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Well you might be on the right lines as they are a funder of Atlantic council........

That is the usual meaning. But I notice delayed draws are often used in acquisitions where the target has Outstanding public debt that requires an irrevocable notice of redemption.

That sounds very much like the outrider debt. To exchange it would need an irrevocable notice if redemption else FRR could just add debt!

Pyro I think the key word to understand is what does delayed mean.

Normally it would be that the payments are staged or delayed. That was my initial read of it.

However, could it be that Frontera intend to sign the term sheet for the $60m initially ranking under outrider. Then use the proceeds to settle the notes or interest. Then once outrider are paid off then the debt becomes senior debt in FEGL.

Hence in this context delayed would mean it will become senior debt in the future.

I remain convinced they have a plan and the key card in the hand is the term sheet.

The fidcuary claim is the means to force the veto. If they block the deal then failing to act in the interests of the company would be proven.

This way out would leave Hope his cash on a pretty good return and FRR back in control.

That is my hope how ths one plays out.

For those who are not as battle scared share holders here welcome to Frontera an adventure not just an investment and many call it a punt.

I've spent the last couple days away from the board. So Seasons greetings all. I've actually felt strangely relaxed. Suspension loss of the nomad is a new one for FRR but it has worked for the best I feel.

We are currently spectators watching a high stakes poker game being played out with our money on the table! The ante has been raised with FRR going all in and asking to see Mr Hopes hand.

Having read the documents I remain of the view the original forced loan restructure has been designed to make it extremely difficult for shareholders and has been balanced too much in favour of Outrider. With it in place a non-equity injection of cash was difficult as non one would want to be behind Outrider as creditors. That would mean the only way to fund the 2019 campaign would be either giving away a large % of the company in a farm out or through a large placing having raised headroom further.

Since 2016 we have been shackled by YA putting constant pressure on the share price and Outrider with a veto on non equity debt based funding.

My gut feeling is that plan b with the New York funding has been in play probably since June/July - are they the ones who wanted to profit share on Niko?

Whilst its a dangerous game to be playing if are ready to convert into a loan then delivering that into Court before the security is lifted would force Outrider and Hope to concede that it was in the best interests of shareholders. Should he then block that funding which at a lower interest rate is clearly in the best interests of the company then he will have proven by that action a clear breach of fiduciary duties.

My read of the notes still leads me to believe the notes can be repaid at any time - and that includes now while the court clock is stopped. Equally there is a backstop where they may just need to pay the interest (in shares if we have too).

We asked before where does the $56m claim come from. Well I would suggest that is the value after costs etc of the New York Loan.

There is a deal to be done here. I suspect this is a slightly more public version of what happened in 2016. The difference this time will be that FRR do have some headroom, YA have been restricted to $64k cash a month and FRR have advanced the field operations to the point that there is something for an alternate funder to loan against. We may even have the cash to hand.

There are a few ways out here. The loss of the nomad has added a new dimension to the problem but I think on balance the suspension is good while this is worked through. I can't see this taking too long to come to a head from here. I'm in the camp that a deal will emerge here and either Outrider get a modest equity position or they are removed by the replacement finance.

The key remains Frontera playing their funding card before the injunction is lifted. If it was me I'd have gone to court with a plan to settle but first I would let it run a bit by appealing.

I'm going to enjoy the rest

I doubt we will ever know. But probably not. Not seen anywhere about them being a witness but they get a mention in the spat around whether the default would be disclosed at the shareholder meeting given the debate about what could and couldn't be said then. To have had the meeting in October when a week into a default and one week from the end of the cure period without anyone knowing is problematic if they knew. Hope in his published mail has drawn him into the spat.

Knowing Jo at cairns reasonably well from meeting him at the shareholder meetings he is in the middle of a boardroom battle where some key information and things that should have been disclosed have not been. It's at the end of the day a trust thing. The nomad has to be able to work with the company and in the current climate they obviously feel they can't. I am disappointed at that as I would regard cairn as having tried hard with Frontera over what has been a difficult 2 years.

