Access journalism, done right: The Serafino Iacono case

Tommy Humphreys of CEO.ca traveled in Colombia with Frank Giustra and Serafino Iacono. He got rare face time with Iacono, who as chairman of Pacific Rubiales Corp. and a group of mining and infrastructure companies is a particularly alluring subject for media scrutiny. The article is basically positive and ever-so-cheery (“Net net, the future is bright for Colombia, and Fino and Frank’s Blue Pacific is moving along at a rapid pace.” Fino and Frank? Really? And net net? WTF) but heck, there is a place for this stuff. There’s no harm in hearing the founders of a bunch of companies, giving us their pitch. Sure, the pitch is not very heavy on content, but it’s ok, it gives you some sense of how Iacono and Giustra have done well in Colombia.

What makes this article fun are the subtle digs. Like this one. 

“Colombia is the longest standing democracy in South America,” Fino tells me, his ever-present security detail hovering ominously at our periphery. “I never feel like I’m in danger here.”

Love it. Isn’t Colombia’s tourism slogan, “The only risk is not being able to afford 24-7 personal protection”?  (Speaking of these guys and that slogan, here is a really fantastic article called The Only Risk Is Wanting to Stay.)

Iacono saw opportunity in the Colombian raw materials sector before anyone else. This is why he’s one of the country’s most successful entrepreneurs today — one who has, for example, Colombian presidents both past and present on speed dial.

But, but, didn’t you just say it was a democracy? How does a Venezuelan working for a Canadian company get more access to the president than almost any Colombian citizen? Ha, don’t answer that.

Blue Pacific — Iacono and Giustra’s private company led by Jaime Perez Branger — owns ports under construction in Cartagena and Barranquilla, as well as power plants, farms, mines, and other infrastructure assets scattered across the country….

“In the resource business, you have to look at the related businesses of each of these commodities.” Fino tells his guests over whisky with coconut water one night. “The other products and materials used in production, the infrastructure…”

Isn’t that just the question? How much does Iacono’s private company sell to the publicly traded companies (that would be you, Mr. retail shareholder), and at what prices? Luckily we have the public disclosures, which all tell us that the PRE.to pays its related parties for office space, electricity and transport, and not to worry, a board committee has ensured that PRE.to is paying fair market value in these deals.

 Of all the companies in Frank and Fino’s portfolio, Petroamerica Oil Corp. (TSXV:PTA) is the one they’re most excited about. “There’s a huge opportunity for Petroamerica to be the consolidator of light oil projects in Colombia,” Fino says. “CEO Nelson [Navarette] is the top oil executive in Colombia, with the best connections in the country. This is the next Pacific Rubiales.”

Frank and Fino are two of the largest holders of PTA shares, last at 32 cents.

Part of the humour here comes from where they call it “the next Pacific Rubiales.” Obviously they are referring to that company’s 10-fold stock price gain from 2009 to 2011. But there’s another reading:

PRE-to-stock-price-1-year-chart

Hmm.

The other bit of humour here comes from the dual nature of the second paragraph: Disclosure or explanation? You be the judge.

Anyway, good article. It made me smile. Take a read if you wish.

6 thoughts on “Access journalism, done right: The Serafino Iacono case

  1. Bill

    “But, but, didn’t you just say it was a democracy? How does a Venezuelan working for a Canadian company get more access to the president than almost any Colombian citizen? Ha, don’t answer that.” Do you call the USA a Democracy? How does the head of a foreign bank get to play golf with Obama when most Americans don’t have any access to their President?
    http://voices.washingtonpost.com/44/2009/08/24/senior_ubs_official_key_donor.html?wprss=44
    Can you answer that?

      1. sapitosetty Post author

        Sorry, that was an obnoxious answer. I actually do call both the USA and Colombia democracies. But they are really oligarchies. Make sense?

  2. Paula

    Why does Blue Pacific look more like a family reunion than a private company owned by Serafino Iacono and Frank Giustra led by Jaime Perez Branger?
    Correct me if I am wrong but Frank Giustra’s ownership in Blue Pacific appears to be 0%
    20% BP Trust – whose beneficiary is Beatrice Drielts Pelaez mother of Serafino Iacono
    20% KFK Trust – the family of Jose Francisco Arata
    20% Torino Consultants Limited – controlled by Miguel de la Campa
    20% The Carngton Trust – Mascherani Paolo family business
    10% Orinoco Belt Venezuelan company 50% controlled by de la Campa and 50% by the mother of Iacono
    10% Investment AVV Andes – Juan Manuel Peláez company.

