DALLAS, July 4, 2025 /CNW/ – Petro-Victory Energy Corp. (TSXV: VRY) (“Petro-Victory” or the “Company“) and Azevedo & Travassos Energia S.A. (“ATE“) are pleased to announce the signing of a binding memorandum of understanding on July 2, 2025 (“MOU“) pursuant to which Petro-Victory and ATE intend to complete an arm’s length business combination by the acquisition by ATE of all of the issued and outstanding common shares of the Company (the “Transaction“). The Transaction is intended to combine the businesses and assets of ATE and the Company and result in the Company becoming a wholly owned subsidiary of ATE. Under the Transaction, the current shareholders of the Company will become shareholders of ATE. The combination of the Company and ATE is expected to increase shareholder value through the development of ATE’s growth strategy with the supplementation of the Company’s diversified portfolio of production and exploration assets.
Transaction Summary
Pursuant to the Transaction, ATE will complete a capital increase by way of a private placement of 205,479,453 Units of ATE (“Units“) at an issue price of R$0.73 (CAD$0.18) per Unit, for aggregate gross proceeds of R$150,000,000.69 (or US$27,683,955.13 and CAD$37,533,870.17 based on today’s conversion rate) (“Capital Increase“).
Following the completion of the Capital Increase and all other conditions precedent, certain shareholders of the Company will convert certain claims held by them against the Company and its affiliates into new common shares in the capital of the Company (“PV Shares“).
Thereafter, ATE will purchase 100% of the issued and outstanding PV Shares and will issue, in favor of the Company’s shareholders, 266,000,000 ATE Shares, all of which are registered and without par value based on a price per ATE Share equal to R$0.73 (CAD$0.18) (“Share Consideration“). The Share Consideration shall be provided proportionately to the holders of PV Shares in their respective interests.
As part of the Transaction, the Company’s shareholders of record at closing will be entitled to a gross overriding royalty (“GORR“) in the percentage of ten percent (10%) on the gross revenue from all new production arising from fields that already exist in the concessions owned by the Company prior to the MOU or that will be created after the date of the MOU in the concessions owned by the Company (“PV Fields“), except with respect to the production of the reservoirs of the São João Field that are the subject of the partnership between PVE and Eneva S.A. (“Eneva“). The GORR will apply, for each PV Field, for a period of fifteen (15) years from the start of its commercial production or, for existing fields that are already in production, from the Closing Date.
The Company’s shareholders of record at closing will also be entitled to receive certain contingent payments in connection with certain existing partnerships between the Company and its affiliates with third parties.
In addition, ATE will assume all outstanding debt of the Company with the estimated enterprise value of the Transaction being approximately USD$39.5 million (CAD$53.6 million) including net debt and before considering any valuation for contingent payments (“Transaction Value“). The Transaction, Transaction Value and price of the Share Consideration will be subject the polices, rules and approvals of the TSX Venture Exchange (“TSXV“) or such other recognized stock exchange upon which the Share Consideration is listed for trading. The Share Consideration represents a premium of approximately CAD$2.15 to the Company’s shareholders based on the closing price of the Company as of the market close on July 2, 2025 and based on the target price of R$0.73 (CAD$0.18) per share for the Share Consideration.
The Transaction is subject to a number of conditions precedent including the completion of the Capital Increase on or before July 12, 2025, subject to a thirty (30) day extension in the sole discretion of ATE. Additionally, the Transaction is subject to a number of terms and conditions following the completion of the Capital Increase within one hundred and twenty (120) days of such completion, including, but not limited to, the parties entering into a definitive agreement (the “Definitive Agreement“) with respect to the Transaction (such agreement to include representations, warranties, conditions and covenants typical for a transaction of this nature), the obtaining by both the Company and ATE of all corporate and governmental approvals applicable to their respective jurisdictions, the obtaining by both the Company and ATE of any consents from third parties of financial institutions, as applicable, and the completion of an audit by both the Company and ATE of any and all information relevant to the performance of financial, legal, operational, environmental, accounting and regulatory audits.
Where applicable, the Transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the Transaction will be completed as proposed or at all. Trading in the securities of the Company and ATE should be considered highly speculative.
There will be no finder’s fees associated with the Transaction.
As of the date of this news release, the conversion rate between the Brazilian Real and the Canadian Dollar is 1:0.25 and the conversion rate between the Canadian Dollar and the US Dollar is 1:0.74. As such, the conversion rate between the Brazilian Real and the US Dollar is 1:0.18.
Due Diligence
In order to advance the Transaction to the point where a Definitive Agreement can be negotiated, each of the parties will conduct customary due diligence on the other party and following completion of satisfactory due diligence reviews, the parties expect to negotiate and execute a Definitive Agreement on or before the date that is one hundred and twenty (120) days from the date of the completion of the Capital Increase.