But both the accounts and the RNS on the debt is incomplete. Arguably the default claim at end of September should have triggered a review of what had previously been disclosed as clearly it made no sense hence my querying what Star was posting on Friday.

I would say PWC audit is also remiss as I can't reconcile the accounts notes and interest for 2017 or 2018 H1 even having seen the actual loan contract and mortgage even now. 2018 H1 is unaudited but 2017 full year and 2016 full year were and yet both fail to show the change in the loan note terms which has caused the problems.

I suspect it would have been better had the court bundle not been published. But at least with the information a proper context is available. Without it today's RNs would have been inexplicable.

I'll give you my honest assessment.

1. Possible but would say onus is on Frontera to resolve the default.
2. Probably but they should really have done that before it got to this stage.
3. yes the shares don't just disappear they are just not liquid on an exchange until relisted. Going private is one option.
The main issue will be whether the unlisted shares can be held in say your ISA by your provider.
4. There is always recourse in law but it's a long and slow process and not one to be looking at lightly.

No it's not good. But it's the right decision.

The nomad resignation is worse though as we need the nomad to stay listed. The listing enables equity to be raised to pay for things.

The nomad may feel they had to resign given the gap between the reported information on the loan notes and the reality. Jo is pretty principled and combined with the grief they get from all angles it might be the final straw.

As of the moment the company is not in a good position but you have no choice but to see how it unfolds.

Not good the day before Christmas.

The negative is that they lifted the injunction apart from the fiduciary duty claim.

But the defence on the fiduciary has to be lodged this week and the injunction for the moment remains by the look of it till January.

So the urgency to get the new York note funding in place is now critical as they can't rely on the injunction staying else the judge would not have lifted it.

It could be the judge is trying to force a resolution. I would say the immediate pressure is on Frontera though Hope needs to be certain of his defence. Though lifted the judge would have known Frontera would appeal.

So the position. For the moment is as it was with a diminishing window to resolve. That might be the intention of the judge to focus minds as the easiest way to resolve this is for Frontera to find a way to pay the default irrespective of the merits of the fiduciary duty case.

Robocharlie - part of the reason I'm confused is that inspite of reading what the section on the notes says about what should happen from July 2017 - the annual accounts said we paid in kind in 2017. So if it was the case that it was all in cash from July 2017 then the followings statement in the 2017 full year audited accounts:

"During 2017, the Company elected quarterly interest payments in kind and issued approximately $4.0 million in additional unconvertible notes in accordance with the terms of the 2020 Notes."

Makes no sense! If its wrong and it was paid in cash then I'd be interested in the quality of the PWC audit as a shareholder!

The 2018 Half year accounts I picked up the fact that the notes total had not changed and surmised it was part of the large increase in current liabilities.

So I am struggling to reconcile the paragraphs in the loan note with the actual movements as reported in the accounts. What I can say is that the 2018 half year did not increase the notes (indicating they were NOT paid in kind) but 2017 did show as paid in kind as the company accounted for the notes as paid in kind.

Ivy the deal with Outrider is just too onerous. No business could survive with it. It is clearly intended to cause the company to fold and default!

I do suspect the key here is the progress of the work program in Q3 and the MOU's needing to be the bait for the New York Fund.

From here if we do get the replacement funding its at a lower interest rate and gives the company back a degree of independence to make the finance deal we need. I think that is most likely what the battle is really about.

Ok I agree but it does depend alot on how you link the paragraphs together. Its some what academic as they would never have been able to meet the requirement in 2017 or 2018 so we have lost the ability to roll up the interest and we are probably indeed on the higher 18% rate.

This I believe is why they have looked for and found hopefully a cheaper deal on the new New York notes but that again would not have been an option before we have something in the field to show.

Bedex - they probably had no choice at the time. Remember although the 2016 campaign (trimmed back when Varang dropped away) that nearly ruined all long term holders here worked it did not produce revenue bearing results. During the contested case the bankruptcy trustee impounded all our cash and this was not returned until May 2017. We had no headroom and no ability to raise via RBL or other funding. Remember the oil price crashed around that time and it was impossible to get a partner.

