Member Info for Njames

I believe there is a link between Lundin and Shamaran. There's a Lundin on the Board of Shamaran, and several Lundins on the Board of Lundin.

Getting good. SN saying why the farmout from FRGC to FRUS was done. ZM's counsel should cross examine on this point. Says it was because of "financing" and because investment bankers advised them it would be easier to finance if held in a US entity rather than Cayman. Every shareholder should be listening now. Saying why Szescila resigned (due to Zaza), why ZM was retained in Spring of 2018. Great stuff.

Claudia Frost for ZM is one of the best in Houston. Laura Gibson for SN is good too but it seemed mostly a more junior guy doing the speaking

SN lawyers arguing the transfer to FRUS was valid and signed by ZM, and all that was left to foreclose on in Cayman was the 5% royalty. Wave away the arbitration ruling Invalidating the transfer saying it was suspended (which isn’t really true, the termination was suspended not the entire ruling). Say what happens in the Caymans is irrelevant because the interest was already transferred. (Obviously FTI and the Cayman court saw it differently.) Now going on about Green being run by Zaza’s cousin. SN sitting impassively looking like Santa Claus from the kids show Rudolf the Red Nosed Reindeer. ZM smirking and rolling his eyes.

Re brown envelope--w ZM as bag man.

Like many things about this company, the reasoning for defunding the share registrar, Computershare, while paying for other services, like lawyers (sometimes) and lobbyists, is murky. The maintenance fees are not that significant and if the company ever hoped to do a sale or relist, having a proper share register to know who owns what shares is of utmost importance. Shareholders can't get certificates, private transfers cannot be tracked, it will be a big mess. Did the company throw in the towel on the future sometime in 2019 when they stopped paying Computershare, or was it negligence or inattentiveness to allow this situation to continue? They are still fighting in courts as if it all still matters, so why not pay the nominal fees to Computershare to keep the register alive, and with it the ability of shareholders to receive certificates and record private transfers of shares?

Oddly, SN continues to act as if the arbitration panel did not rule the transfer to FRUS invalid. Sure ZM may have signed the transfer documents but they never were registered in Georgia and a year later the tribunal ruled against the company saying the transfer did not meet the requirements of the PSC. SN did file a letter from GOGC stating that the termination of the PSC was temporarily suspended and a raft of documents purporting to show FRUS did have the requisite operating experience, but there's nothing showing the Georgians ever acted upon that and approved the transfer. Even if the transfer to FRUS is approved by the Georgians, it is still subject to being undone by FTI as a fraudulent transfer. It's obvious it was done to escape the hands of the liquidators, just ahead of the posse, and likely to be undone on that basis. In which case it's back to FRGC, and hence to Green/Uniserve/Georgian govt.

Is this article the result of the poster on the other site, Brookemia, making good on his promise to contact an investigative journalist if the company did not adequately respond to his questions?

You have to ask yourself why it makes a difference that SN is fighting this issue so hard. The dispute seems to be carrying on quite nicely in the courts. But the revelations that are coming out in these court proceedings must be deeply embarrassing for the company, while finally shedding some light for long suffering shareholders on what has been happening in secret. That is exactly why he wants to put it in arbitration, so all can be hidden once again. We likely never would have found out the true results of the arbitration initiated by GOGC absent these proceedings, and many other matters. The company wasn't going to tell. So in spite of ZM apparently being a bad actor, he has done us all a favor by pursuing this action in court.

The sanctions document was the one from the California case where the judge sanctioned Frontera for not telling the court about the prior Caymans case dealing with the same issues.

Most of the new docs are the same that have been filed before. There's a sanctions document I can't open and a new declaration of ZM. Here's the intro to the main new 16 pager filed by ZM. Don't have time to post the rest right now.

TO THE HONORABLE JUDGE OF SAID COURT:

Frontera Resources Corporation (“FRC”) is not entitled to the injunctive relief it seeks for
the following reasons.

