Member Info for Moleinahole

Welloiled you are correct on the next important move should be on the Georgian registry. As of today no move since the disputed FRR US move. The problem is they already moved the assets including 50% PSA share to FRR US along with all the liabilities in return for a 5% royalty to FTI for the creditors of oil produced by FRR US (that triggered FTI to take action in New York). FRR US had 1,000 units shares 100% owned by FRC. If FRC is now about to be struck off then the question of the hour is what does that mean as we hold shares in a company that wholly owns the 1,000 shares of FRR US. If we were going to carry on then they should have demomiciled. The bit they need to do and may have done without telling us (which in itself is shocking) is possibly merge - the obvious way would be to restructure FRR US share capital and make it the main entity by replacing the register 1,000 units with our billions of shares. The only asset left in FRC was the shares in FRR US I suspect.
The problem is that transfer of the block 12 PSA has never been ratified by the Georgian Government. So we are in the odd position that the assets have been transferred to FRR US at a corporate level but the Georgian Government do not recognise the transfer.
Zaza comments are also a bit misleading - FEGL was not going anywhere its the joint entity that runs the PSA. FTI seem to have left FRR management to run FEGL in the interim while the battle over who owns the shares was worked through.

The problem FTI have is that whereas FRR had issues with the transfer under section 27.3 of the PSA which covers affiliates if they try and sell the shares on say to Outrider or their mates they have to pass the stricter section 27.1 part for third parties. Hence in my opinion the Outrider approach to the Georgian Government was a play to test whether they could pass it.

In my opinion the Georgian Government hold the aces here with both Outrider and FRR. To take the license either party has to show funds and a plan to develop. Arguably FRR only need funds if they resurect the Baker Hughes partnership. FTI however have a problem as if they now pull the asset back out of FRR US into an insolvent entity I would guess the license is immediately likely to be lost or seriously devalued if say the cost recovery pool was lost.

Those who think that there is likely to be a surprise deal need to reflect on the fact that to secure the transfer FRR only needed to show funds and technical capability in FRR US. Had they a major on board that was the time to do it.

I have no idea how they intend to or have restructured (a debt for equity swap has always been most likely) but who wants paper in a private company? 3 days before the parent company is struck off and we have no idea what is going on.

I should say black 12 is "contested" with FIT as a proxy for outrider and FRR US so until that's resolved it's moot. So unless that case has been resolved in their favour it was an odd move....

Crazy stuff. Never seen anything like it.

Well here we go again.
This latest contribution to the show by frontera doesn't really change anything. How tortuous it is might depend on who each side thinks controls the asset at the moment.
To me it still doesn't yet help understand the mechanism of how shareholders are going to be protected or the company restructured or leave me feeling anything but concerned.
But
Outrider Vs FRR has previously been conducted behind closed doors but it's been brought into the open.
However, if the block 12 asset is still with FIT then until the insolvency issues are resolved it would seem unwise to make a premature approach to GG and then make a press release. Something has provoked that attempt. Given its one of the complaints FRR have tried to pin on outrider in the past it's odd.
I do wonder if this BB has become a focal point. I also wonder if all this kicking off now 2 weeks from a US and Georgian election is a factor. It's an opportunity to score points but FRR have had no choice but to respond once news of the strike offs made the press as they have republican US backers and have laid great store in Georgia on hammering GD party.
Going to be a lively 2 weeks as it feels like this is heading to a defining moment.

ODR no 10 minutes as I know the articles very well.

If the company just strike off we have 2 years as shareholders (or creditors) to reinstate it but God knows what other ramifications there are - around contracts the licenses and litigation comes immediately to mind. My only thought is that are they trying to do this to start a clock to force a deal through. That might explain the Outrider counter play note where they are trying to prise the license away.

The only other resolution is a buyout offer coming in to fund a restructure and /or give us a special dividend in a liquidation.

I don't see other options here. And none make sense closing the group company in Cayman. Hence why I said my head hurts yesterday. But agree something has to give here before 30th Oct. If its a capital restructure to debt for equity swap Outrider - it needs an EGM. If its an offer then the board can handle it but they can't just let the group company strike off.

Memorandum
9. The Company may exercise the power contained in Section 206 of the Companies Law (as amended) to deregister in the Cayman Islands and be registered by way of continuation in some other jurisdiction.

