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Jan 30, 2014

Estrella International Energy Services Ltd. Completes US$117 Million Acquisition of San Antonio Colombia

On November 1, 2013, Estrella International Energy Services Ltd. (“Estrella”) (TSX Venture Exchange: EEN) completed the final step in its acquisition of the Colombian oil and gas service operations of San Antonio International (“San Antonio”). Estrella entered into a definitive share purchase agreement with San Antonio International Oil & Gas Services LLC and Armadillo Drilling Services LLC on June 16, 2013 for the acquisition of the issued and outstanding shares of San Antonio Internacional Co. Inc. (“SAI Colombia”) for an initial estimated purchase price of US$117.6 million (subject to adjustments relating to cash, working capital and indebtedness) (the “Acquisition”). The Acquisition was completed on August 1, 2013 and on closing, Estrella paid the sellers US$75.1 million in cash and assumed US$42.5 million of net debt.

The Acquisition of SAI Colombia added 20 drilling rigs, 6 workover rigs, 4 cementing sets, 2 coiled tubing units and operating bases in four locations to Estrella’s Colombian operations. As a result of the Acquisition, Estrella now controls 37 rigs in the Colombian market making it the largest single rig operator in the country.

In connection with the completion of the Acquisition, Estrella entered into a secured loan agreement with its principal shareholder, Ringo Holding L.P. (“Ringo Holding”) in the amount of US$97 million and closed financing arrangements with Colombian financial institutions in the amount of US$58 million. The proceeds of the loans were used to finance the purchase price of the Acquisition, refinance the debt of SAI Colombia and for working capital purposes.

Finally, after obtaining the requisite shareholder and TSX Venture Exchange approvals, Estrella completed a private placement of 24,664,514 Series B Preference Shares to Ringo Holding for aggregate gross proceeds of CDN$123,322,570. The Series B Preference Shares were issued at a price of CDN$5.00 per share. The proceeds of the private placement were used to repay all outstanding indebtedness owing by Estrella to Ringo Holding. 

Aird & Berlis LLP represented Estrella in Canada with a team that included James Leech (Corporate Finance), Francesco Gucciardo (Tax) and Aaron Collins (Financial Services).

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