First, the covenant not to compete in Mr. Mamulaishvili’s Employment Agreement, upon
which FRC’s counterclaims is based, is unenforceable because it imposes a greater restraint than
is necessary to protect FRC’s business interests. FRC, the only entity covered by the non-compete
clause, does not have any business interest in Georgia to protect.
Second, performance by the plaintiff is a necessary element of a breach of contract claim.
Mr. Mamulaishvili entered into the Employment Agreement in December 2008, but FRC has not
paid Mr. Mamulaishvili his agreed upon compensation since 2009. Because FRC has failed to
perform its obligations under the Employment Agreement, it cannot enforce the non-compete
clause against Mr. Mamulaishvili.

Third, FRC does not own, and has never owned, any of the assets that are the basis of its
counterclaims. Instead, FRC affiliates owned those assets at one time.1
Conveniently, however, FRC fails to disclose the fact that, as a result of an award from an international arbitration tribunal
and the order of a Cayman Islands court (not as a result of anything Mr. Mamulaishvili did or
failed to do), the affiliates do not own them anymore. Although Mr. Mamulaishvili believes that
the fact that FRC does not own the assets on which it bases its claims deprives FRC of standing,
if the Court believes that FRC’s lack of ownership is a merits issue, the same evidence shows that
FRC has neither a probable right to relief nor an irreparable injury. Indeed, FRC’s assertion that
it has any interest in the assets on which it bases its counterclaim is a baseless sham and an
impermissible collateral attack on the arbitral award and the order of the Cayman Islands court.
There are also significant procedural barriers that will preclude FRC from prevailing on its
claims. For one, FRC has not joined, and cannot join, parties that are necessary to the just
adjudication of its counterclaims. In addition, FRC’s counterclaims should be dismissed on forum
non conveniens grounds because all of the property and conduct on which FRC’s counterclaims
are based is in the Republic of Georgia. Finally, FRC’s counterclaims should be dismissed on the
basis of international comity. Accordingly, FRC’s request for a temporary injunction should be
denied.

Interesting coincidence perhaps--$3 million from this financing plus the $2.8 million from the forward sale equals the $5.8 million debt amount to Green Capital. And payable out of production. Maybe this funding was also Green.

The Green oil sale contract is dated 25 April 2018. Two interesting things I've now noticed. The agreement calls for a payment of $2.8 million, not $5.8 million. There's no amendments attached or anything else around payment besides the $2.8 million. Second, the signature and handwriting for Green of a certain Sant[e]o Moviara looks incredibly similar to ZM.

Also the notarial writ of execution from Green against FRGC whereby Green got a secured claim against FRGC mentions the debt amount of $5.8 million but makes reference to a 19 September 2020 agreement and states that if FRGC due to technical or financial reasons can't conduct oil and gas operations to deliver the hydrocarbons to the buyer according to an attached schedule (not in evidence) then buyer has the right to finance operations and also in event of failure to deliver scheduled amounts to enforce against the "entire property of Debtor."

So we're still not being shown the entire picture. There must be a later agreement with Green that gave them the security interest mentioned in the writ of execution and also that resulted in additional amounts being advanced beyond the $2.8 million in the April 2018 agreement.

Pretty brutal read. A guy who was part of the founding and with the company for 20 years laying out the hard facts of what has resulted from the default and action of the Cayman courts.

Also, as mentioned a couple of days ago, calls out SN for making a false declaration about the assignment to FRUS saying he well knew the assignment was invalid due to the ruling of the arbitration panel.

The role and motivations of Outrider are a bit strange. You'd think they would have been advised by the insolvency professionals that Green would end with the asset being the largest creditor the closest to it if they put FRGC in liquidation. Maybe they tried to make a deal with Green and failed. If they knew all this and proceeded anyway, you'd think maybe it was just punitive against ZM and SN. But then we have word that the company and Outrider are in settlement discussions. It's difficult to fathom how the pieces can be put back together in the face of all the Cayman court orders and actions of the liquidators. Even if ZM and Green are related parties and the sale to Green is invalidated, it goes to Uniserve or turned back over to the GG. So Outrider gets nothing, Green get nothing. SH's get nothing.