Shareholder and TSXV Approval
The Transaction, if completed as contemplated, will be a Reviewable Disposition, as defined in TSXV Policy 5.3, by the Company, and as such will be subject to the requirements of TSXV Policy 5.3. If the Transaction is completed, the Company will be making an application to voluntarily delist from the TSXV under TSXV Policy 2.9, as the acquisition by ATE of all of the issued and outstanding shares of the Company will cause the Company to no longer meet the listing requirements of the TSXV. The completion of the Transaction and the subsequent delisting is subject to the approval of both the shareholders of the Company and the TSXV, in accordance with TSXV requirements. The Company will seek the approvals of the TSXV and the Company’s shareholders once the Capital Increase is complete and the Company and ATE enter into a Definitive Agreement.
About Petro-Victory Energy Corp.
Petro-Victory Energy Corp. is an oil and gas company engaged in the acquisition, development, and production of crude oil and natural gas in Brazil. The total portfolio under management as of the date of this filing includes 49 concession contracts with 276,755 acres, net to Petro-Victory plus an additional 6 concessions and 19,074 acres owned jointly with BlueOak in Capixaba Energia. Through disciplined investments in high-impact, low-risk assets, Petro-Victory is focused on delivering sustainable shareholder value. The Company’s common shares trade on the TSX Venture Exchange under the ticker symbol VRY.
About Azevedo & Travassos Energia S.A.
Azevedo & Travassos Energia S.A. (“ATE”) is a publicly traded Brazilian energy company (B3: AZTE3.SA) focused on the acquisition, development, and production of onshore oil and gas assets in Brazil. Headquartered in São Paulo and founded in 2023, ATE holds concession contracts and strategic partnerships in the Potiguar Basin, with operations concentrated around Mossoró/RN. Through its wholly owned subsidiaries, Azevedo & Travassos Petróleo (ATP) and Phoenix Óleo e Gás, ATE is committed to sustainable growth and long-term value creation in the Brazilian energy sector.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
The information in this news release has been prepared as at July 2, 2025. Certain statements in this news release, referred to herein as “forward-looking statements”, constitute “forward-looking statements” under the provisions of Canadian provincial securities laws and the applicable securities laws of the United States of America. These statements can be identified by the use of words such as “expected”, “may”, “will” or similar terms. Forward-looking statements are necessarily based upon a number of factors and assumptions that, while considered reasonable by the Company and ATE as of the date of such statements, are inherently subject to significant business, economic and competitive uncertainties and contingencies.
Forward-looking statements in this press release relate to, among other things: anticipated benefits of the Transaction to the Company and ATE and their respective shareholders; the timing and receipt of required shareholder, stock exchange and regulatory approvals for the Transaction; the consideration to be paid to the Company’s shareholders; the ability of the Company and ATE to satisfy the conditions to, including the completion of the Capital Increase, and to negotiate and execute a Definitive Agreement and to complete, the Transaction; the anticipated timing for executing a Definitive Agreement; the timing for closing of the Transaction; and liquidity and access to capital markets of ATE. There can be no assurance that such statements will prove to be accurate, and actual results and future events could differ materially from those anticipated in such statements. Forward-looking statements reflect the beliefs, opinions and projections on the date the statements are made and are based upon a number of assumptions and estimates that, while considered reasonable by the respective parties, are inherently subject to significant business, economic, competitive, political and social uncertainties and contingencies. Many factors, both known and unknown, could cause actual results, performance or achievements to be materially different from the results, performance or achievements that are or may be expressed or implied by such forward-looking statements and the parties have made assumptions and estimates based on or related to many of these factors. Such factors include, without limitation: satisfaction or waiver of all applicable conditions to closing of the Transaction including, without limitation, receipt of all necessary securityholder, stock exchange and regulatory approvals or consents, lack of material changes with respect to the parties and their respective businesses; the synergies expected from the Transaction not being realized; business integration risks; fluctuations in general macro-economic conditions; the loss of key directors, employees, advisors or contractors; fluctuations in securities markets and the market price of the Company’s and ATE’s shares; fluctuations in the currency markets (such as the Canadian dollar versus the reais); changes in national and local government, legislation, taxation, controls, regulations and political or economic developments; the impact of COVID-19 or other viruses and diseases on the ability to operate; risks and hazards associated with the business; litigation; competition; the failure to meet the closing conditions thereunder and the failure by counterparties to such agreements to comply with their obligations thereunder. Readers should not place undue reliance on the forward-looking statements and information contained in this news release concerning these times. Many factors, known and unknown, could cause actual results to be materially different from those expressed or implied by such forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date made. Except as otherwise required by law, the Company and ATE expressly disclaim any obligation or undertaking to release publicly any updates or revisions to any such statements to reflect any change in the Company’s and ATE’s expectations or any change in events, conditions or circumstances on which any such statement is based. Other risks are more fully described in the Company’s most recent Management Discussion and Analysis and Annual Information Form, which are incorporated herein by reference and are filed on SEDAR+ at www.sedarplus.ca.
There can be no assurance that the Transaction will be completed as proposed or at all. Investors are cautioned that, except as disclosed in the management information circular to be prepared in connection with a meeting of shareholders to consider the Transaction, any information released or received with respect to the Transaction may not be accurate or complete and should not be relied upon. The TSXV has not in any way passed upon the merits of the Transaction, and has neither approved nor disapproved the contents of this news release.
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SOURCE Petro-Victory Energy Corp.