    Blue Pacific has been sued in Canada for failed corrupt corporate governance only to settle for pennies and repeat so maybe more like a dysfunctional family reunion.

  3. Paula

    If ownership stakes of Blue Pacific were filed correctly than Dr. Michael J. Burry’s Scion Capital would have located September 27, 2005 at sedar.com under Coalcorp.

    Although Blue Pacific Assets Corp is a company incorporated under the laws of the British Virgin Islands they tend to have many dealings with Canadian Public Companies that require them to file under All related party transactions or Material Contracts which can be found in http://www.sedar.com.

    http://www.colombiayourpartnerofchoice.com/Archivos/Presentacion_MiguelDeLaCampa.pdf
    Above link appears to be missing Coalcorp, Vega Resources Inc., Prima Colombia

    http://agenciabk.net/matoneo_justicia.htm
    http://www.acolgen.org.co/article.php?sid=1898&PHPSESSID=0c60704b7c14b72b56d418213dc6da1b
    http://www.primerapagina.net.co:9080/Primera/mostrarpagina.jsp?pagi=13&tipo=1&idio=1&codigo=1225728
    http://www.newswire.ca/fr/story/288449/coalcorp-announces-transactions-implementing-focus-on-core-assets
    More Related party Transactions http://www.pacificrubiales.com/archivos/financial_report_1Q_2011/english/AIF.pdf
    Here is what appears to have sparked all the battles including statement of claims and Krolls involvement
    COALCORP MINING INC. (“CCJ” ) (CCJ.WT”)
    BULLETIN TYPE: Property-Asset Acquisition, Prospectus-Unit Offering, New
    Listing-Warrants, Company Tier Reclassification, Resume Trading
    BULLETIN DATE: February 8, 2006
    TSX Venture Tier 2 Company

    The Exchange has provided its acceptance to each of the matters described
    below.

    1. Agreement with Blue Pacific Assets Corp. (‘Blue Pacific’):

    TSX Venture Exchange has accepted for filing an agreement, dated September 27,
    2005 (as amended November 23, 2005) (the ‘Blue Pacific Agreement’), between the
    Company and Blue Pacific pursuant to which the Company has agreed to acquire
    from Blue Pacific all of the issued and outstanding shares of each of Americoal
    Corporation Ltd. (‘Americoal’), Neo Coal Corporation AVV (‘Neo Coal’) and
    Panamerican Ports Corporation Ltd. (‘Panamerican’), each of which holds the
    right to acquire certain coal properties or coal-related assets located in
    Colombia, in exchange for cash consideration of US$1,250,000 and 28,000,000
    common shares.

    Americoal is a private British Virgin Island corporation whose sole asset is
    the right to acquire all of the issued and outstanding shares of Compania
    Carbones del Cesar, S.A. (‘Cesar’). Cesar is a private Colombian corporation
    that operates the ‘La Francia Mine’, a coal producing mine located in the Cesar
    region of Colombia. Pursuant to the Blue Pacific Agreement, the Company will
    assume all of Americoal’s purchase obligations relating to Cesar which consists
    primarily of the payment of US$45,000,000 to the existing shareholders of
    Cesar.

    Neo Coal is a private corporation under the laws of Aruba whose sole asset is
    the right to acquire a 90% joint venture interest in a 2,500 hectare coal
    exploration concession located in Colombia known as the ‘La Curubita
    Concession’. Application has been made to the applicable Colombian
    governmental authorities for the granting of the concession. At present, the
    governmental authorities are in the process of reviewing the application. When
    and if the concession is granted by the governmental authorities, Neo Coal will
    have a 90% participating interest in the La Curubita Concession and an arm’s
    length third party will hold a 10% carried interest. Pursuant to the Blue
    Pacific Agreement, the Company will assume an obligation to pay US$500,000 to
    the joint venture partner.

    Panamerican is a private British Virgin Island corporation whose only
    operations and assets consist of an option to acquire: (i) 57 hectares of land
    on the coast of the Caribbean Sea near the industrial zone of Cartagena,
    Colombia, which land has the potential of being used as a coal port; and (ii)
    all of the issued and outstanding shares of Carbones del Carare, S.A.
    (‘Carare’), a private Colombian corporation, that was previously licensed to
    operate and maintain a private port near the city of Cartagena. Pursuant to
    the Blue Pacific Agreement, the Company will assume all of Panamerican’s
    purchase obligations relating to the port assets including the payment of
    US$13,900,000 for the land and US$100,000 for the shares of Carare. In
    addition, the Company must pay a finder’s fee of US$250,000 to an unrelated
    third party.

