Member Info for psxtalks2u

ToT......"I suspect that YA have a long standing relationship with Shareprophets as they always target stocks that YA are involved with, and YA probably have some insight as to the latest state of play on an OOC settlement and the NY loan deal, so yes they have probably heard something that is worrying them.

They’ll be even more worried if they have to compete with any shorts that Hope might have opened as part of his illegal interference in the affairs of the company when the stock relists and they need to close their positions."

Devex commenting on ToT's post:

"Just catching up - and adding to ToTs post about YA, plus what we now know about the court papers.

Re the court papers we have this huge gap - end April to early October. In that gap we clearly have enough evidence that Hope was significantly marginalised from operational updates - and of course in that period 3 drills were progressed (one entering Eldari B producing both oil and gas), both BH and BP signed NDAs, BH then signed an MOU, no new equity based funding was sought (despite the obvious cash problems of HY1), YA was taken to task and promptly put back in its box, and clearly the early soundings were initiated regarding the $60 million NY financing.

There is one other thing that needs emphasising - referred to by ToT - and relating to YA and timing.

On 17th September the YA problem was first communicated.
On 12th October the Hope issue was communicated.
On 19th October YA accepted a deal that was hugely favourable to FRR. And barely 30 days after the problem first arose

And on 19th September this was communicated: “The Company is continuing to investigate YA II PN Ltd’s actions in that regard, particularly the above (82 million) sales and YA II PN, Ltd’s and ANY OTHER POSSIBLE UN-AUTHORISED DEALINGS IN SHARES”. Note the last bit of that sentence.

The 6 months from April to October resulted in a wide range of activities - many inter-related. And the YA relationship I believe has much more to do with events than we probably understand. ToT is absolutely right in his comments.

Should have added that thoughout the last few years we have seen quite extraordinary and significant financial support from operational vendors. Without any formal or obvious security. Remarkable."

Only just catching up; more revelations if somewhat outdated and overtaken by other events. The biggest revelation appears to be that 97% of the Block could be at risk and could revert back to the Georgian Govt unless commercial production is increased between now and 2022. I believe this specific comment from Zaza was directly aimed at Hope, telling him you are risking the entire PSA and if FRR fails, there is no way you will get your hands on the whole Block. Zaza also repeatedly keeps telling him that it is in the interest of all stakeholders if Outrider relaxes some terms to complete the current drilling operations. Again, in my view, all these exchanges between Hope and other Directors shows that Hope was not acting in the best interest of the company, even if OMF had legitimate rights as a creditor; he should always be voting which would be the most beneficial for the Company rather than acting like a ‘bailiff of OMF’. Nevertheless, the most damning email from Hope was when he made the counter-offer to Zaza’s US$5M revolving facility with a smaller amount of $2.5M but attaching more stringent terms such as appointing a Chief Risk Officer and exploring asset sale. So, the Judge should consider what was best for the company and stakeholders at that point in time when Zaza offered $5M facility; his or OMF US$2.5M? I think any normal person would conclude that Zaza’s offer was better and could have been used to avoid the non payment of the coupon.

Nevertheless, with all these revelations, we shareholders have been kept in the dark. On one hand, Zaza’s has been very open and engaging at investor gathering and Podcasts telling us good progress is being made with Super Majors and on the other, internally dealing with an aggressive and destructive debtor, which could have brought down the company. Remember, he inherited this situation from SN and has been juggling many balls in the air since he become the CEO.

But as shareholders, we still don’t know what the 3 wells are producing, although we know BHGE is in the field with them. If the 3 wells have been stabilized and producing over 500bpd, then many of our headaches could be easily overcome. The Taribani is a fantastic asset and very close to becoming commercial with another 4 wells, sidetracked to zone 25.

Anyway, still feel an out of court settlement is going to be the most likely outcome but on what terms?

Finally, as someone as already mentioned, since those emails, FRR completed T39, signed MoU with BHGE and an NDA with BP.

When’s the next episode?

FRR back up and fully working....sorry for the panic chaps!!

Jon3........that's exactly what I'm finding!

Looks as though Frontera Resources FRR has been ‘removed’ form the London Stock Exchange site unless I’ve got finger trouble this morning!!

