Offer Results in a CAD$0.48 Per Share Distribution or 6.6% Yield (to
Frontera's Share Price Prior the Offer's Announcement)
Assuming Full and Pro-Rata Shareholder Participation
Over US$52
Million Returned to Stakeholders in 2024, Including
Successful Completion of the Offer
Additional Dividends, Share Buybacks,
Distributions, Bond Buybacks or Other Investor Initiatives May Be
Considered in the Future
CALGARY,
AB, Sept. 4, 2024 /PRNewswire/ - Frontera
Energy Corporation (TSX: FEC) ("Frontera" or the
"Company") announces that its board of directors (the
"Board") has approved the commencement of a substantial
issuer bid (the "Offer") pursuant to which the Company will
offer to purchase from holders ("Shareholders") of common
shares of the Company (the "Shares") up to 3,375,000 Shares
for cancellation at a purchase price of CAD$12.00 per Share (the "Purchase
Price"), for an aggregate purchase price not exceeding
CAD$40,500,000 (equivalent to
US$30,000,000).
The Offer is expected to commence on September 11, 2024, and remain open for
acceptance until 5:00 p.m. (Eastern
time) on October 17, 2024,
unless extended, varied, or withdrawn by the Company (the
"Expiration Date"). Pursuant to the Offer, tendering
Shareholders will have the right to elect to tender a specified
number of Shares.
The Company plans to fund the Share repurchases through
available cash on hand. The Offer is denominated in Canadian
dollars, and Shareholders will have the option to elect to receive
payment in either Canadian or United
States dollars.
Purpose of the Offer
As part of its efforts to maximize value for Shareholders, the
Company has identified the Offer as an attractive and efficient
means to return capital to Shareholders. Upon successful completion
of the Offer, the Company will have returned over US$52 million of capital to its stakeholders this
year, including US$11.7 million in
declared dividends, US$7.7 million of
share repurchases and US$3.5 million
in buybacks of its 2028 unsecured notes.
On August 6, 2024, the last full
trading day prior to the date of announcement of the Company's
intention to make the Offer, the closing price of the Shares on the
TSX was CAD$7.25 per Share.
Assuming full and pro-rata shareholder participation, the Offer
represents a CAD$0.48 per Share distribution equivalent to a
6.6% yield on the Company's stock price prior to the announcement
of the Offer during the Company's second quarter 2024 results.
Including all dividends declared this year, the year-to-date
distribution total to shareholders would be CAD$0.67 per
Share (equivalent to a 9.2% yield). The Board shall continue
to consider future investor initiatives in 2024 and beyond,
including potential additional dividends, share buybacks,
distributions, bond buybacks or other initiatives, based on
the overall results of the businesses, cash flow generation and the
Company's strategic goals.
Purchase Price
Frontera will pay the Purchase Price of CAD$12.00 per Share for each validly deposited
Share taken up by the Company up to a maximum of 3,375,000 Shares,
for an aggregate purchase price not exceeding CAD$40,500,000 (equivalent to US$30,000,000).
Each Shareholder who has properly deposited Shares and who has
not withdrawn such Shares will receive the Purchase Price, payable
in cash (subject to applicable withholding taxes, if any), for all
Shares taken up by the Company upon the terms and subject to the
conditions of the Offer.
If more than 3,375,000 Shares are tendered for purchase, the
Company will purchase the Shares on a pro rata basis after giving
effect to "odd lot" tenders (Shares tendered by Shareholders
beneficially owning fewer than 100 Shares), which will not be
subject to proration. In that case, Shares that are tendered but
not purchased, will be returned to Shareholders.
Manner of Tender
Pursuant to the terms and subject to the conditions of the
Offer, Shareholders wishing to tender to the Offer may do so by
making an election to tender a specified number of Shares
(representing, in the Shareholders' discretion, all or a portion of
the Shareholders' Shares) at the Purchase Price.
Additional Information
As of September 3, 2024, the
Company had 84,188,756 issued and outstanding Shares. The Offer
will be for up to approximately 4.0% of the total number of issued
and outstanding Shares on a non-diluted basis.
The Offer is optional for all Shareholders, who are free to
choose whether to participate, and if they participate how many
Shares to tender. Any Shareholders who do not deposit their Shares
(or whose Shares are not purchased under the Offer) will realize a
proportionate increase in their equity interest in the Company, to
the extent that Shares are purchased under the Offer.
In connection with the Offer, Frontera has suspended Share
repurchases under its normal course issuer bid ("NCIB")
effective September 4, 2024, and therefore the Company shall
not repurchase any of its Shares under its NCIB during the term of
the Offer.
The terms and conditions of the Offer, including instructions
for tendering Shares, will be included in the formal offer to
purchase and issuer bid circular, letter of transmittal, notice of
guaranteed delivery and other related documents (the "Offer
Documents"). On or about September 11, 2024, the Offer
Documents will be mailed to Shareholders, filed with applicable
Canadian securities regulatory authorities, and made available
without charge on SEDAR+ at www.sedarplus.ca.
The Offer is not conditional upon any minimum number of Shares
being tendered. However, the Offer will be subject to other
conditions described in the Offer Documents. Frontera reserves the
right, subject to applicable laws, to withdraw, extend or amend the
Offer, if certain events occur at any time prior to the payment for
the tendered Shares.
