Harvest Natural Resources Inc. (NYSE: HNR) says that CT Energy Holding SRL, a Venezuelan-Italian consortium, has agreed to purchase from Harvest senior secured notes, convertible notes, and warrants. Harvest will immediately receive proceeds of $32.2 million from the sale of the senior secured notes and convertible notes, and could realize up to $42.5 million in additional proceeds from the full exercise of the warrants, which is subject to stockholder approval.
Harvest will use today's proceeds from CT Energy Holding SRL to repay its existing long-term debt and to reposition Harvest for long-term growth, both in Venezuela and Gabon.
Additionally, Harvest has entered into a strategic partnership with CT Energy Holding SRL and CT Energia Holding Ltd., an international energy trading firm (CT Energia), designed to maximize the long‑term success and value of Harvest's Venezuelan operations and its 20.4% investment in Petrodelta SA.
Under the terms of this strategic partnership:
- Harvest has entered into a term sheet with Petróleos de Venezuela SA (PDVSA), Harvest's partner in Petrodelta, for the repositioning and growth of Petrodelta's business.
- Two directors designated by CT Energy Holding SRL and a third independent director will join Harvest's board of directors, effective immediately.
- Harvest has agreed to appoint two of CT Energy Holding SRL's designees as Harvest's representatives on the Petrodelta board of directors.
- CT Energia has entered into a management contract to oversee the day-to-day operations of Harvest's Venezuelan business and to assist with the development of a plan for the business operations and financing for Petrodelta and the negotiation of definitive documents to implement such plan.
- During the term of the management contract, CT Energia CEO Alessandro Bazzoni will be appointed director and general manager of Venezuelan operations for Harvest.
As part of the partnership agreement, Oswaldo Cisneros, Francisco D'Agostino, and Edgard Leal, senior executives with knowledge of Venezuela, have joined Harvest’s board, while Igor Effimoff, H. H. Hardee, and J. Michael Stinson have stepped down from the company’s board, effective June 19.
Norton Rose Fulbright US LLP acted as legal counsel to Harvest. D'Agostino & Co. served as financial advisor, and Wachtell, Lipton, Rosen & Katz acted as legal counsel to CT Energy Holding SRL.