Article
183. The Company may by Special Resolution resolve to be registered by way of continuation in a jurisdiction outside the Cayman Islands or such other jurisdiction in which it is for the time being incorporated, registered or existing. In furtherance of a resolution adopted pursuant to this Article, the Directors may cause an application to be made to the Registrar of Companies to deregister the Company in the Cayman Islands or such other jurisdiction in which it is for the time being incorporated, registered or existing and may cause all such further steps as they consider appropriate to be taken to effect the transfer by way of continuation of the Company.

See also:
https://www.conyers.com/wp-content/uploads/2018/06/Pub_Cay_Cayman_Deregistration.pdf

So for those who think we have been transferred or about to be transferred out of Cayman then I don't see how that happens without a special resolution (passed by us). That would take more time than we have to convene a meeting. Not only that it requires a declaration of solvency by directors.
So based on that I don't understand how they could shift the existing register out of Cayman. That being the case exactly what restructure can be lawfully executed without shareholder approval that involves the share capital of the group?

Thoughts? If the above is true I don't get why the group company would be intentionally left to be struck off through non payment. If they were moving us with them it should be a deregister by way of continuation. Outside that I'm not sure they have any authority. Outside that the articles also have limits on the share capital and any change to that above the 1bn shares in treasury needs shareholder approval.

Whilst the articles give them alot of leeway to ignore shareholders in this area its pretty clear.

Big double I will reply with my thoughts - note I have lost three times your amount so have plenty of skin in this game so consider everything here very carefully indeed.

Let be clear ever since Oct 2018 shareholders here have been in a near impossible position. The articles of the company give us no real rights for over sight - they are weighted in favour of the directors. The only provision I have seen that comes close it is a breach is the section in the articles around the register and transfers. I think the board have likely breached that section but it would need more research. Lining up more litigation against FRR (most likely for breach of duty) or in the UK around the material non disclosure would have been clearly counter productive while they were engaged in the arbitration and face off with outrider. I would have undermined both. But you can see from Outrider own efforts it is not even easy to deliver a summons. Any action you would have to fund or find a litigation partner preapred to take it fighting on a no win no fee basis on a cross border litigation from UK into US and Cayman. That would not be easy and if you did the board has insurance to fund their own defense. Having initiated such an action like that the outcomes become unpredictable - in particular the board would be even less incentivised to look out for the small shareholders in a restructure and even less likely to communicate at all let alone how prejudicial it would be on the arbitration up to recently or the ongoing fiduciary and other litigation with Outrider.
The main protagonists have not gone anywhere. If they had personal assets easy to get at Outrider already had security and promises as it seems did many others before us - so how effective you would be getting personal assets is doubtful. That then leaves people like Hope himself if he wins as he was well aware of the accounts and what was in RNS he can't escape so easily. If FRR win its not an issue anyway. Then there is PWC as auditors and nomad and they aren't going anywhere.

So its not straight forward. The only guaranteed winner in litigation are normally the legal profession but in FRR case even they seem to have ended up with unpaid bills.

CF the problem I have with the sudden re-emergence of Zaza is that if you look at it very carefully it does not answer any of the questions. Given Steve was claiming he had nothing to do with the company in the Texas case very recently it's even stranger that he pops up again in Georgia today. Exactly what capacity is he representing the company now?
How can we be sure this is not just pure spin to explain the strike offs before the election?
Allowing your company to be struck off as part of a restructure is really odd. It's totally unclear whether they have agreed something with outrider or not. I find it hard to reconcile the outrider press release with Zaza commentary. Outrider were due to get shares off Steve and Zaza. The way he is talking doesn't sound like a done deal more an appeal to make a deal.
I know it won't be a popular view tonight but I want to see verifiable facts to substantiate what is going on here. So far we have confirmation that the Cayman companies are being struck off and it's been implied it's part of a planned restructure. The comments on the rest is simply restating the status quo.

CF I will just continue to disagree what I've seen today does not justify the way shareholders have been treated or any continued silence. This latest developments is not political it flows from the default on the interest and the resulting fiduciary case which gets no mention.

Big double if you want to set up an action group to pursue a more litigious approach with FRR you have been and still are free to do so and could have at any point over the past 2 years.
Anyway if it is a planned restructure we should hear soon enough as the company will be struck off in 2 weeks if we don't.

