Business Context and Reporting Period
Gran Tierra Energy Inc. filed this Form 8-K on July 28, 2008, to disclose the entry into a Material Definitive Agreement. The company, a Nevada corporation, entered into an Arrangement Agreement with Solana Resources Limited, an Alberta corporation, to acquire all outstanding shares of Solana common stock via a statutory plan of arrangement under Canadian law.
Key Financial Metrics
This filing is a current report regarding a corporate transaction and does not contain periodic financial statements. Consequently, specific metrics such as revenue, profit, cash flow, margins, debt, and liquidity are not provided in this document.
Material Changes and Transaction Terms
- Acquisition Structure: Solana shareholders will receive either 0.9527918 of a share of Gran Tierra common stock or an Exchangeable Share of a Gran Tierra Canadian subsidiary for each Solana share held.
- Exchangeable Shares: These shares may be exchanged for one share of Gran Tierra common stock at the holder's election for a period of five years.
- Shareholder Support: Directors and officers of both companies have entered into Shareholder Support Agreements to vote in favor of the Arrangement and against actions that would delay or prevent it.
- Termination Fees: A termination fee of $21 million is payable by Solana to Gran Tierra if the agreement is terminated due to a superior proposal or a change in Solana's board recommendation. Conversely, Gran Tierra must pay Solana $21 million if terminated due to a change in Gran Tierra's board approval.
- Expense Recovery: A party may recover up to $1.5 million of expenses if certain conditions in the agreement are not satisfied.
Guidance, Outlook, and Risks
The transaction is expected to close in the fourth quarter of 2008. Completion is subject to several conditions, including United States and foreign regulatory approvals, approval by shareholders of both companies, and other customary conditions. The agreement may be terminated if the Plan of Arrangement is not consummated by November 15, 2008, or if necessary approvals are not obtained. The filing includes standard forward-looking statements cautioning that actual results could differ materially due to regulatory and shareholder approval risks.
Investor Verification Checklist
- Verify the final approval status of the Arrangement by shareholders of both Gran Tierra and Solana.
- Monitor the receipt of necessary regulatory approvals from United States and foreign authorities.
- Review the upcoming joint proxy statement/management information circular for detailed financial and operational data regarding the combined entity.
- Confirm the closing date remains within the fourth quarter of 2008 and watch for any termination events prior to November 15, 2008.