Harvest Natural Resources entered a partnership with CT Energy Holding SRL and CT Energia Holding Ltd. to maximize the long-term success and value of Harvest’s Venezuelan operations and its investment in Petrodelta SA, Harvest said June 19. CT Energy Holding SRL is an Italian-Venezuelan consortium.
Houston-based Harvest entered into a term sheet with Venezuela’s state-owned PDVSA, its partner in Petrodelta, to reposition Petrodelta’s business. Harvest has a 20.4% investment in Petrodelta.
Two directors designated by CT Energy Holding SRL and a third independent director joined Harvest's board of directors. Two of CT Energy Holding SRL’s designees were appointed as Harvest’s representatives on the Petrodelta board of directors.
CT Energia entered a management contract to oversee the day-to-day operations of Harvest's Venezuelan business and to help develop a plan for Petrodelta’s business operations and financing.
Alessandro Bazzoni, CT Energia’s CEO, was appointed director and general manager of Venezuelan operations for Harvest. He has more than 15 years’ experience in the oil and gas industry.
Additionally, CT Energy Holding purchased senior secured notes, convertible notes and warrants from Harvest.
Harvest received $32.2 million in proceeds. Up to $42.5 million in additional proceeds could be received from exercise of warrants, subject to stockholder approval. The $32.2 million will repay Harvest’s long-term debt and support long-term growth in Venezuela and Gabon.
CT Energy Holding acquired a $25.225 million, five-year, 15% senior secured non-convertible note and a $6.975 million, five-year, 0.09%% senior secured convertible note.
The convertible note can become about 8.5 million common shares, or about 19.9% of Harvest’s outstanding stock.
CT Energy Holding also received 69.75 shares of a newly created series of preferred stock that will entitle the holder to vote on an as-if converted basis. The company also acquired a warrant for about 34 million additional common shares priced at $1.25 each.
Harvest’s annual shareholder meeting is scheduled to occur in August. At the meeting shareholders will be asked to approve the transaction and an amendment to Harvest's charter to authorize enough new shares of common stock to meet future needs, the company said.
Pro forma for the transaction, CT Energy Holding SRL would own 16.5% of Harvest's outstanding stock prior to the shareholder approval, and 49.9% of outstanding stock following approval and warrant exercise.
Norton Rose Fulbright US LLP was Harvest’s legal counsel.
D'Agostino & Co. was CT Energy Holding’s financial adviser. Wachtell, Lipton, Rosen & Katz was CT Energy Holding’s legal counsel.