Pan Orient has agreed to acquire a minimum of 7.1 million Andora shares from existing Andora shareholders of Andora for a minimum total acquisition price of $9,585,000, being $1.35 per Andora share. This, in addition to other Pan Orient acquisitions of Andora shares, will give Pan Orient approximately 51 percent of the issued and outstanding Andora shares.
Pan Orient will satisfy the acquisition price either (at the option of the Andora shareholders): (i) by the issuance of common shares of Pan Orient at a deemed price of $3.75 per share; or (ii) in cash, provided that Pan Orient will not be obligated to pay for more than 25 percent of the Andora shares in cash. In the event that shareholders of Andora wish to sell more than 7.1 million Andora shares, Pan Orient will purchase up to an additional 6,751,600 Andora shares from such shareholders, under the same maximum 25-percent cash terms.
In the event that Pan Orient acquires the additional 6,751,600 Andora shares, then, together with the Andora shares acquired by Pan Orient as described above, Pan Orient will hold approximately 67 percent of the issued and outstanding Andora shares. The share acquisition may be effected through an amalgamation or other form of corporate reorganization to be agreed upon by Pan Orient and Andora.
Closing of the above transactions, other than the share acquisition that will be subject to Andora shareholder approval, is expected to take place on or before July 28, 2006. The share acquisition is expected to close as soon as reasonably practicable following this date. Completion of the transactions is subject to satisfactory completion of due diligence investigations on or before July 7, 2006, and certain other conditions, including the approval of the TSX Venture Exchange.
``The combined Andora/Pan Orient heavy oil assets form a private corporate vehicle that has an operated, core position of critical mass in the Sawn Lake heavy oil project area,” said Jeff Chisholm, Pan Orient’s president and CEO. “These transactions allow Pan Orient shareholders to leverage their 10 percent interest in Sawn Lake into what we believe to be more than 400 million barrels (net) of defined oil in place in a under-explored area of 85.5 square miles. Andora's 25.9 million barrels of probable recoverable reserves alone are significantly accretive to Pan Orient's net asset value.''
``The agreement with Pan Orient is a major milestone for Andora, which was created solely to develop the Sawn Lake reservoir,'' noted Tyler Cran, president and CEO of Andora. ``It places Andora as the only company with an interest in the entire Sawn Lake property, strengthens its financial and managerial capacity, and allows its private shareholders a degree of liquidity. A win-win for both Andora and Pan Orient.''
``This is great news for Habanero and Habanero's shareholders,” added Habanero President Jason Gigliotti. “We have felt all along that the Alberta Oil Sands is the best way to grow the company and this deal would enable Habanero to have an interest in one of the single-largest continuous parcels of Oil Sands leases in the Peace River region. At the very least, we would have the option to sell some of our interest at a significant profit. When you couple this exciting news with our other Athabasca Oil Sands leases, it is clear that Habanero intends to grow via the Oil Sands and we have shown the ability to acquire high-quality assets. Habanero is one of the smallest market capitalized companies with interests in multiple Alberta Oil Sands leases and when you combine this with the current near all time highs on oil prices, these are extremely exciting times of growth for Habanero.''
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