Po Valley terminates deal to divest Italian assets to Saffron Energy

Po Valley Energy has reached an agreement to terminate the previously agreed deal to divest Po Valley Operations (PVO) and its northern Italian gas assets to Saffron Energy.

Saffron Energy signed the acquisition agreement in January this year, together with the deal to acquire Sound Energy’s assets in Italy.

According to Po Valley, the decision was arrived at after holding discussions with its tax advisers and the Australian Taxation Office (ATO), as well as receipt of an independent experts report (IER).

In a statement, Po Valley said: “Following a number of discussions with the ATO, and having regard to the recent valuation of these shares, Po Valley’s tax advisers are of the view that a favourable class ruling to grant demerger relief to Po Valley shareholders will be unlikely for the in-specie distribution of the 200m Saffron shares.”

Under the agreement, Saffron agreed to offer 200 million ordinary shares to Po Valley in exchange for the acquisition of the entire issued share capital of PVO.

The portfolio of assets considered for sale include the company’s 63% interest in the Selva gas development field, wholly owned Teodorico offshore gas development field, and the Torro del Morro oil and condensate exploration field.

The decision to withdraw from the deal will enable Saffron to increase its focus on prospective opportunities in South East Asia.

Saffron noted that the decision to opt out was taken in view of regulatory and taxation issues, as well as its management’s intention to limit upfront equity dilution.