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Mole, when looking through the PWC Consolidated Financial Statements December 31, 2012 and 2011, I noticed this on page 7:
“Frontera Cayman simultaneously exchanged $121.6 million aggregate amount of the Company’s 10% convertible notes payable plus accrued interest, for (i) 1,593,853,570 Frontera Cayman Shares, and (ii) $18.2 million aggregate principal amount of new 10% convertible notes due 2016 issued by Frontera Resources Holdings, LLC, a Delaware limited liability company and a wholly owned subsidiary of Frontera Cayman. These convertible notes payable were exchanged for
shares of common stock at a price lower than the conversion price at inception of the notes. The difference in the value of the original conversion price to the actual conversion price was recorded as inducement expense in the statement of operations of approximately $99.4 million. Frontera Cayman also exchanged $9.2 million principal amount plus accrued interest of its related party notes payable for 141,515,879 newly issued Frontera Cayman Shares pursuant to note exchange
agreements”.
https://fronteraresources.com/wp-content/uploads/2017/08/Frontera-Resources-Corporation-and-Subsidiaries-2012.pdf
I also noticed the reference to Frontera Resources Holdings, LLC, a Delaware limited liability company and a wholly owned subsidiary of Frontera Cayman. I have managed to find only limited information on it and another Delaware company, Frontera Resources Corporation; unfortunately I am unable find out if the companies are still active or not.
Frontera Resources Corporation, No. 2714496, Formed 04/02/1997
Frontera Resources Holdings, LLC, No. 5015274, Formed 25/07/2011
Both addresses: 251 Little Falls Drive, Wilmington, New Castle, DE 19808. Phone: 302-636-5401
I notice that the Texas FRC was registered 3 months after FRC Delaware company on 08/05/1997 but the Texas FRH was registered only a week after FRH Delaware on 01/08/2011. A day after on 02/08/2011, FRC Texas completed a merger with and into a new Cayman Islands exempted company (“Frontera Cayman”), with Frontera Cayman being the surviving entity (page 6 of the PWC report). On page 7 it says:
“By operation of the Merger, each share of common stock of the Company (i.e. FRC) has been converted into and represents the right to receive either (i) one Frontera Cayman Share (the “Stock Consideration”) or (ii) £0.04 ($US0.065) (the “Cash Consideration”). As a result, all stockholders of the Company received the Stock Consideration, except for US stockholders who were not “accredited investors” as defined in Rule 501 under the US Securities Act of 1933, who received the Cash Consideration”.
I don’t know if this is valid but if 1,593,853,570 (Frontera Cayman Shares) is multiplied by $0.065 it comes to $103.6m. Could this link to the $100m FRGC’s outstanding debt owed to Frontera Resources Corporation or has lockdown finally got to me?
Would an SM want to be part of the bad press that will follow a scam like that?
I don't suppose, and its just a thought, that all this fighting between zaza and the Georgians is just for show.
The licence gets ripped up in july, frontera say they put up a fight to no avail but company goes pop
Then all of a sudden the licence turns up in a company not connected to all the old baggage , outrider , shareholders etc and zaza and the Georgians turn up hand in hand to reap the rewards
Looking back at the last RNS regarding Finance before delisting it looks like they had a Financier in the pipeline to lend them $60 million:
https://www.investegate.co.uk/frontera-resources--frr-/rns/financing-update/201812120700021694K/
Perhaps it went through? The way it is written makes it sound that they were quite firm on this. However, FRR apparently had trouble keeping the workers on, paying Lawyers, etc.
The RNS mentions that Zaza was looking to use this money to develop the field. So whether this means the field has been substantially developed already?
I'm personally annoyed the the GG are being such dicks on all of this I'm sure approx. 50 percent of the deal will be a good payer for them. All companies bare going to charge to develop the field so their going to be much the same. The sooner they let FRR get on with it the better off we'll all be.