Get this message:

"The page you requested could not be found.
This may be because the page has been removed, renamed or be temporarily unavailable."

https://www.londonstockexchange.com/exchange/prices-and-markets/stocks/summary/company-summary/KYG368131069GBGBXASQ1.html

This also from Symore B on ii

"One interesting thing about all these legal wranglings is that FRR don’t skimp on lawyers, only the top draw will do. And why not, when you are protecting a US$400M investment, and sitting on potentially the 6th largest O&G field in the world (18bn barrels oil, 202TCF gas). This combined with the revelation that the best operational fit for B12 has signed an NDA (i.e. BP).

Now, I’ve been sitting here since Xmas eve wondering what could Hopeless’s defence be for indiscriminately shooting down the financing proposals? To be fair to the Board, in SN’s affidavit, he does not contest the default but says the cause has been due to Hope’s vetos. And since he was removed, they have actually signed a term sheet with a NY Fund.

Separately , I agree with ToT’s comments that the meeting on Thursday could be more time consuming and constructive than we currently think (well, I certainly hope so, really depends on whether Hopeless wants to play ball). But if the Judge sees Hopeless for what he is i.e. not interested in getting his money back but trying to take over the company, then he could be in deep poo. And if we can see through him, why can’t the Honorable Judge?"

Facebook site:

https://www.facebook.com/groups/1391721167557893/

From Devex on ii:

"The fact that Hope and others are mentioned suggests that CD&P are acting for both Hope and Outrider - makes sense to use just one. Moruant of course for FRR.

Re Maples they are the appointed Caymans legal counsel for both Outrider (from 2004) and FRR (from 2011). FRR would have gone straight to Moruant on this one as they would not have wanted any risk of a “Chinese Wall” failing. Suspect Hope et al have now taken a similar view - probably only on this case. (Maples are still on the website as the FRR Cayman’s legal counsel).

Personally suspect that the 17th is procedural or for guidance purposes - doubt that we will get any news re the outcome unless it is a pre-cursor to a mediated outcome."

Symore B on ii just now:

"In a strange way, glad a court date has been fixed for next week. I believe this is a ‘directional’ hearing based on the submission of the information from both FRR and Hopeless. The Judge will provide some guidance based on this information. I still don’t know if Hopeless has submitted his defence in but the likelihood has to be high otherwise why pencil this court date? What we still don’t know is, what is his defence. Why did he shoot down financing proposals which would have protected the company, the employees, creditors and the shareholders? He cannot say because the terms were unfavourable to his Outrider Fund because that leads to a direct conflict of interest. He will also need to justify the corporate espionage with MND a few years back because this demonstrated he is a tarnished, corrupt Company Director for many years. This may be why FRR obtained the Discovery Order from the California Court. But nevertheless, let’s see what he has to say for himself and his Fund.

Then there is still so much undisclosed info we are not privy to, such as ‘illegal interference with the company’. What does this mean? And what evidence has FRR accumulated.

After the 17th Jan meeting, we will have a clear picture on whether we are heading for a settlement or a trial. For Hopeless, $56m damages claim may force him to the table. On one hand, I want SN to wipe him out and on the other an out of court settlement would be better.

An ideal solution for me would be to secure the new financing to repay Outrider but to continue with the Fiduciary case against him and OMF."

Just now:

"Well, another week comes to a close and apart from the email from Yellow Jersey, we are still none the wiser on what is going on. But to be fair, news this week was going to be on the low side after the festive period. In fact I think news next week also looks pretty slim.

Anyway, I started trawling through FRR’s Twitter feeds and it was interesting to note that they first posted a short video clip on the oil seep at Taribani on the 27th Nov, and then the black & white picture from the 1960s of the blowout at B-16 (BTW is T-16 the old B-16?). This was then followed up by another 2 short video clips of oil seep on the 2nd December. Just a supposition but I believe these postings may have been done to support the financing discussions. Actually nearly 3weeks after those tweets, we got the RNS confirming a indicative terms sheet had been signed. And the fact this was achieved without Mr Hopeless being around, confirms the company’s allegation that he was not acting in the best interest of the shareholders; another bit of evidence to support the Fiduciary breach.

