Frontera Resources Corporation (London Stock Exchange, AIM Market – Symbol: FRR), an independent oil and gas exploration and production company, is pleased to provide an update in connection with the proposed funding plan, debt exchange and merger (the “Proposals”), previously announced on 28 June 2011, and to notify publication of an Admission Document.
The Company is announcing today the results of the Exchange Offer, which closed on 26 July 2011, for which acceptances to receive share consideration have been received in respect of 84.8 per cent. of the outstanding 2012 and 2013 Notes. The Company has previously announced, on 18 July 2011, that it has received the requisite shareholder consent to proceed with the Proposals.
The final total results of the Exchange Offer reflect that holders of approximately US$102.5 million or 84.8 per cent. of the Company’s 2012 and 2013 Notes have elected to convert their debt into equity, at a price of 4 pence per share. In addition, holders of approximately US$18.1 million of the Company’s remaining debt have elected to exchange their debt for new convertible notes maturing in 2016.
Accordingly, including accrued and unpaid interest through to the date of Admission, being 2 August 2011, US$76.6 million of 2012 Loan Notes (representing 85.9 per cent. of the total 2012 Notes) will, subject to satisfaction of the remaining conditions and Admission, convert into 1,180,905,580 new Frontera Cayman Shares, and US$13.0 million 2012 Loan Notes will be exchanged for 2016 Loan Notes. Further, including accrued and unpaid interest through to the date of Admission, US$26.8 million of 2013 Loan Notes (representing 84.8 per cent. of the total 2013 Notes) will, subject to satisfaction of the remaining conditions and Admission, convert into 412,947,990 new Frontera Cayman Shares, and US$5.0 million 2013 Loan Notes will be exchanged for 2016 Loan Notes. Following these conversions, US$241,039 of the 2012 Loan Notes and nil 2013 Loan Notes will remain outstanding.
As outlined in the announcement on 28 June 2011, completion of the Proposals will serve to simplify and strengthen the Company’s balance sheet, as well as to enhance Frontera’s operating and financial flexibility. Initially, the net proceeds of the equity fundraising will be used to accelerate the next phase of planned development drilling campaigns from the Shallow Fields Production Unit and the Taribani Field Unit. These campaigns are designed to increase oil and gas production and associated reserve bookings from three undeveloped and underdeveloped fields.
Assuming free cash flow from operations and/or availability of funds, Frontera will also continue to fund exploration drilling at the highly prospective Basin Edge Play Unit, as well as to simultaneously advance efforts to seek a strategic partner for ongoing exploration work associated with this asset. In addition, the Company will continue the evaluation of the significant potential associated with its 2,000 km2 Shale Gas Play Unit. Full details of the proposed work program are included in the AIM admission document published by Frontera Cayman, which is available for download from the Company’s website at www.fronteraresources.com.
The Proposals remain conditional upon completion of the Merger which is expected to occur after 10.00 p.m. on 1 August 2011. The conditions to the Merger are as set out in the announcement dated 28 June 2011.
Application has been made for the admission of the entire issued share capital of Frontera Cayman to be admitted to trading on AIM under the symbol “FRR” (ISIN: KYG368131069), which upon Admission will comprise 2,044,325,136 ordinary shares of par value US$0.00004 each. Cancellation of the trading of the shares in Frontera Delaware and Admission of the new shares in Frontera Cayman is expected to take place at 8.00 a.m. on 2 August 2011.
Terms used in this announcement have the same meaning as defined in the announcement dated 28 June 2011, unless otherwise defined.
Steve C. Nicandros, Chairman and Chief Executive Officer, commented:
“We are delighted to have successfully concluded this funding plan. This allows the Company to accelerate the development of Frontera’s future activities. In particular, we will be continuing apace to complete the next phase of the work program at the Shallow Fields Production Unit and the Taribani Field Unit. The coming months will be an exciting and active period for the Company.”
Frontera Resources Corporation
Vice President, Investor Relations and Corporate Communications
Strand Hanson Limited
James Harris / Andrew Emmott / Paul Cocker / Liam Buswell
+44 (0)20 7409 3494
Arbuthnot Securities Limited
Richard Johnson / Adam Lloyd
+44 (0)20 7012 2000
Old Park Lane Capital Plc
Michael Parnes / Luca Tenuta
+44 (0)20 7493 8188
Tim Thompson / Ben Romney / Helen Chan
+44 (0)20 7466 5000
Notes to Editors:
1. Frontera Resources Corporation is an independent Houston, Texas, U.S.A.-based international oil and gas exploration and production company whose strategy is to identify opportunities and operate in emerging markets around the world. Frontera currently operates in the country of Georgia where it holds a 100 percent working interest in a production sharing agreement with the government of Georgia. This gives Frontera the exclusive right to explore for, develop and produce oil and gas from a 5,060 square kilometer area in eastern Georgia known as Block 12. Frontera Resources Corporation shares are traded on the London Stock Exchange, AIM Market – Symbol: FRR. For more information, please visit www.fronteraresources.com
2. This release may contain certain forward-looking statements, including, without limitation, expectations, beliefs, plans and objectives regarding the transactions, work programs and other matters discussed in this release. Exploration for oil is a speculative business that involves a high degree of risk. Among the important factors that could cause actual results to differ materially from those indicated by such forward-looking statements are: risks inherent in oil and gas production operations; availability and performance of needed equipment and personnel; the Company’s ability to raise capital to fund its exploration and development programs; seismic data; evaluation of logs, cores and other data from wells drilled; inherent uncertainty in estimation of oil and gas resources; fluctuations in oil and gas prices; weather conditions; general economic conditions; the political situation in Georgia and relations with neighboring countries; and other factors listed in Frontera’s financial reports, which are available at www.fronteraresources.com. There is no assurance that Frontera’s expectations will be realized, and actual results may differ materially from those expressed in the forward-looking statements.