Roll forward to 2018 and the campaign has opened up new opportunities for funding.

....would end up just paying interest.

During 2018 since Feb Frontera have not raised any money and at half year we know they had $500k in the bank. So without a unanimously approved board funding proposal the company defaulted on the interest payment. For whatever reasons the default of $2m has been allowed to run its full course and the clock was stopped on the last day by the injunction.

Quite why an equity raise was not done to resolve is moot. I'm sure if the situation was adequately explained no existing shareholder would allow the potential loss of the company over $2m. But then once again many people who slated the company over the primary bid in feb should reflect whether encouraging people to sell, no participate in the primary bid and then buy cheaper has closed that avenue of fundraise at the critical moment.

In the absense of an equity raise - there appears to have been a deal advanced by WHI Ireland ($3m) to resolve and competing offers of $5m (secured rolling note) from Zaza and a $2m takeover of the company by Outrider.

And so that is where we are today. The $2m interest remains unpaid, the unsealing of the presigned documents by the mortgage security holder stayed by injunction and Frontera counter claiming against Hope and Outrider.

Meanwhile in the wings Frontera have signed a large $60m funding term sheet which potentially could replace the debt.

And that is where we are. Waiting on critical news on the injunction remaining in force, the alternate finance being released and the 2 MOU's progressing to deals. In the background we still have the arbitration with GOGC and the constant sniping from shorters.

Anyone who reads the documents can question the wisdom of some of what has happened but you cannot question the alignment of the board to shareholders or their commitment to the company. Like others my firm preference is that this is resolved sensibly and equitably by all parties.

When the loan notes were re-issued in Dec 2016 there were a number of important changes.

The notes to the accounts show the position only for the first year namely that the notes accrue interest that can either be paid in kind or cash. Historically FRR have always paid in kind and rolled the accumulating debt forward.

From Mid 2017 there is a 6 month test period and in that period FRR must either invest $10m or repay 10% of the notes to enable the interest roll over in kind to continue.

Because of the YA preference share sales and the need to fund operations and fund the monthly deficit that was always going to be a tall order. Repaying approx $3m of debt would have been easier than to do both!

Frontera did pretty well raising the cash for the operations in 2017 and 2018 but it has been short of $10m. The main reason we are short is because of the constant selling by YA decimating the headroom. As an aside for those of you who have joined in and traded I hope you can now see the consequences of shorting and trading the stock.

Because it has not met the threshold the interest is paid in cash until the shortfall of investment or debt repayment is made.

This is the $2m interest that Frontera have either been unwilling or were unable to pay.

Noone knew of this provision as whoever write the notes to the accounts simply copied the base 2017 position and neglected to add the important provisions from mid 2017. That omission is absolutely critical in understanding how the Outrider rearrangement was intended to work and why we are where we are.

The other pieces of information that we have learnt is that Mr Hope is not only a non- exec nominee to the board but on matters of finance has an effective veto as such matters need to be approved unanimously. (I do need to revisit the company articles to see whether we have all inadvertently voted for this change as part of the 2016 restructure without realising what the change meant).

Finally, the loan notes are more secured than many of us realised. To complete the deal a mortgage has been set-up and pre-signed but undated documents held in escrow in the event of a default to enable security to be enforced. As part of that it seems Steve and Zaza have also had to give their own guarantees to sign over shares as well in the event of default.

So from mid 2017 the focus was operations and all the funding that could be raised funded that and the monthly operational deficit. By Q1 2018 although we received the funds from the Turkish court case funds were tight. We learn from the email in the case file that Georgian local issues at Batumi (strikes etc) were stopping sale of our output. For those with a long enough memory that was around the time Zaza did his primary bid and institutional investment. The difficulties on the oil sales may well explain the pressing need for that now for those who again winged and whined at the time). It is also now clear that they had to keep raising or

This process was initiated by Outrider over the $2m 2018 interest but Frontera stopped the clock by injunction on the security on the final day having allowed the default to run its cure period (when they really should have resolved things and where based on the emails they seemed to be somewhat ignoring Mr Hope by that stage) while bringing their own counter fiduciary duty claim to support the injunction.