So, back to the reply from YJ, it could be that the lenders have indeed completed a site visit now and if so, we should be in the final stages of legal documentation. If this is the case, we could be in a position to repay the debt if the injunction is lifted. Remember, legally, once a noice of default has been served the company is given specific period to repay the debt before the collateral is called upon. But for sake of balance, there is still no guarantee that financing will be approved, so let’s not get ahead of ourselves.

As far as the fiduciary case is concerned, I think FRR has a good case, and they will be doing the investor community a service if they elimated this vulture fund by winning the $56m case (#Madagascar Oil). In fact, I was doing some research and couldn’t find another situation where a bondholder was appointed as a Board Director, because it can lead to an indisputable case of conflict of interest. But surely Hope(less) couldn’t have been that stupid!? What I do know is that bond holders are normally organised through a steering committee and not via representation to the Board.

Anyway, just some thoughts while we continue to wait."

My read of the notes is that full or partial repayment can be made at any time - but the issue is does this include a “frozen” period - ie when an injunction has been served to “stop the clock”. Am pretty sure that eventuality won’t have been built into the contract small print! My interpretation would be that it can as sufficient evidence was lodged to secure the injunction in the first place - but would need a lawyer to confirm that.

Irrespective a mediated settlement would sweep everything up into one deal.

The key for me is the wording of the Term Sheet announcement on 12th December - “the loan would be on a delayed senior secured basis”. This says that the new lender has already accepted that there is a problem with existing debt seniority - and has built that aspect into the term sheet terms (and costings). I repeat my view that the most important single issue in the whole sorry saga is the timing and outcome of the lender’s field visit to Block 12 - which I am pretty certain will involve both FRR and BH technical experts presenting data together. It may of course already have taken place.

Part 1 continued:

"As far as the pledge of FEGL shares are concerned, it is worth remembering that secured Creditor only gain priority in ranking for repayment compared to other unsecured creditors. He is not allowed to gain financially from an asset beyond what he is owed [so in this case US$30M]. It is the Courts responsibility to appoint a receiver for the benefit of all creditors, both secured and unsecured. We know from H1 results that accrued liabilities alone stood at nearly US$20M so their interest have to be protected too. It is therefore wrong to assume that Hope will take over the company on the trigger of default, unless the pledged shares in FEGL have ‘step in rights’ meaning OMF can assume the responsibility for the running of the company. But even then, an independent valuation will need to be carried out to assess what is the fair value, especially after completing the 3 new producing oil wells [results we don’t know, could be good, could be not so good, could be ok].

As far as the PSA is concerned, I think as long as it stays in the name of FEGL, there should not be any involvement of GoG, unless there is a ‘change of ownership’ clause in the PSA covering specifically FEGL - I don’t know. The point I am making is that, Hope has a lot of hoops to jump before he can consider himself as ‘home and dry’. I wonder if he had even bothered to read the PSA?

I call this 50-50. FRR has legitimate causes against Hope and Hope is also holding a ‘good hand’. Best if Zaza and Hope have a good punch up outside and the guy with the bloodiest nose concedes and a new agreement is drafted. No, seriously, very nervous times for all, so
ive prepared for the worst and ill hope for the best"

"So many permutations here given the limited news available to us. So while we wait, we are left ‘playing with our thoughts’. But we shouldn’t forget that this case was initiated by FRR, so if they lose, Hope will be cleared from the allegation that he breached his Fiduciary duties and he will then be in a position to serve the default notice and exercise his right to call on the collateral [i.e. the pledged shares in Frontera Eastern Georgia Ltd and shares personally pledged by SN and Zaza]. This is why I believe the judge felt there are two separate issues here and he only wanted to contend with the Fiduciary one. But FRR lawyers convinced him that they are inter-linked, and perhaps this is why he reinstated it, to be discussed at the next hearing. This situation is akin to the ‘chicken and egg’ i.e. needed to raise new finances to pay creditors but he kept vetoing so we ended up here.