    Insider / Pro Group Participation: None. At the time the transaction was
    agreed to, the Company was at arm’s length to Blue Pacific, Cesar and Carare.

    The Company’s involvement in the transactions contemplated by the Blue Pacific
    Agreement was approved by the written consent of shareholders of the Company
    holding, in the aggregate, greater than 50% of the Company’s issued and
    outstanding common shares. Such consent was provided in early February 2006.

    For additional information regarding the Blue Pacific Agreement, and all
    transactions thereunder, refer to the Company’s Short Form Prospectus, dated
    February 1, 2006.

    2. Agreement with Next Com Limited (‘Next Com’):

    TSX Venture Exchange has accepted for filing an agreement, dated September 29,
    2005 (the ‘Next Com Agreement’), between the Company and Next Com, pursuant to
    which the Company has agreed to acquire all of the issued and outstanding
    shares of Andean Coal Corporation (‘Andean’) in exchange for cash consideration
    of US$1,000,000.

    Andean is a private British Virgin Island corporation whose sole asset is the
    right to acquire all of the issued and outstanding shares of Carbones
    Colombianos del Cerrejon, S.A. (‘Cerrejon’). Cerrejon is a private Colombian
    corporation that operates the ‘Caypa Mine’, a coal producing mine located in
    Colombia. Cerrejon is currently a wholly-owned subsidiary of Enel SpA
    (‘Enel’), an Italian electricity utility company. Pursuant to the Next Com
    Agreement, the Company will assume all of Andean’s purchase obligations
    relating to Cesar which consists primarily of the payment of up to
    US$37,500,000 to Enel and a working capital adjustment payment of approximately
    US$5,000,000.

    There is no finder’s fee payable in respect of the transaction.

    Insider / Pro Group Participation: None. At the time the transaction was
    agreed to, the Company was at arm’s length to Next Com and Cerrejon.

    The Company’s involvement in the transactions contemplated by the Next Com
    Agreement was approved by the written consent of shareholders of the Company
    holding, in the aggregate, greater than 50% of the Company’s issued and
    outstanding common shares. Such consent was provided in early February 2006.

    For additional information regarding the Next Com Agreement, and all
    transactions thereunder, refer to the Company’s Short Form Prospectus, dated
    February 1, 2006.

    3. Prospectus-Unit Offering (the ‘Offering’) and Listing of Warrants:

    Effective February 1, 2006, the Company’s Short Form Prospectus dated February
    1, 2006 was filed with and accepted by TSX Venture Exchange, and filed with and
    receipted by the British Columbia, Alberta, Manitoba and Ontario Securities
    Commissions, pursuant to the provisions of the Securities Acts of each such
    jurisdiction.

    Agents: GMP Securities L.P. and Canaccord Capital Corporation

    Offering: 300,000,000 units. Each unit consists of one common share and
    one-half of one common share purchase warrant. Each whole warrant entitles the
    holder to acquire one common share.

    Unit Price: $0.60 per unit

    Warrant Exercise Price/Term: The warrant exercise price is $0.80 per share.
    The warrants shall expire at 5:00 PM (E.S.T.) on February 8, 2011.

    Agents’ Warrants: None.

    Over-Allotment Option: The Agents may over-allot the units in connection with
    this offering and the Company has granted to the Agents, an option to purchase
    additional units, up to 15% of the offering (being up to 45,000,000 units), at
    $0.60 per unit, up to the close of business on March 10, 2006 (being 30 days
    from the closing date of the offering).

    Effective at market open on February 9, 2006, the share purchase warrants
    issued pursuant to the Offering will commence trading.

    Transfer Agent: Equity Transfer Services Inc.
    Warrant Trading Symbol: CCJ.WT
    Warrant CUSIP Number: 190135111

    4. Graduation to Tier 1:

    In accordance with Policy 2.5, the Company has met the requirements for a Tier
    1 Mining Issuer. Therefore, effective February 9, 2006, the Company’s Tier
    classification will change from Tier 2 to:

    Classification

    Tier 1 Mining Issuer

    5. Resumption in Trading:

    Further to the Exchange’s bulletin of February 7, 2006, the Exchange has been
    advised by the Company that it has completed the closing of: (i) its
    transaction with Blue Pacific (as described above); (ii) its transaction with
    Next Com (as described above); and (iii) its $180,000,000 prospectus offering
    (as described above). As a result, effective at market open on February 9,
    2006 shares of the Company will resume trading.

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