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Canada´s Gran Tierra Energy to Sell Peru Business
Monday 13 November 2017

13 November 2017 - Canada-based, Colombia-focused oil and gas exploration and production company Gran Tierra Energy Inc. (NYSE American: GTE) (NYSE MKT: GTE) (TSX: GTE) has agreed to sell its Peruvian business, Gran Tierra Energy International Peru Holdings, to PetroTal Ltd., and Sterling Resources Ltd. (TSX Venture: SLG), the company said.

Under the deal, Gran Tierra Energy and its indirect wholly-owned subsidiary, Gran Tierra Energy International Holdings Ltd., have entered into a share purchase agreement with PetroTal Ltd., and Sterling Resources Ltd. (TSX Venture: SLG), under which GTEIH has agreed to sell all of the issued and outstanding shares of its wholly owned subsidiary, Gran Tierra Energy International Peru Holdings B.V., subject to the satisfaction of certain conditions.

In connection with the SPA, Sterling and PetroTal have concurrently entered into an arrangement agreement under which they have agreed, subject to certain conditions, that PetroTal will complete a reverse take-over of Sterling; Sterling and PetroTal will be amalgamated; and the management and board of directors of Sterling will be reconstituted.

Subject to the terms of the SPA, the resulting issuer has agreed to acquire all of the issued and outstanding shares of GTEIPH from GTEIH as the final step of the arrangement, in exchange for 187.25m common shares of the resulting issuer, representing approximately 38% of the issued and outstanding resulting issuer shares, plus or minus a cash-settled working capital adjustment.

Gran Tierra will evaluate its investment in the Resulting Issuer from time to time and may, based on such evaluation, market conditions and other circumstances, increase or, subject to applicable escrow periods under the rules of the TSX Venture Exchange, decrease shareholdings as circumstances require through market transactions, private agreements, or otherwise.

Closing of the Arrangement and the transactions contemplated by the SPA is subject to a number of conditions precedent, including the completion of a minimum CDN 25m equity financing by PetroTal, TSX Venture approval of, inter alia, the reverse take-over of Sterling and the listing of the Resulting Issuer's shares on the TSXV, certain minimum working capital levels of PetroTal and Sterling and other regulatory and customary conditions.

There can be no assurance that the conditions will be met or that the transaction will be completed as proposed or at all.

The SPA provides that, at closing, GTEIH and Gran Tierra Resources Ltd. will enter into an investor rights agreement with Sterling, pursuant to which, inter alia, GTEIH and GTRL will be granted the right to nominate two directors to the board of the Resulting Issuer, be granted certain demand and piggy-back registration rights and certain pre-emptive rights and, agree not to exercise their voting rights over more than 30% of the issued and outstanding Resulting Issuer Shares, the whole subject to the terms and conditions set forth therein.

In addition, the SPA provides that, at closing, GTEIH will enter into a carried interest and option agreement with Sterling and a Peruvian subsidiary, pursuant to which GTEIH will be granted a 20% carried working interest in Block 107, located in the Ucayali basin in Peru, which interest will, at the option of GTEIH, either be converted to a non-carried working interest or be forfeited following the drilling of an exploration well in Block 107.

Following the completion of the Peru Transaction, the Purchaser expects that its Resulting Issuer Shares acquired under the Peru Transaction will be deposited with an escrow agent and subject to the terms of an escrow agreement, substantially in the form required by the TSXV.
Date Published: 13/11/2017
Target: Gran Tierra Energy International Peru Holdings
Country: Peru
Deal Size: 8.5m (USD)
Sector: Petroleum/Natural Gas/Coal
Type: Divestment
Financing: Stock
Status: Agreed
Vendor: Gran Tierra Energy
Buyer: PetroTal, and Sterling Resources