Who will prevail? What will be important is the Board Minutes when these proposals were discussed. I know that most Board Meetings are recorded so FRR may have some verbal evidence of Hope declining proposals. The modus operandi in a normal company is that when there is a breach in the lending facility documentation, the company discusses this directly with the lender on how to overcome this. But that protocol didn’t happen here because one of your own Directors was shooting down every proposal even before it could be presented to Outrider. So, I agree that Hope sitting on the FRR Board had a specific mandate to protect OMF’s interest and not FRR. It would have been wiser for him to say ok to a deal and then Zaza to approach OMF with a proposal, where as the Principal of OMF, he could have said no and he would have been within his rights. But lets be honest, Hope doesn’t want his money back, he wants Block 12 plus $400M cost recovery pool.

To me, this whole situation has been cooking in the background and timed to coincide with the coupon payment due date. It seems that the FRR legal team were prepared for this situation, as illustrated from the dead silence on Hope’s emails for interest payment.

Anyway, the biggest disappointment for all us investors was the revelation that interest on the CLNs changed from PIK to cash payment unless US$10M was spent in the field. We should have been informed of this sooner. Conversely, the fact that two of our biggest Directors put up their personal guarantees and their shares on the line against this obligation is a massive validation that they were aligned with the shareholders. Also, consider that Hope, as a FRR Board Director, does he not bear some responsibility to inform FRR shareholders about this new arrangement sooner? Did he discuss this with the NOMAD? Are they complicit too? Actually, Hope was probably the most conflicted person of this situation."

Posted on ii for Dev. Will watch out for a reply!

A great well balanced post from SB just now:

"The thought that Zaza and Hope are part of a large collusion to steal the company from shareholders is absolute nonsensical; more chance of seeing a UFO tonight than for that to pass. Why? Well, this saga has been going on for at least over 4 years now, and if there was any collusion, there would have been some telltale signs by now. Infact we can clearly see that there were open disagreements [and even contempt I would say] between Zaza and Hope, as evidenced by the emails revealed in the Court paper [and this was up to October!]. Plus, we have still not seen the official Board Minutes.

The fact Zaza and SN have been involved with FRR since 1997 and have spent best part of $400M in to B12, plus their own large personal investments, makes the possibility of collusion as ZERO imo.

However, I do agree with many spectators that this situation was cooking for at least 12 months and sooner or later, we were always going to reach this juncture: on one side you have Outrider, whose modus operandi is to buy distressed companies and take these over via bankruptcy and/or litigation, and on the other, FRR who were just reaching a point of generating positive cashflows.

So, the move to Cayman Island seems preemptive, and finally occurred in 2016. This country has a lean, efficient and punitive judiciary.

On Hope’s defence submission, worth remembering that the Court originally made the order on the 22nd November giving him a deadline of 18th December. That is nearly 1 month. Then on the 18th December, they only gave him another 10 days, right bang in the middle of X-Mas period - so not a lot of extra time I would suggest. Procrastination tactic didn’t work but by the same token, the injunction was lifted and reinstated. These courts don’t mess around. So, what could Hope say in his defence for vetoing financing proposals that would have helped to pay debt/creditor obligations?

Anyway, as the title of this thread is ‘Speculation’, I would now suggest that FRR has evidence that the regular 10M and 5M sells we saw in October and November were probably from Hope, forward selling the 500M he was expecting from SN & Zaza because he knew FRR was not in a position to pay the US$2M coupon. He was following up, but there was dead silence from the Company, which only confirms to Hope that there is no money forthcoming. I read somewhere that over a period of 6 weeks, total sells gone through the till were around 800M, so we may have TWat and crew also jumping on the bandwagon by shorting, knowing that this is waht Hope was doing. Hence the high BB activity from the trolls since the shares were suspended!].

I would prefer an amicable out of court solution, but this really will depend on what evidence FRR has collected. But getting the Discovery Order will have only strengthened their case.

JMO for what its worth."

"Have to say TOT my confidence grows here as well. So essentially the most important single event is now the field trip - and as you say this might already have taken place (if not I would be sure that it will be very early in January).

A successful trip would almost immediately allow a confirmation of the loan offer, which in turn enables a) the other directors to agree acceptance of the loan and to formally vote Hope off the board, b) allows FRR and BH to announce a joint operating agreement to develop Tarabani, c) allows an announcement on the first phase of the 2019 drill campaign, and d) allows any new Nomad to be appointed with the benefit of a hole stack of positive news to balance off any “in retrospect” RNS. Also quite possibly a gas drill in MK to get the other major (I’ll remind peeps that I long thought this was more likely to be BP) on-board.