Frontera absolutely need to keep the injunction in place while they finalise the replacement finance. Frontera argue that any delay to Outrider can be remedied financially if required but the loss of the secured asset would have a disproportional effect on FRR.

The key is the retention of the injunction. If the injunction is lifted before they have a plan b in place - Outrider will force the board to resign. The other option is that the injunction remains while they fight out the fiduciary duty case.in 2019 which would give them a bit more time to line up the replacement finance or they come to an out of court settlement.

Those are the options as I see it from where we are at the moment.

There are two documents to look at the loan note and the mortgage on the note which is how it has been secured.

The Loan note says:

Section 5.1 The company may purchase, redeem, prepay or otherwise acquire, directly or indirectly any or all the outstanding notes from time to time at its option without premium or penalty. Any amounts prepaid shall be applied first to accrued and unpaid interest and then to the principal. The company will promptly cancel all notes acquired by it pursuent to any payment, prepayment or purchase of notes pursuant to any provision of this agreement and no notes may be issued in substitution or exchange for such cancelled notes.

So on the face of it we can repay the notes. The only complication is how you read that last part of the para. That may explain why the New York term sheet is in a different legal entity FEGL and is a different type of loan. I wouldn't try and assume best or worst case here as these contracts are pretty complex with all types of clauses. Everyone needs to digest and come to their own view of the available information.

Yes - that forecast was pretty old but it does show why they had to do the primary bid in Feb. Hence my comment earlier sharing Hope's view that they are not very good at planning the finances. Its all very interesting stuff and most should have been redacted or not even posted into Pacer at all. The arbitration and all the other board pack slides are equally interesting.......

Ivy the answer to how the note has resulted in cash payment is inside the loan agreement which again thanks to Star for posting link. Section C is the terms we see in the accounts.

But section D and E has a clause that required FRR to invest $10m a year or repay 10% of the notes in a 6 month period to retain the right to carry the interest in kind.

Obviously depending on how you view things like the debt restructures in 2017/18 with YA and the boards own conversion we did not raise $10m for the work program. Hence in 2018 the debt would have triggered the cash payment option and lost the payment in kind until extra cash was paid in to catch up the deficit.

That missing clause from the accounts should have been picked up in a set of audited accounts as the terms changed mid 2017. So to avoid the clause FRR would have needed to repay $3m+ in principal on the notes in 2017 or 2018 or invest alot more in the field. That same clause is where approval is required unanimously by the board for investment.

Now the "good news" bit - the terms on the notes allow Frontera to settle them at any time without charge.

So running the notes is expensive and onerous and hence the replacement New York funds could be used for that.

If you take a share price around 0.004 then 500m is the $2m. Anyone who doubts the boards commitment and for all their faults (and they do have them) then their conversion of secured debt to unsecured at 1p a share and having to pledge personal guarantees to secure the settlement in 2016 should leave you in no doubt that they share our pain these days.

The whole episode around this $2m "engineered default" is really peculiar. Removing Outrider with the New York Term sheet would be a result if they can achieve the back to back signing of the note to clear out Outrider and remove the mortgage security. My read of the mortgage is that they have to remove that security to complete that loan as its at the FEGL level.

Like others I would find it inconceivable and unforgivable if they have not gone into this with a clear plan of how they wanted it to play out.

Pyro - read the email evidence carefully rather than just the snips in the affadavit. I think its a little less clear cut even if I share your overall sentiment. At the same time I have to say I do share some of Mr Hopes concerns he has articulated into how to run your business finances!

Once I've read the mortgage document I hope to work out how on earth we ended up owing them cash in 2018. That is at the root of the problem and what has precipitated the current problem. The injustice of the timing and problems caused as a result of this $2m is a tough one.

The vast majority of that supplementary document should have been redacted and not published.