Might be coincidence but the figure of USD100m figure has popped up a few times in relation to the Award -
"The vast majority of the state's demands have not been met by the international arbitration and it is unclear where the state's profits against the Frontera can be seen. Most importantly, none of the financial claims were met by the state court, a claim that has been challenged since 2013, as if we were misleading the distribution of oil and gas products to the state, as if we were not paying the state the money it deserved. The amount demanded by them exceeded 100 million dollars - they refused. In addition, they demanded the cancellation of the contract, which was not satisfied. Instead, the court granted the state a very trivial matter, which we did not even dispute. We pay the state the advance tax on the entrails every year, and this advance, which was not a large sum and is about $ 200,000, had to be paid to us. It's just that the state has our debt and we were telling it to reduce that debt in that amount. The arbitral tribunal granted this request to the State"
Around November '19, the amount was USD80m but it now is referred to as either $100m / more than $100m / 320 Crore
Hope this link to the docs is helpful - https://we.tl/t-JxMtxBNjJF
Most of the docs is in English (from page 10) and it seems the rest are the Georgian translations.
Sorry 15-4-19
Thanks Welloilled for your reply at 21.29.
If the Farmout agreement was concluded and the $100 million drawn down on 15-4-20 that would have needed Hope's approval . He didn't leave the board until 3 weeks later.
That would suggest that Hope was in agreement with the farm out and an deal had been done with him /Outrider and FRR...
If that was the case though the court cases would have stopped pretty promptly you would have thought but they didn't. We did get an indication that the parties were talking a few months ago and that the cases had been halted .
Hi Mole, Frontera's corporate structure is like a set of Russian dolls! Its frustrating that the bulk of the documents are in Georgian.
I note in the letter dated 15/04/2019 to GOGC, it guaranteed FRUS "has the technical and FINANCIAL ability to perform the obligations to be assumed by it under that PSC".
On 04/06/2019 Maples certified that FRGC (Incorporation Number 72227) based solely on the Register of Members of the Company maintained at the Registered Office, the issued share capital is $100 and the shareholder is Frontera Resources Caucasus Corporation (IN 97554, FRCC). The IN of Frontera International Corporation (FIC) is 71338 and for Frontera Resources Corporation (FRC) is 256380. Based solely on the Register of Members of FRCC maintained at the Registered Office, the sole shareholder of FRCC on 13/04/2019 was FIC. Based solely on the Register of Members of FIC maintained at the Registered Office, the sole shareholder of FIC is FRC.
Keep going and posting well oiled your reading the documents I was perusing the other week. We should have tapped this area in the past as it's got alot of interesting stuff in there.
Your latest post is high lighting the affiliate connection. If FRR us is affiliated it should not need GG approval for the transfer per section 27 of the PSA only written notification which is what that is. That doc and the others in that set are the response to GG not accepting the registration. If you keep going you will start to pick up the FRR US registration of a foreign branch subsidiary. Also attempted to be blocked at registration. When Zaza talks of obstruction in these transactions you can see some evidence of it.
In a letter dated 15/04/2019 to GOGC (signed by ZaZa for FRGC and Luis Giusti for FRUS) it refers to the Production Sharing Contract and Refinery Study (PSC) entered into on 25/06/1997 by and between FRGC, The Ministry of Fuel and Energy of Georgia and The State Company Georgian Oil, as amended. It says “ Please take this letter as notice pursuant to Article 27 of the PSC that on 13/04/2019, Contactor assigned 100% of its interest in the PSC and the corresponding ownership interest in the Operating Company to Frontera Resources US, LLC, a Texas limited liability company, an Affiliate of Contractor and a wholly-owned subsidiary of Frontera Resources Corporation. Pursuant to Article 27 of the PSC, FRUS hereby declares and guarantees that: (a) It has the technical and financial ability to perform the obligations to be assumed by it under that PSC; (b) As to the interest assigned to it, accepts and assumes all of the terms and conditions of the PSC.” Note, I think there is a spelling mistake as Affiliate of Contractor should be Affiliate of Contactor.
