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PETRORIO ANNOUNCES ANNUAL AND SPECIAL SHAREHOLDERS MEETING VOTING RESULTS
Rio de Janeiro, April 29, 2016 - Petro Rio S.A. ("PetroRio" or the "Company") (BM&FBOVESPA: PRIO3, TSX-V: PRJ) hereby announces that, at the Annual and Special Shareholders Meeting held today, April 29, 2016, all the matters proposed on the agenda have been approved.
Board of Directors and Fiscal Council
According to the Management Proposal, the current members of the Board of Directors, Messrs. Helio Calixto Costa, Vinícius do Nascimento Carrasco, William Connel Steers, Ronaldo Carvalho da Silva, Haroldo Borges Rodrigues Lima and Pedro Grossi Junior, all independent members under the BM&FBovespa Novo Mercado Regulation, have been reelected for a two year term of office. For the Fiscal Council, with a term of office until the next Annual General Shareholders Meeting, Messrs. Elias de Matos Brito, Roberto Portella and Gilberto Braga, have been re-elected as effective members, and Messrs. Ronaldo dos Santos Machado, Anderson dos Santos Amorim, and Luis Alberto Pereira de Mattos, as alternates, respectively.
Reverse Split of Shares
In the context of discussions about the Management Proposal for the reverse stock split at a ratio of 15 (fifteen) common shares to one (1) common share, also including the reverse split of the Global Depositary Shares ("GDSs") issued by the Company, at the rate of 15 (fifteen) GDSs to 1 (one), the Company‘s shareholders resolved by majority, to approve the reverse stock split at a ratio of 5 (five) common shares to 1 (one) common share, also including the reverse split of the Global Depositary Shares ("GDSs") issued by the Company, at the rate of 5 (five) GDSs to 1 (one), maintaining the same proportion currently in force of 2 (two) GDSs to 1 (one) common share.
Reasons for the Reverse Split
Management of the Company proposed the reverse split of shares to mitigate the excessive risk of volatility in the price of these securities, given that it will allow the price per share and per GDS not to be so low that minor fluctuations could represent a high percentage. Additionally, the reverse split reduces the possibility of breaching the BM&FBovespa rules (Regulamento para Listagem de Emissores e Admissão à Negociação de Valores Mobiliários), which do not allow stock prices quoted below R$ 1.00 (one Brazilian Real).
Reverse Split Effects
PetroRio shareholders (holders of common shares or GDSs) will have until June 10, 2016 to, at their own discretion, dispose of or acquire as many shares as necessary to eliminate fractional shares that may result from the implementation of the reverse split by the Company. After the deadline mentioned above, the group of shares formed by fractions of shares will be sold by auction on the stock exchange, intermediated by a brokerage firm in Brazil and a selling agent in Canada. The amount resulting from the sale of fractional common shares or GDSs will be credited to their holders. From June 13, 2016 on, the common shares and GDSs start to be traded aggregated, according to the reverse split. The reverse split of shares will not impact (i) the value in Brazilian Reais (R$) of the Company’s consolidated capital, (ii) the rights attributed to common shares and GDSs, or (iii) the interest of each shareholder in the Company’s capital, except if the reverse split, otherwise, result in a holder holding a fraction of a common share or GDS, as the case may be. The reverse split will not result in the Company’s name change. On this date, April 29, 2016, the Company has 65,945,675 common shares issued and outstanding. After the conclusion of the reverse split of shares approved herein, there will be 13,189,135 common shares issued and outstanding (on an undiluted basis and subject to the fractions mentioned in this Material Fact). Also on this date, the Company has 8,078,546 GDSs issued and outstanding. After the conclusion of the reverse split of the GDSs there will be approximately 1,615,709 GDSs issued and outstanding (on an undiluted basis and subject to the fractions mentioned in this Material Fact).
The reverse split is subject to the approval of the TSX Venture Exchange.
Common Shares Buyback Program
Also according to the Management Proposal, PetroRio shareholders approved the proposal of implementation of a buyback program of up to 16,500,000 common shares issued by the Company (3,300,000 common shares after the conclusion of the reverse split of shares now approved) within 18 (eighteen) months, without capital reduction, to be held in treasury, cancellation and/or subsequent sale. The share buyback program, as it relates to GDSs, is subject to the approval of the TSX Venture Exchange and no GDS shall be purchased by the Company before such approval is received.
The common shares buyback program aims to ensure that the market price of PetroRio’s shares more appropriately reflects the Company’s intrinsic value. Due to the amount in the proposed buyback program compared to the Company‘s cash availability history and considering the general evaluation from Management regarding PetroRio’s financial situation, it is understood that the share buyback shall not affect the compliance with creditors or the payment of mandatory dividends.
Number of outstanding shares to be acquired:
The common shares buyback program approved on this date authorizes the buyback of up to 16,500,000 common shares issued by the Company (3,300,000 common shares after the conclusion of the reverse split of shares now approved), without capital reduction.
The maximum period for the acquisition of shares approved in the buyback program is of 18 (eighteen) months as of this date, ending on November 02, 2017.
Itaú Corretora de Valores S.A., headquartered in the city and state of São Paulo, at Avenida Brigadeiro Faria Lima, 3500, 3º andar, Itaim Bibi, CEP: 04538-132, inscribed in the corporate roll of taxpayers (CNPJ/MF) under no. 61.194.353/0001-64;
XP Investimentos CCTVM S.A., headquartered in the city and state of Rio de Janeiro, at Praia de Botafogo, 501, Sala 601 (bloco Pão de Açúcar), inscribed in the corporate roll of taxpayers (CNPJ/MF) under no. 02.332.886/0001-04;
Santander Corretora de Câmbio e Valores Mobiliários S.A., headquartered in the city and state of São Paulo, at Avenida Presidente Juscelino Kubitschek, 2041/2235, 24º andar, Vila Olímpia, CEP 04543-011, inscribed in the corporate roll of taxpayers (CNPJ/MF) under no. 51.014.223/0001-49.
The Minutes of the Annual and Special Shareholders Meeting are available on the websites of Comissão de Valores Mobiliários - CVM (www.cvm.gov.br), BM&FBOVESPA S.A. - Bolsa de Valores, Mercadorias e Futuros (www.bmfbovespa.com.br) and the Company (www.petroriosa.com.br).