Part 4

It is undisputed that FRC never directly owned an interest in FEG or the PSC. FRGC, a
separate entity, entered into the PSC with GOGC and owned 50% of FEG. See FRC’s 1st Am.
Countercl. ¶ 8. Even if the assignment of FRGC’s interest in FEG were valid (which it was not),
that assignment was to FRUS, another subsidiary, not FRC. See id. ¶ 10. FRC chose to conduct
its business through subsidiaries in the first instance and should not be allowed to disregard their
separate existence at its own whim. Accordingly, because FRC never had any direct interest in
FEG or the PSC, it lacks standing to complain about Mr. Mamulaishvili’s alleged efforts to
appropriate those assets. See, e.g., Gattenby, 2019 WL 457600, at *2-3; Grant, 470 S.W.2d at
202-03; Marburger, 957 S.W.2d at 89-90.

II. Neither FRGC Nor FRUS Has Any Interest in FEG or the PSC
FRUS has no interest in FEG or the PSC because an international arbitration tribunal has
already declared that the assignment of FRGC’s interest in FEG to FRUS “was made in breach of
Article 27.3 of the PSC and therefore is null and void pursuant to Article 27.1 of the PSC.” Final
Award ¶ 642 (Ex. E). FRGC has no interest in FEG or the PSC because the Cayman Islands court
ordered FRGC’s interest in FEG and the PSC assigned to Green Capital. See Order, In re FIC,
FSD Cause No. 292 (Grand Ct. Cayman Isl. Mar. 19, 2021) (Ex. B). ...

Because neither FRGC nor FRUS has any interest in FEG or the PSC, they lack standing to assert any claims based on Mr.
Mamulaishvili’s alleged misappropriation of those assets.

CONCLUSION
For the foregoing reasons, Mr. Mamulaishvili respectfully requests that the Court dismiss
FRC’s counterclaims for lack of jurisdiction.

Part 3

Mr. Nicandros, FRC’s CEO and Chairman of the Board and the declarant in support of
FRC’s TRO application, actively participated in the arbitration, frequently communicating with
the tribunal about scheduling issues and submitting a witness statement. See, e.g., id. ¶¶ 147-48,
150, 153, 157-58, 162, 164, 166, 168, 180, 303, 441. Mr. Nicandros was undoubtedly aware of 4
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the Final Award in the arbitration, and FRC’s claim that “[f]or reasons unbeknownst to FRC or
any of its subsidiaries . . . the assignment of shares in FEG was not properly reflected in the records
of the Public Registry by the Government of Georgia,” which is repeated in Mr. Nicandros’s
declaration, is completely false. ( Mr. Mamulaishvili reserves the right to seek sanctions against FRC and Mr. Nicandros for knowingly submitting a false declaration.) FRC’s 1st Am. Countercl. ¶ 12; 2d Am. Decl. of Steve Nicandros ¶ 7.

