Benchmark has executed an arm's-length binding letter of intent to acquire 100% of Delavaco Energy
With this transaction, Benchmark continues its strategy of developing a suite of South American oil and gas assets with a balance of low risk development and exploration upside. The acquisition of Delavaco provides
"Delavaco is exactly the opportunity we have been seeking for our shareholders," said David Robinson, CEO of Benchmark. "It has excellent assets in Colombia with the right team led by Bob Szczuczko to successfully create value for the shareholders of the combined company."
The Agreement has been approved by the Boards of Directors of each of Benchmark and Delavaco and is subject to a number of conditions (to be satisfied on or prior to December 19, 2008) to the entering into of a
The Definitive Agreement will supersede the Agreement in its entirety and a further comprehensive news release with respect to the Transaction will be issued in connection with the entering into of the Definitive Agreement.
Trading of Benchmark's common shares (the "Benchmark Shares") has been halted by the TSXV and the Benchmark Shares will remain halted in accordance with TSXV policies until all required documentation with respect to the Transaction has been received, including receipt of a sponsorship acknowledgment form with respect to a sponsor for the Transaction.
Consideration paid to Delavaco shareholders will consist of the issuance of 165,590,859, at a deemed price of $0.16 per share, subject to adjustment with respect to Delavaco Shares issuable pursuant to the terms of the Delavaco Private Placement (as defined below). Delavaco currently has 49,713,900 common shares (the "Delavaco Shares") outstanding and therefore each Delavaco shareholder will receive 3.3309 shares of Benchmark in exchange for each share of Delavaco (the "Exchange Ratio"). Any Delavaco Shares issued in connection with the Delavaco Private Placement will be acquired by Benchmark based on the Exchange Ratio. Closing of the transaction is expected to occur on or about February 28, 2009.
There are currently 25,758,578 Benchmark Shares outstanding. At a meeting of the holders of Benchmark Shares (the "Benchmark Shareholders") to approve the Transaction, Benchmark intends to, among other items of special business, consolidate its shares on the basis of six pre-consolidation common shares of
Delavaco is currently undertaking a "best efforts" private placement financing (the "Delavaco Private Placement") co-led by Cormark Securities Inc., Clarus Securities Inc. and Thomas Weisel Partners to raise up to an aggregate of C$15 million by way of an offering of common share subscription receipts ("Delavaco Share Subscription Receipts") and convertible debenture subscription receipts of Delavaco ("Delavaco CD Subscription Receipts").
The closing of the Delavaco Private Placement is not a condition precedent to the closing of the acquisition of Delavaco and Delavaco is not required to complete any minimum offering amount under the Delavaco Private
As part of the closing of the Transaction, Bob Szczuczko will become the President and Chief Executive Officer of Delavaco Energy Corp., Andrew DeFrancesco, current Executive Chairman of Delavaco will become Co-Chairman of the Board of Directors of Delavaco Energy Corp., David Robinson, current President and Chief Executive Officer of Benchmark will become Co-Chairman of the Board of Directors of Delavaco Energy Corp. and Chris Cooper will continue as acting Chief Financial Officer of Delavaco Energy Corp. until a permanent
As part of the closing of the Transaction, the number of Board members of Delavaco Energy Corp. shall be increased to 7 members, composed of 3 members of the current board of Benchmark and four members to be agreed to by Delavaco, but to include Bob Szczuczko and Andrew DeFrancesco. The Benchmark representatives of the Board will be Larry Youell, David Robinson and Brian Petersen.
"I am very excited to become the President and CEO of Delavaco Energy Corp. and provide the Delavaco shareholders an opportunity to move forward as a public company with access to the capital needed to develop our high quality asset base," said Bob Szczuczko.
Overview of Delavaco
Delavaco is a private oil and gas exploration and production company headquartered in Calgary, Canada with a regional operations office in Bogota, Colombia. Management of Delavaco has represented that Delavaco has interests in three producing blocks in Colombia, each with exploration and development upside, as set forth below:
Rio Magdalena Block
La Punta Block
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