satisfied or  waived. Although PetroMagdalena believes that the forward-looking  information contained in this news release is based on reasonable  assumptions, readers cannot be assured that actual results will be  consistent with such statements. Accordingly, readers are cautioned  against placing undue reliance on forward-looking information.  PetroMagdalena expressly disclaims any intention or obligation to  update or revise any forward-looking information, whether as a result  of new information, events or otherwise, except in accordance with  applicable securities laws. 

 Neither TSX Venture Exchange nor its Regulation Services Provider (as  that term is defined in the policies of the TSX Venture Exchange)  accepts responsibility for the adequacy or accuracy of this news  release. 

PetroMagdalena Energy Corp.


CONTACT:  Mike DaviesChief Financial Officer(416) 360-7915 


    

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