CALGARY,
AB, June 20, 2022 /CNW/ - 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 shareholders for cancellation up to $65 million (equivalent to US$50 million) of its outstanding common shares
(the "Shares"). The Offer will proceed by way of a "modified
Dutch auction" procedure with a tender price range from
$11.00 to $13.00 per Share.
The Company plans to fund repurchases of Shares through
available cash on hand. Unless otherwise stated, 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.
The Offer is expected to commence on June
24, 2022 and remain open for acceptance until 11:59 p.m. (Eastern time) on July 29, 2022, unless extended, varied or
withdrawn by the Company.
Manner of Tender
The Company will conduct the Offer through a "modified Dutch
auction" procedure. Shareholders wishing to tender to the Offer may
do as follows: (i) by making an auction tender pursuant to which
the tendering shareholders agree to tender a specified number of
Shares at a price of not less than $11.00 and not more than $13.00 per Share in increments of $0.20 per Share (an "Auction Tender");
(ii) by making a purchase price tender pursuant to which the
tendering shareholders do not specify a price per Share, but rather
agree to have a specified number of Shares purchased at the
Purchase Price (as defined below) (a "Purchase Price
Tender"); or (iii) by making a proportionate tender pursuant to
which the tendering shareholders agree to sell to the Company, at
the Purchase Price, a number of Shares that will result in them
maintaining their respective proportionate equity ownership in the
Company following completion of the Offer (a "Proportionate
Tender"). The Company will deem those shareholders who validly
deposit Shares without specifying the method in which they are
tendering their Shares to have made a Purchase Price Tender.
Purchase Price
The purchase price Frontera will pay for each validly deposited
Share taken up by the Company (the "Purchase Price") will be
determined upon expiry of the Offer. The Purchase Price will be the
lowest price (which will not be less than $11.00 per Share and not more than $13.00 per Share) that enables the Company to
purchase Shares up to the maximum amount available for Auction
Tenders and Purchase Price Tenders, determined in accordance with
the terms of the Offer. Each Shareholder who has properly deposited
Shares pursuant to an Auction Tender at or below the Purchase
Price, a Purchase Price Tender or a Proportionate Tender and who
has not withdrawn such Shares will receive the Purchase Price,
payable in cash (subject to applicable withholding taxes, if any,
as will be outlined in the Offer Documents, as defined below), for
all Shares taken up by the Company upon the terms and subject to
the conditions of the Offer. The Company will return those Shares
not taken up in connection with the Offer, including Shares
deposited pursuant to Auction Tenders at prices above the Purchase
Price.
If the aggregate Purchase Price for Shares validly tendered
pursuant to Auction Tenders and Purchase Price Tenders is greater
than the amount available for Auction Tenders and Purchase Price
Tenders (after taking into consideration the Proportionate
Tenders), 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 pro-ration. In that case, all Shares tendered at
or below the Purchase Price will be purchased, subject to
pro-ration, at the same Purchase Price determined pursuant to the
terms of the Offer. Shares that are tendered but not purchased,
including Shares tendered pursuant to Auction Tenders at prices
above the Purchase Price, will be returned to shareholders.
Purpose of the Offer
The Board believes that the trading price of the Shares is not
fully reflective of their intrinsic value based on the value of the
Company's assets and its business, future prospects and financial
position. Share buybacks are a key tool to increase value for and
return capital to shareholders. The Offer reflects the Board's view
that the Company's Share price remains undervalued and represents a
value accretive use of the Company's financial resources.
The Board remains committed to creating increased value for
shareholders. In doing so, the Board will continue to consider
various forms of strategic initiatives or transactions in addition
to the Offer, which may include, without limitation, a further
return of capital to shareholders, a merger or consolidation,
recapitalization or a business combination, or the transfer, sale
or other disposition of all or a significant portion of the
business, assets or securities of the Company or of interests in
one or more subsidiaries or in assets of the Company, whether in
one or a series of transactions. There can be no assurance that any
such initiative or transaction will occur or if it occurs, the
timing thereof.
Additional Information
The Offer will be for up to approximately 6.355% of the total
number of issued and outstanding Shares on a non-diluted basis
(based on a Purchase Price equal to the minimum Purchase Price per
Share and 92,982,495 Shares issued and outstanding as of
June 17, 2022).
The Offer is optional for all shareholders, who are free to
choose whether to participate, how many Shares to tender, and the
manner in which they tender their Shares. 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"), and
therefore the Company shall not repurchase any of its Shares under
its NCIB during the term of the Offer. The Company shall resume
Share repurchases under its NCIB, which is for up to 10% of the
Company's public float, calculated as of March 7, 2022, following closing 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"). In respect of the Offer, including any applicable
withholding taxes, shareholders are urged to consult their own tax
advisors with respect to their particular circumstances. On or
about June 24, 2022, the Offer
Documents will be mailed to shareholders, filed with applicable
Canadian securities regulatory authorities, and made available
without charge on SEDAR at www.sedar.com.
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
tendered Shares.
The Catalyst Capital Group Inc. ("Catalyst") is the
beneficial owner of, or exercises control or direction over,
34,775,609 Shares, which represent approximately 37.400% of all
issued and outstanding Shares. Catalyst has advised the
Company that it will not be depositing any Shares pursuant to the
Offer.
The Company intends to engage Computershare Investor Services
Inc. to act as depository for the Offer and has engaged 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
remains subject to obtaining the necessary exemptive relief under
applicable securities laws in Canada. 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 or the price or prices at which shareholders may choose to
tender Shares. 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.
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 33
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.
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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, and the ultimate purchase price, the
number of Shares purchased and the amount of capital returned to
shareholders under the Offer, the resumption of Share purchases
under the Company's NCIB, and the consideration of strategic
initiatives or transactions. 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, 2021, each dated March 2, 2022, available on SEDAR at
www.sedar.com. 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