D. The Cayman Islands Liquidation of FRGC

Moreover, FRGC no longer has any interest in FEG or the PSC. In October 2018, Frontera
International Corporation (“FIC”), which is the indirect parent of FRGC, defaulted on a loan from
Outrider Master Fund, LP (“Outrider”). See Ltr. from MaplesFS Ltd. to FIC (Apr. 17, 2019) (Ex.
F); see also Final Award ¶ 3 (Ex. E) (describing FIC’s corporate structure). Following the default,
Outrider placed FIC and its subsidiaries (including FRGC) into voluntary liquidation in the
Cayman Islands, where FIC and FRGC were organized. See Winding Up Order, In re FIC, FSD
Cause No. 292 (Grand Ct. Cayman Isl. Dec. 21, 2020) (Ex. G). The Cayman court approved
Andrew Morrison and David Griffin of FTI Consulting (Cayman), Ltd. (“FTI”) as joint liquidators.
See id.; see also Final Award ¶ 324 (Ex. E) (describing the voluntary liquidation).
In the liquidation proceeding, the Cayman court ruled that FRGC’s interest in FEG and the
PSC should be assigned to Green Capital. See Order, In re FIC, FSD Cause No. 292 (Grand Ct.
Cayman Isl. Mar. 19, 2021) (Ex. B). Green Capital was FRGC’s largest creditor as a result of
FRGC’s $5.8 million default on an oil and gas supply contract with Green Capital. See Forward
Sale and Purchase Contract (Ex. H); see also Issuance of Writ of Execution (Ex. I); Mamulaishvili
Decl. ¶ 13 (Ex. 1).

ANALYSIS

I. FRC Lacks Standing to Assert Claims on Behalf of FRGC and FRUS
To establish standing, the plaintiff “must be personally injured—he must plead facts
demonstrating that he, himself, rather than a third party, suffered the injury.” Grant v. Espiritu,
470 S.W.3d 198, 202 (Tex. App.—El Paso 2015, no pet.) (plaintiff lacked standing to sue for
damage to and conversion of a car when the evidence showed that he did not have title to the
vehicle) ... .

Part 2

The assets on which FRC’s counterclaim is based are FRC’s supposed interest in a
Production Sharing Contract (“PSC”) with the Georgian government and in the operating company,
Frontera Eastern Georgia LLC (“FEG”), required by the PSC. See id. ¶¶ 4, 8. The PSC gave FEG
the exclusive right to conduct petroleum operations in a specified area in Georgia. See PSC § 3.1
(Ex. A). FEG was jointly owned by FRGC and JSC Georgian Oil & Gas Company (“GOGC”),
the Georgian state-owned oil company. See FRC’s 1st Am.Countercl. ¶ 9 FRC admits that its
indirect subsidiary, Frontera Resources Georgia Corporation (“FRGC”), not FRC, was the party
who entered into the PSC with the government of Georgia. See Id. ¶ 8 (“On June 25, 1997,
Frontera, through its wholly owned subsidiary, [FRGC] entered into a [PSC] with the Ministry of 3
4160-7584-0557.4
Fuel Oil and Energy of Georgia and the State Company Georgian Oil.” (emphasis added)). FRC
also admits that FRGC, not FRC, owned the 50% interest in FEG. See Id. ¶ 9 (“Frontera, through
its wholly owned subsidiary FRGG, and GOGC each held 50% of the ownership interest in FEG,
the Operating Company.” (emphasis added)). The counterclaim fails to mention that, as discussed
below, FRC lost control over FRGC’s assets in 2019.

C. The Invalid Assignment to FRUS

In 2019, FRGC attempted to assign its interest in FEG and its corresponding rights under
the PSC to “another of [FRC’s] wholly owned subsidiaries, Frontera Resources US, LLC
(“FRUS”).” Id. ¶ 10 (emphasis added). This assignment would only have given FRUS, not FRC,
an interest in FEG and the PSC. See id. In any event, FRC is well aware that an international
arbitral tribunal in Stockholm, Sweden, has already ruled that the assignment of FRGC’s interest
in FEG to FRUS was a nullity. See Final Award ¶ 642, GOGC et al. v. FRGC et al., PCA Case
No. 2018-02 (Apr. 17, 2020) (“Final Award”) (Ex. E).
On January 15, 2018, GOGC commenced an arbitration proceeding against FRGC,
alleging that FRGC had breached the PSC. See id. at ¶¶ 6, 11. Among other things, GOGC asked
the tribunal to: “DECLARE that the purported assignment of Respondent 1’s [FRGC] interest in
the PSC to Respondent 2 [FRUS] is null and void pursuant to Article 27.1 of the PSC.” Id. ¶ 210.
The tribunal concluded that FRGC did not “objectively prove that Respondent 2 [FRUS] has
financial and technical resources to perform any purportedly assigned obligations under the PSC,”
as required by art. 27.3 of the PSC. Id. ¶ 343. Accordingly, the tribunal granted GOGC’s request,
declaring that “the Purported Assignment was made in breach of Article 27.3 of the PSC and
therefore is null and void pursuant to Article 27.1 of the PSC.” Id. ¶ 642.