Ziggy I hear what your saying - I'm sure the guys will have seen the commentary on the boards! But I'll email them as well.

Bryan yes it was sent in sept to the govt and not frontera with an alternate vision! But Outrider published it on same day the gazette published the strike offs (due to non payment of fee!). So whilst there could be a timing thing here its a bit odd the way Zaza is talking if its an agreed restructure. As I say a few things just don't add up and the main one is exactly what have they agreed with whom. Hence my serious reservations here - but ultimately as I've always said they will have to either pay them off or beat them in court. Winning in court seems the least likely which puts Outrider in an interesting position. I'm still thinking the problem Outrider have is that they haven't got a way to cleanly get the license out of FIT if they reverse the transfer from liquidation and retain the license. The other takeaway is that Zaza has finally stopped laying into the GG. That is a positive as I just don't see that as helpful.
So whilst no doubt the big deal advocates will spin this - I note it talks only about oil (no gas) for 7 years and does not address how the field development plan will progress and that is where further investment above paying off outrider or a farmin has to come.

I've read it very carefully and my head hurts. Alot doesn't quite add up to me. The Outrider bid for the license makes no sense if they have agreed a restructure. So have they agreed one?
Whilst it sounds like some sort of deal I would be very wary here. Frontera are obviously restructuring (and Zaza is back as a spokesman) - they better be else the strike off is of great concern. But its now totally unclear to me how they are accommodating Outrider and what the restructured entity looks like.
Its impossible to tell whether Outrider are onboard or not in the process. The great worry is that this could turn out very like what happened at Madagascar oil - the devil is in the detail of how you restructure and balance stakeholder interest. Outrider interest could be as a shareholder due to the shares owed by Steve and Zaza or an equity for debt swap or still just a bondholder. The bit about FEGL is interesting as it skates around the thorny question of who currently owns it.

Speaking to Georgia press is nice but a formal or informal communication to shareholders and employees is surely necessary? So I'm pleased they have said something but I still have grave concerns here about what may be happening but the company will have to address this soon as any capital restructure surely has to come to shareholders to vote?

Ziggy I'm not sure what your asking. Has Looed got a contact inside the company willing to talk or is this someone else acting as a proxy? To my knowledge the company continue to ignore communication from shareholders and that includes FSHG.

Bigun where I come from here is that anything regulatory or legal takes time.

The history of FRR US has never been clear. We spotted it years ago and it dates back to the original spat with Outrider in 2016 and the setup of the Frontera international that held the loan notes under the group secured against block 12 under other subsidiary.

A restructure of the group will take time and I struggle to see how you do it without some sort of shareholder engagement around the articles.

The other option is something like a management buy out and the proceeds going into a pot to settle the debt and pay off shareholders and FRR US carries on without us and GG approve the transfer and Outrider end up with FIT having to try and prise the asset back in the courts or be paid off in a deal. That is possible.
What I can't work out is why you would allow your company registration to lapse before doing that. I'm not at all sure what that would mean for shareholders of the group.
It makes no sense. Whatever is going on I'm pretty sure has not worked out how they would have liked and is very messy.

Kipper I would still advise caution as while the employee has told you their thoughts you have published it.

Scripts whatever you may think of posters who study the logistics of what is going on the rule of law will apply to frontera in the Courts. There is a clear split of opinion here where a common sense evidence based analysis suggests the company is in the process of imploding and an alternate reality that it's on the verge of an incredible deal. That position is not supported by any actual evidence other than the GG didn't fold it post intense lobbying and some hearsay comments by Zaza in election orientated media. We only know of the transfer via court papers. So they did something in 2019 but we do not know officially what they did or at this stage whether FTI will unwind it.
We have no choice but to sit and watch but they will have to do something in the next few days or the entity we hold our shares in will cease to exist with serious ramifications. If that happens then the politics and shenanigans of a big deal will be irrelevant. We have reached the point where the board will be shown to have either been cunning or foolish. 2 years of total silence as the underlying company disintegrates leads me towards a darker view of prospects but still with a faint glimmer of hope that they have friends who will bail them out.
Posting without substance that it will be all right in the end doesn't help.

Kipper we know all the stuff about employees but I'd be careful posting saying anyone is a fraud if I was you.

