Shona Energy Company, Inc. Announces Shareholder and Court Approval of Arrangement Transaction

        






Shona Energy Company, Inc. Announces Shareholder and Court Approval of Arrangement Transaction

CALGARY, Dec. 14, 2012 /CNW/ - Shona Energy Company, Inc. ("Shona" or the "Corporation") (TSXV: SHO and OTCQX: SHOAF) is pleased to announce that at the annual general and special meeting of the Corporation held in Houston, Texas on December 14, 2012 the common and preferred shareholders of the Corporation present in person or by proxy at the meeting together approved the previously announced arrangement transaction with Canacol Energy Ltd. by a vote of 99.59% in favour ("Canacol") (TSX: CNE; BVC: CNEC).

On October 15, 2012 Shona and Canacol entered into an agreement whereby Canacol, under a statutory plan of arrangement ("Arrangement"), would acquire 100% of the issued and outstanding class "A" common shares of Shona ("Shona Common Shares") and series "A" preferred shares of Shona ("Shona Preferred Shares"), in exchange for common shares of Canacol ("Canacol Shares") and cash. The Court of Queen's Bench of Alberta issued its Final Order approving the transaction on December 14, 2012.  The transaction is expected to close on or around December 19, 2012 (the "Effective Date").

Canacol received shareholder approval for the transaction at its annual general and special meeting also held on December 14, 2012, with 98.3% of the shareholders present in person or by proxy at the Canacol meeting voting in favour of the acquisition.

On the Effective Date, each Shona Common Share will be exchanged for C$0.0896 cash and 1.0573 Canacol Shares (the "Consideration") and each Shona Preferred Share will be exchanged for US$100.00 cash. The Consideration represents a value of approximately C$0.56 per Shona Common Share, based on the volume weighted average price of the Canacol Shares on the Toronto Stock Exchange for the 15 trading days ended October 12, 2012.

Under the terms of the Arrangement, all holders of Shona warrants will be entitled to receive, in lieu of the number of Shona Common Shares otherwise issuable upon the exercise thereof, the number of Canacol Shares adjusted in accordance with the exchange ratio and with respect to the exercise price such that the warrants maintain their economic equivalency.  As of the date hereof, all holders of employee stock options have elected to enter into option cancellation agreements with the Corporation.   The Arrangement is more fully described in the management information circular and proxy statement of Shona dated November 9, 2012, which may be viewed at www.sedar.com.  Shona has applied to de-list the Shona Common Shares from trading on the TSX Venture Exchange ("TSXV") which is expected to occur on or around the Effective Date. Shona will then be a wholly-owned subsidiary of Canacol.

In connection with the Arrangement, Shona Common Shares and Shona Preferred Shares previously held in escrow shall be released in accordance with the terms of an escrow agreement entered into on September 17, 2011 between the Corporation and Olympia Trust Company, with the exception of the escrowed securities held: (i) by James L. Payne and Gary R. Petersen, of EnCap Investments L.P., who shall be appointed to the Canacol board of directors, and (ii) as of the Effective Date, by holders of more than 1% of the issued and outstanding Canacol Shares (taking into account convertible securities held by such holders).  The escrow release has been approved by the TSXV.

AltaCorp Capital Inc. acted as financial advisor to Shona with respect to the Arrangement and has provided the board of directors and shareholders of Shona with its opinion that the Consideration payable pursuant to the Arrangement is fair, from a financial point of view, to the Shona securityholders

About Shona Energy Company, Inc.

Shona is an international oil and natural gas exploration, development and production company focusing on South America, specifically Colombia and Peru. Shona's assets currently include interests in the Shona-operated Esperanza block located in Colombia's Lower Magdalena Basin, the non-operated Serrania, Los Picachos and Macaya Blocks in Colombia's Caguan Putumayo Basin, and the non-operated Block 102 in Peru's Maranon Basin.

Forward-Looking Information

This press release contains forward-looking information and statements within the meaning of applicable securities laws that are based on the expectations, estimates and projections of management of Shona as of the date of this news release unless otherwise stated. The use of any of the words "expect", "anticipate", "continue", "estimate", "may", "will", "project", "should", "believe", "plans", "intends" and similar expressions are intended to identify forward-looking information or statements. More particularly and without limitation, this press release contains forward-looking information and statements concerning the anticipated closing of the Arrangement transaction.

In respect of the forward-looking information and statements concerning the completion of the proposed Arrangement and the anticipated timing for completion of the Arrangement, Shona has provided such in reliance on certain assumptions that it believes are reasonable at this time, including the assumption that all conditions to closing will be met by the Effective Date.

Since forward-looking information and statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. Risks and uncertainties inherent in the nature of the Arrangement include the failure of Canacol or Shona to obtain necessary government, regulatory, and other third party approvals, or to otherwise satisfy the conditions to the Arrangement, in a timely manner, or at all. Failure to so obtain such approvals, or the failure of Canacol or Shona to otherwise satisfy the conditions to the Arrangement, may result in the Arrangement not being completed on the terms set out in the Arrangement Agreement, or at all.

Readers are cautioned that the foregoing list of factors is not exhaustive. Additional information on other factors that could affect the operations or financial results of Shona and the combined company going forward, are included in reports on file with applicable securities regulatory authorities which may be accessed at www.sedar.com.

The forward-looking information and statements contained in this press release are made as of the date hereof and Shona undertakes no obligation to update publicly or revise any forward-looking information or statements, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.

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

SOURCE Shona Energy Company, Inc.

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