Gipps51, the Farmout Agreement is dated 13/04/2019 and was presented to Lakesia Brent (Notary Public, State of Texas) and executed by Giorgi Zabakhidze (FRGC Director) and Luis Giusti (FRUS Manager). The Apostille also bears the signature of SN and the FA those of GZ and LG.
The group will have pushed money to Frontera Georgia and down into Frontera Eastern Georgia. It's near impossible to work out what is where in the subsidiary.
The $30m bond notes were issued I thought by Frontera international a separate subsidiary secured on the shares in Frontera Caucasus and ultimately Frontera Eastern Georgia. So the $30m bonds makes little sense as a debt of FRR US as part of a $100m. The vendors $10m being in Frontera Georgia makes sense as vendor debt run up in Georgia. The YA preference shares is at the higher group level as well.
So it could be an accounting book entry for prior sunk costs spent in Georgia that is effectively in the cost recovery pool. But if so that should be higher nearer $200 or $300m.
So yes none the wiser really what it represents. Too small for the cost recovery, too big for the vendor debt and the main debt is in another company.
Bit of a mystery. You would think if you got a loan and couldn't use Caucasus company then Frontera Georgia would be the place if you wanted to secure and move it with the shares in the PSa.
First indication that there could be something else going on but will be difficult to find more. To get out of this it's always required an injection of funds to handle Outrider and the arbitration resolving.
Wasn’t $60 million also the amount they were (fruitlessly) suing Hope for in the Caymans ? Is this the magic number that gets them out of a huge financial hole ? How long ago those Cayman court sessions seem. Justice Kawaley is a distant memory now. We’ve moved onto trying to decipher the Robert Peston of Kavkazia (Caucasus) TV and his laugh-in with Zaza. This whole charade gets more and more bizarre. Nothing would surprise me now. I just hope Zaza manages to avoid Covid to see this to the end - whatever the outcome.
If they'd had money they'd certainly spent it by November or else presumably they would have paid the employees something to keep them at work. Zaza was not happy that the employees ended up downing tools when he had been trying to persuade them to be patient just a tad longer.
who,under these circumstances would lend the company 60m?
Yup! Very good - just about sums this FRR situation up! :-) Thought Zaza looked a bit dishevelled in the YouTube interview, not his usual well-preened self, but I guess it's not surprising really. So grateful to all you super sleuths who dig and find so much - i've never once managed to find anything of any interest so don't know how you guys do it, but am glad you do, whatever part of the world you're in. Gonna miss reading the banter when this is all over, that's for sure!
cheers star I see
how we paying the 60m back then if we are kicked out of georgia
Excellent
sorry i mean
so FRGC owed FRR 100 mill but now FRUS owe FRR (not anyone else ie debtors such as Hope)100 mil
well as welloiled said
"it suggests that at some point FRGC had been loaned at least $100m from the Frontera Resources Corporation"
could this be somejiggery pokery.. ie moving cash between entities?
I read this as FRUS has taken over 100 mil that FRGC owed to FRR
this statement seems contradictory
"FRUS shall assume ~ $100,000,000 of FRGC’s outstanding debt owed to Frontera Resources Corporation."
so FRGC owed FRR 100 mill but now FRGC owe FRUS (not anyone else ie debtors such as Hope)100 mil
As usual, I'm probably going to show my ignorance here, but would $60m pay off Hope, the lawyers and the workers?
Thanks Welloilled.
Do when know what date the Farm Out agreement was signed ie was it signed after Hope left in May 2019 ?
Article 7 suggests this farm out is just about the oil. Gas not mentioned !
not sure what this is all about
can anyone put it in simple terms please
Is it frontera have managed to secure a loan of 100m ?
If so how they paying that back if the psa is up the spout