PTA Executive Chairman Jeff Boyce in Calgary (Photo: Globe and Mail)

PTA Executive Chairman Jeff Boyce in Calgary (Photo: Globe and Mail)

After being halted for all of yesterday, junior Colombian oil producer Petroamerica Oil Corp, and its current friendly takeover target, Suroco Energy, have come up with a stronger bid for Suroco to trump a hostile bid announced by Vetra Holding the previous day.

Petroamerica's offer is now worth $0.80 per share and provides Suroco shareholders with three options:

  1. To receive either (i) 2.2161 PTA Shares (the "Share Option"),
  2. a cash payment of $0.2079 and 1.6401 PTA Shares (the "Cash and Share Option"), or
  3. a cash payment of $0.80 (the "All Cash Option"), for each Suroco Share they hold.

The amount of cash being offered by PTA is capped at $27 million.

The offer represents a 11% premium to Vetra's $0.72 all cash hostile offer presented Tuesday.

The board of Suroco unanimously recommends the revised Petroamerica offer in favour of the most recent proposal from Vetra.

Alentar, Suroco's largest shareholder, has confirmed its preference to receive stock of the combined company to participate in Petroamerica's upside, rather than be cashed out.

Suroco shareholders of record on May 20, 2014 are entitled to vote at their upcoming AGM, scheduled for June 25, 2014.

Petroamerica and Suroco together urge Suroco Shareholders to vote IN FAVOUR of the Arrangement.

The arrangement creates a combined company with a production base of approximately 9000 bopd focused on light and medium oil in Colombia. The combined company aims to grow to a 30,000 boepd producer with a reserve life of more than 5 years over a 2-3 year time frame.

Here's the news release: Suroco and Petroamerica announce unanimous support for an improved offer by Petroamerica equal to $0.80 per Suroco Share with optional cash components

Disclosure: I am long PTA