Part 1

TO THE HONORABLE JUDGE OF SAID COURT:
Counter-defendant Zaza Mamulaishvili moves to dismiss Counter-plaintiff Frontera
Resources Corporation’s (“FRC”) counterclaims because FRC lacks standing to assert them. FRC
admits that the assets that are the basis of its counterclaims were not owned by FRC, but by
subsidiaries. FRC does not have standing to assert claims for injuries to the property of
subsidiaries, especially subsidiaries whose assets it has lost control of in voluntary liquidation. A
prior international arbitration award and a judgment from a liquidation proceeding in the Cayman
Islands have already disposed of the assets on which FRC’s claims are based.

FACTUAL BACKGROUND

A. Background of the Dispute
FRC claims to be an international oil and gas exploration company, although it does not
have any employees, offices, or operations in the countries in which it claims to do business,
including the Republic of Georgia. See Supp. Decl. of Zaza Mamulaishvili ¶ 5 (Ex. 2); see also
FRC’s 1st Am. Countercl. ¶ 6. Mr. Mamulaishvili has been a shareholder in FRC since its
founding in 1996 and has held various positions at FRC since that time, including serving as FRC’s
President and CEO and on its Board. See Decl. of Zaza Mamulaishvili ¶ 5 (Ex. 1) (“Mamulaishvili
Decl.”).
Toward the end of his tenure as CEO of FRC, Mr. Mamulaishvili became aware of a pattern
of misconduct by the other members of FRC’s Board, Defendants Steven Nicandros, Luis Giusti,
and Tyler Nelson (collectively “Defendants”). Defendants’ misconduct exposed FRC to monetary
losses, reputational damage, and even potential criminal liability. Mr. Mamulaishvili brought this
suit as a shareholder in FRC to correct Defendants’ breaches of their fiduciary duties to FRC.
Following the normal procedure in shareholder derivative suits, Mr. Mamulaishvili named FRC as
a nominal defendant.

B. The Assets That Are the Basis of FRC’s Counterclaim
On April 29, 2021, Defendants retaliated by causing FRC to file a permissive counterclaim
and TRO against Mr. Mamulaishvili. In the TRO, FRC accuses Mr. Mamulaishvili of using a
Georgian company, Green Capital, LLC (“Green Capital”), to “hijack and steal all of Frontera’s
assets in Georgia.” FRC’s 1st Am. Countercl. ¶ 4. Although ostensibly brought under the rubric
of the non-compete provision in Mr. Mamulaishvili’s Employment Agreement with FRC, the only
misconduct FRC alleges and the only injury it claims arise from Mr. Mamulaishvili’s alleged
efforts to steal certain of FRC’s assets. See, e.g., id. ¶ 23.

Slowly, slowly, little by little, the truth will out.

August 28, 2020
Zaza Mamulaishvili
No. 12 Paliashvili str
Tbilisi, Georgia
Dear Zaza,
The Board of Directors has convened to make changes in our company's direction,
governance and management.
Pursuant to the constitutional documents of Frontera Resources Corporation, we
hereby notify you that you have been removed from Frontera's Board of Directors
and from the position of President and CEO in a meeting duly convened and held by
the board.
Going forward, transition in our company's financial work will be affected by Price
Waterhouse. Legal matters will be handled by the firm Dentons. Operational
matters will be handled by Schlumberger. Representatives of these firms will be in
touch with you shortly.
We will also be in touch in the days ahead to speak with you.
Sincerely,
Steve Nicandros Luis E. Giusti Tyler Nelson