Alvopetro Inc. ("Alvopetro" or the "Company") announces that it has closed a transaction with Petrominerales Ltd. ("Petrominerales") to sell its 25 percent interest in 10 exploration blocks located in the Reconcavo Basin and three marginal fields located in Brazil for $9.0 million.
Alvopetro entered into a purchase and sale agreement on March 5, 2012 with the shareholders of Alvorada Petroleo S.A. ("Alvorada") to acquire the shares of a newly established entity, Alvopetro S.A. Extracao de Petroleo e Gas Natural ("Alvopetro S.A."), its assets consisting of most of the assets and operations of Alvorada being nine exploration blocks in the Reconcavo Basin and three marginal fields in Brazil. The acquisition was subject to, amongst other things, the approval of the Agencia Nacional do Petroleo, Gas Natural e Biocombustiveis of Brazil (the "ANP") which was granted in September, 2012.
Alvopetro entered into an agreement on December 7, 2012 with Petrominerales for it to indirectly acquire 75 percent of Alvopetro S.A. for US$36.85 million, satisfying the purchase price with the Alvorada shareholders and becoming the manager of the Brazilian assets. Since the acquisition of the Brazilian assets, Alvopetro has been aggressively pursuing financing options which efforts have been largely unsuccessful and lead to establishing a Special Committee of the Board consisting of the Independent Directors to examine strategic alternatives available to maximize the value of the Company. After a review of a number of alternatives, the Special Committee had determined that the best option available to the Company was to accept an offer from Petrominerales to acquire its interests in the Brazilian assets for $9.0 million.
The transaction was subject to the approval of the Alvopetro shareholders. At a special meeting of the Alvopetro shareholders held on November 18, 2013, shareholders present in person and by proxy voted 99.6% in favor of the transaction and approved a change of name of the Company to Fortaleza Energy Inc.
The proceeds will be used to repay trade payables of approximately $1.8 million which the Company has incurred to pursue its interests in Brazil and offer repayment of $2.815 million of principal amount of convertible debentures plus accrued interest.
In September 2008, the Company re-filed its income tax returns for the 1997 to 1999 tax years to claim additional scientific research and experimental development credits and investment tax credits related to the bio-technology business of its predecessor company, which could result in a refund to the Company of approximately $3,700,000. Further communication with Canada Revenue Agency ("CRA") has indicated that CRA has agreed to comply with a court order and issue a notice of determination specifying CRA's position related to the expected refund.