No.
Liquidated is an orderly wind up. To do that all the assets and liabilities of the group would need to sit in FRR US for the strike off to be orderly. If they do intend to exchange FRR Cayman registered shares in the group for FRR US ones we will hear soon. Quite what is involved in that at a regulatory level I have no idea. But it won't change anything on litigation which still has to be concluded. A strike off without addressing a equity move would not be a good idea.

They have 30 days to pay but now the fee will be double with a 100% penalty - its been outstanding since Jan so is not new and may just be another unpaid bill. Great way to waste money we don't have. I have no idea who the company secretary is now Levan has left - you don't need one in Cayman and we don't seem to have one or anyone maintaining a register of members. Alot of the company registration stuff was probably handled by our Cayman legal team - who we didn't pay and were suing FRR!

Invoking the fraudulent transfer provisions is my greatest concern as that really is a game over moment. Hence why I wanted it checked - it may be just an unfortunate coincidence that the sections have been renumbered the way they have been - I hope so. I cant see any good coming from a strike off unless they have given up now and its the cheapest way to walk away and leave a liquidator appointed by a creditor to clean up the mess. However, Steve and Zaza and even Hope need to be a little concerned about how they have handled the information in public domain since 2016 around the interest and mortgage and the transfer. As if this goes under they have put themselves at risk as directors.

Right off to work now back to watch this unfold. Complete mess - how anyone thinks there is a plan here is beyond me. They are busking with the fat lady in my opinion while the creditors (Hope) works out how to get the asset off FTI without losing it from the GG.

Yes you could be right ODR the sections have been renumbered in recent versions - I've just pulled down the very latest 2020 company law revision and you are right the sections for return and fee are 18 and 169 and the old sections look like they have moved to 134 and 135.

Either way is not a good idea to de-register your company by strike off - normally its a cheap way of liquidating if you have no assets. It can be reversed in Cayman from what I can tell by shareholders or creditors.

The article quoted is 168 and 169 I see.

That is the section 168 to do with fraudulent preference - so that would be the mortgage and the block 12 transfer to me being unwound.

Section 169 is the powers to assess damages against delinquent directors. So the court is likely going after the directors.

So those who think this is all part of some clever plan - I think not.

The outrider letter makes perfect sense if the rest of the FRR ediface is about to be toppled and with it the litigation.

Someone please correct me if I'm wrong but this is not a simple non payment of fees strike off,

Given the magnitude of that piece of news I will comment.

Outrider have been in a difficult position here every since they decided to try and liquidate the subsidiary holding the Georgian license. When I read that note reading between some of the lines to me they need the GG to approve a transfer of the license to another licensee most likely via FTI. The moment the transfer to FRR US is voided then its in play and as to be resolved as it would breach the license terms and should revert to GG - which is what I think they have been waiting for post arbitration. They perhaps hoped that they could buy the asset off FTI to settle the debt. But to do that they need GG approval. Without that its worthless and goes back to GG to be competetively re-tendered. Whilst they did indeed pull off a similar stunt at Madagascar oil in this case I think they would need to introduce someone else as operator - could be the previous company they had lined up or someone else.
Either way they need GG approval of any transfer would meet the technical and financial requirements having already blocked FRR own internal transfer on those grounds.
If that does not happen then the idea that someone else be it a govt or other business entity would pick up the loan notes is crazy.
Outrider only paid $5m for the notes and have never invested a cent in Georgia. If the Georgians even contemplate a move like this then the mainly UK based shareholders who have invested in Georgia need to present an alternate reality of Outrider. Of course the company should be doing that but I'll say no more on that.
And I don't think its good news - to me it looks like they are trying to work out an end game to the litigation and I don't think it involves the existing shareholders. Steve and Zaza if they are sensible will have sheltered their assets when they gave personal guarantees. Outrider if they have misjudged this stand to bring the company down and lose money for everyone. If the GG play along then I think we are left holding shares in an assettless group company and Outrider get to appropriate the asset. If that is the case I wold rather see the asset ceded to GG and Outrider not get a cent.
How valuable the asset is is still anyones guess - but if its appropriated and turns out to be very valuable is there any come back and what could the legal ramifications be?

Trellis this is in reply to your post other day.

