Azevedo & Travassos Energia S.A. signed a binding memorandum of understanding on 2 July to acquire one hundred per cent of the shares of Petro-Victory Energy Corp. The agreement, published on 4 July, values Petro-Victory at about USD39.5mn, including net debt. Petro-Victory shareholders will receive 266mn ATE shares, each priced at BRL0.73 ($0.18). They will also gain a ten per cent gross royalty on revenue from existing fields for fifteen years.
Financing
ATE plans to raise 205 479 453 units in a private capital increase, at the same BRL0.73 price per unit, for gross proceeds of BRL150mn ($27.68mn). The raise must close by 12 July, with a thirty-day extension option at the group’s discretion. After the funds are injected, certain Petro-Victory creditors will convert their claims into shares before the final exchange. The deal will make Petro-Victory a wholly owned subsidiary of ATE, with its shareholders migrating into the Brazilian group’s capital.
The memorandum provides current Petro-Victory holders with contingent payments linked to existing partnerships, notably with Eneva S.A. The exchange price represents a premium of roughly CAD2.15 per share versus the last closing price on 2 July. No finder’s fees will be paid. The exchange rates used are one BRL for 0.25 CAD and one CAD for 0.74 USD.
Regulatory conditions
A definitive agreement must be signed within one hundred and twenty days after the capital increase closes, following financial, operational and environmental due diligence. The transaction remains subject to corporate approvals in Brazil and Canada, as well as required bank consents. Petro-Victory shareholders must approve the disposal, classified as a “Reviewable Disposition” under TSX Venture Exchange Policy 5.3. The Canadian bourse must also approve Petro-Victory’s voluntary delisting once the merger is completed.
Founded in Dallas, Petro-Victory manages forty-nine concessions totalling 276 755 net acres in Brazil and six additional permits with BlueOak via Capixaba Energia. The stock trades under the symbol VRY on the TSX Venture Exchange. Azevedo & Travassos Energia, created in 2023 and listed in São Paulo under the code AZTE3, holds onshore assets in the Potiguar Basin through its subsidiaries Azevedo & Travassos Petróleo and Phoenix Óleo e Gás. Both companies said their securities “should be considered highly speculative”.