The Catalyst Capital Group Inc. ("Catalyst") and Gramercy
Funds Management LLC ("Gramercy" and, collectively with
Catalyst, the "Principal Shareholders") are the
beneficial owners of, or exercise control or direction over,
34,775,609 and 11,300,032 Shares, respectively, which in the
aggregate represent approximately 54.73% of all issued and
outstanding Shares. Each of Catalyst and Gramercy
has advised the Company that their current intention is to
deposit Shares pursuant to the Offer, however, their
decision to participate in the Offer is subject to market
conditions and other factors. Each of Catalyst and Gramercy
reserves the right without notice and for any or no reason, to
change its investment decision at any time prior to the Expiration
Date. In addition, officers of the Company have expressed an
intention to tender 247,569 Shares to the Offer.
The Company has engaged Computershare Investor Services Inc. to
act as depositary for the Offer and BMO Nesbitt Burns Inc. to act
as financial advisor and dealer manager. Shareholders who have
questions regarding the Offer or require any assistance tendering
Shares may contact Computershare Investor Services Inc. by
telephone at 1-800-564-6253 (North
America) or 514-982-7555 (International), or by e-mail at
corporateactions@computershare.com, or BMO Nesbitt Burns Inc. by
email at FronteraSIB@bmo.com.
The Offer referred to in this news release has not yet
commenced. This news release is for informational purposes only and
does not constitute an offer to buy or the solicitation of an offer
to sell Shares. The solicitation and the offer to buy Shares will
only be made pursuant to the Offer Documents to be filed with the
applicable Canadian securities regulatory authorities. The Offer
will not be made to, nor will tenders be accepted from or on behalf
of, holders of Shares in any jurisdiction in which the making or
acceptance of offers to sell Shares would not be in compliance with
the laws of that jurisdiction. None of Frontera, its Board or the
depositary makes any recommendation to Shareholders as to whether
to tender or refrain from tendering any or all of their Shares
pursuant to the Offer. Shareholders are strongly urged to read the
Offer Documents carefully and to consult with their financial, tax
and legal advisors prior to making any decision with respect to the
Offer.
Estimated Paid-Up Capital Determination
The Company also announces that it has re-determined the
estimated "paid-up capital" for purposes of the Income Tax Act
(Canada) of its Shares to be
CAD$14.98 per Share as of the date
hereof.
The Company entered into Minutes of Settlement dated
July 12, 2024, with the Minister of
National Revenue (Canada) to
resolve a dispute in connection with the Company's 2016
restructuring process and relating to, among other things, the fair
market value of the Shares as at November 2,
2016, the computation of the net capital losses and the
computation of non-capital losses of the Company in respect of its
taxation year ending December 31,
2016 (the "Settlement").
The Company has assessed the impact of the Settlement on the
computation of the historical paid-up capital in respect of the
Shares. This assessment has resulted in a decrease in the net
capital losses of the Company, as last reported in the 2023 Annual
Consolidated Financial Statements, and an increase in the computed
amount of the historical paid-up capital in respect of the Shares.
This adjustment may impact the quantum of dividends deemed to have
been received by certain shareholders of Frontera in respect of the
repurchase of Shares pursuant to the Company's substantial issuer
bid that was completed on August 11,
2022.
About Frontera
Frontera Energy Corporation is a Canadian public company
involved in the exploration, development, production,
transportation, storage and sale of oil and natural gas in
South America, including related
investments in both upstream and midstream facilities. The Company
has a diversified portfolio of assets with interests in 22
exploration and production blocks in Colombia, Ecuador and Guyana, and pipeline and port facilities in
Colombia. Frontera is committed to
conducting business safely and in a socially, environmentally and
ethically responsible manner.
If you would like to receive News Releases via e-mail as soon as
they are published, please subscribe here:
http://fronteraenergy.mediaroom.com/subscribe.
Forward-Looking Statements
This news release contains forward-looking information or
forward-looking statements (collectively, "forward-looking
statements") within the meaning of applicable securities laws,
including statements as to the Company's current intentions
regarding commencement of the Offer, the timing, terms and
conditions of the Offer, the participation of the Principal
Shareholders and certain officers, the number of Shares to be
purchased and the amount of capital returned to Shareholders under
the Offer and the consideration of future investor initiatives in
2024 and beyond. Any such forward-looking statements are based on
information currently available to us and are based on assumptions
and analyses made by us in light of our experience and our
perception of historical trends and current market and other
conditions. Readers should also refer to the risk factors set forth
in the Company's annual information form and management's
discussion and analysis for the year ended December 31, 2023, each dated March 7, 2024, available on SEDAR+ at
www.sedarplus.ca. There can be no assurance that the plans,
intentions, or expectations upon which forward-looking statements
are based will be realized. Actual results may differ, and the
difference may be material and adverse to the Company and its
Shareholders.
Social Media
Follow Frontera's social media channels at the following
links:
Twitter: https://twitter.com/fronteraenergy?lang=en
Facebook: https://es-la.facebook.com/FronteraEnergy/
LinkedIn:
https://co.linkedin.com/company/frontera-energy-corp
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SOURCE Frontera Energy Corporation