LOG are clearly an important dynamic here. Interestingly there presence has not phased other institutional investors or CalE.
A few takeaways from read of the old RNS gives some clues:
1. They converted to unsecured notes to get the eurobond and farm out agreed. £11.6m of principal and accrued interest under LOG's 2018 19p convertible loan has been restructured into the Loan Note Instrument. This consists of long-term, unsecured, non-interest bearing loan notes convertible at 19p into 60,872,631 Ordinary Shares. The Loan Note Instrument has a maturity date of 23 September 2024.
2. They agreed an orderly market arrangement on the 30% equity for 1 year from 28th Oct. So that period is coming to an end. "LOG's total shareholding will be 143,011,359 Ordinary Shares representing approximately 29.99% of the Company's issued share capital, which as previously announced, will be subject to orderly market restrictions for a period of 12 months."

Overall they have done OK here borrowed £34.1m - repaid £17.1m and equity £12.5m (at 8p - so they have already "made paper profit on that of approx 30% or £4m) and still have the loan worth £11.6m convertible at 19p. Add it up the bondholders have done very well at the expense of small shareholders already!

The last RNS was from 2nd Dec.

"As previously explained, the Joint Administrators of LOG will continue to take expert, independent professional advice on a strategy designed to achieve the best outcome for its lender LCF, and hence for the LCF Bondholders, in a reasonable timeframe and in line with the orderly market restrictions. At present, our advice is that the share price is currently at a significant discount to IOG's estimated net asset value. By way of illustration, if LOG were to realise its entire interest in IOG at a share price of 30p, the estimated total recoveries for LOG would be approximately £83m, before costs, while at a share price of 40p the estimated total recoveries would be approximately £106m, before costs. Bondholders should be aware, however, that there can be no certainty as to the return, if any, that will ultimately be achieved."

So they seem to be looking for 30 to 40p minimum for their interests and its the only realistic prospect they have of bailing out the LCF mess. That is no doubt why they turned down the offer valued at £56m to do the back door takeover via the debt.

So key take aways is the 28th Oct ends the orderly market period. The note is convertible at 19p and unsecured - but presumably has a tradeable value in its own right. So buying under the 19p seems safe enough. But they could not convert without selling some of existing holding. So what is their exit strategy and when can they convert without going over 30%? For me that convertible will get sold on either that or the balance of the equity to cash it.

Seingred in my opinion that last bit was an unhelpful comment having a pop at FRR LTH. I'll post on that but not the rest of the FRR goings on.

For the genuine long term holders of which I'm aware of many who have been here since it came to AIM best part of 10 years there have been few occasions when you could have taken your money out on a free carry unless you traded or averaged down and sold into the rise in 2014 on the pipeline (when the institutions got out like DDJ - I think we hit 1.70p intraday - then there was no reason to exit as it looked promising) and post the debacle in 2016 in 2017 you had a chance as we got back to 0.80 area. Even then many holders were likely barely at breakeven as the rises were quickly hammered by primary bid trader and YA carper bagging and determined shorting of the stock leaving it trading 0.30 to 0.60 range. Again with drilling in progress and finally the talk of majors and no indication that debt interest was due there was no reason to cash out at that price.

There are alot of people here its clear from posts who have been left trapped by the sudden suspension leaving no chance to do anything. People who have come into FRR from mid 2017 (and likely exited leaving free carry) are not going to be in the same boat as the very long term investors who have been hammered here. The dynamics here have trapped people. Investors in the company in particular have been punished for their loyalty. What FRR have done is destroy the capital of its loyal investors to the point many either don't have any capital or can no longer afford to risk on other risky investments and rewarded shorters and traders.

What you are describing is an admirable strategy but it does rely on an entry at a low price and the business then taking off first. If you invest and it doesn't do that the converse applies. You then have to decide whether to cut and run and take a loss or double down. That is the much harder call to make unless you trade with fixed stops and on AIM that can be equally dangerous. Whatever the strategy the main one has to be spreading risk between asset classes and within asset classes and sectors. AIM has got much harder to make money on any sort of long term hold now particularly on anything resource based. Main market is no guarantee either as 2008 and 2020 has shown again that even solid dividend paying businesses have been brought down a few pegs and even gone under.

I'm personally very upset at the many sad situations the troubles here will have caused folk the past 2 years (we must be on the anniversary of the last London meeting) and that knowledge greatly colours my view of the Board and what I post. Not everyone will be able to recover their capital with trading strategies punting on other stocks. Harsh lesson in life - most were just trying to improve their situation and have not deserved what has happened.