ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
On November 21, 2012, Sunwing Energy Ltd. (“Sunwing”), a subsidiary of Ivanhoe Energy Inc. (the “Company”), entered into a definitive Share Purchase and Sale Agreement (the “SPSA”) with MIE Holdings Corporation (“MIE”) for the purchase and sale of all of the issued and outstanding shares of Pan-China Resources Ltd. (“Pan-China”). Pan-China’s principal business involves acting as a contractor to China National Petroleum Corporation (“CNPC”) under a production sharing agreement in respect of the Kongnan Block in China’s Dagang Oilfield (the “Dagang PSC”).
As consideration for all of the issued and outstanding shares of Pan-China, MIE will pay US$45 million in cash to Sunwing, subject to adjustments for working capital, cost recovery adjustments under the Dagang PSC based on the results of annual audit procedures by CNPC and Sunwing inter-corporate cash distributions. All such adjustments will be made with effect as of September 30, 2012. MIE is entitled to hold back US$5 million of the adjusted purchase price for 180 days as security for post-closing claims in respect of Pan-China employee severance obligations, contingent Sunwing tax obligations, additional, presently unquantified cost recovery adjustments under the Dagang PSC based on the results of CNPC audit procedures completed after closing and errors or omissions in the calculation of the adjusted purchase price.
The transaction is subject to customary closing conditions and is expected to close within 30 days.
The above description of the SPSA is a summary, does not purport to be complete and is qualified in its entirety by the complete text of the SPSA, a copy of which is attached hereto as Exhibit 2.1 and incorporated by reference herein. The Company’s press release announcing the signing of the SPSA is attached hereto as Exhibit 99.1 and is incorporated by reference herein.