As for the courts we await the Hope defence, and indeed his response to the demand for disclosure, and we know that a January date will be set for the next hearing. I would assume the injunction appeal and the FRR claim are all rolled into one hearing - but as the loan offer has already accepted the principle of delayed secured credit then this creates a huge piece of leverage for FRR. I still expect an out of court settlement to be the most likely outcome.

Finally - have no doubt that the field trip will involve FRR and BH joint staff hosting and presenting. They will update on the internal reserve estimates, on the drill technology, no doubt on the intent to apply a lot of US learnings into Georgia, on how the Tarabani field mirrors recent US field geology, and of course on the revenues and ROIs anticipated.

No doubt there will be issues, and we will have to patiently wait for news."

Link to Levans CV from previous post:

http://giac.ge/wp-content/uploads/2014/10/Levan-Bakhutashvili-Esq.-MCIArb-GIAC.pdf

Posted last night by ToT:

"Great summary Dev, and I’m pretty confident that Levan will have conjured up another of his magic bullets when briefing the lawyers. We are lucky to have a man of his calibre within the company and I see that he has updated his CV since becoming accepted as an abitrator on an ad hoc basis at the Georgian International Arbitration Centre:http://giac.ge/wp-content/uploads/2014/10/Levan-Bakhutashvili-Esq.-MCIArb-GIAC.pdf 4

Here you will see that he is dual qualified under both Georgian and New York State Law, and of course the loan notes are drafted under the terms of the laws of the State of New York - so he will know how to fire those bullets at Hope, the ones which could get him into big trouble with the SEC.

On the Nomad issue I would have thought that the obvious choice would be WH Ireland, not just because they are also brokers to FRR, but also because they are one of the top three Nomads dealing with AIM listed E&P companies in London, assuming they are ranked by the number of companies represented:https://www.londonstockexchange.com/exchange/companies-and-advisors/aim/for-companies/nomad-result.html?name=&city=London&contact=§or=Oil+%26+Gas+Producers&search=search&page=1

WHI already have expert knowledge of FRR’s business, so it might not take very long to get them on board, assuming the issues with Hope and Outrider are settled, with the New York bank loan then enabling the company to come back to the market in a stronger position than it has been for a very long time.

An added bonus from the litigation is that if Exxon and other companies have been running the rule book over little old FRR and have looked at the court documents as part of their due diligence they will now be aware that they have serious competition from BP. That should help to concentrate minds a bit!"

SB part 2:

"Fozz - let us consider the case against Hope and breach of Fiduciary Duties. Firstly we are not saying the FRR has not complied with some the terms and conditions of the agreement [we always knew they were in a tight spot when it came to money]. But this is not what the case is about. Remember the case has been brought by FRR against Hope for vetoing a number of financial packages presented by the BoD since April. As a member of the Board and being fully aware of the precarious financial position of the company, he should have voted yes, because that is best option for FRR at that point in time. Once a finance deal has been cleared by the BoD, they would have requested a formal approval from Outrider to arrange the new financing at the FEGL subsidiary level. At that point, OMF would have said no [get lost] and they would have been within their contractual rights. But we didn’t even get to that stage because one of your own Directors killed the deal. So, he has exposed himself [not in a literal sense]. And this is why I think FRR has a strong case against him.

Furthermore, FRR has now provided documentary evidence that they have signed a Term Sheet for financing of US$60M, which would not have been possible had Hope still been on the Board.

I remain pessimistic as legal cases are notoriously difficult to call, and we are only privy to certain bits of information [i.e. not having a full picture]. But ‘a big shot in the arm’ would be to see a NOMAD appointed."

"Another interesting perspective from Fireflying, and appear s ‘near the mark’. But I think Hope’s intention was always to take over FRR with or without SN + team. All he is going to do is arrange a farmout to another oil company because he some connections. In fact you could argue, with the substantial progress FRR made this year in the field, he is in a far better position to arrange a quick farmout than ever before.

We also know from his previous actions with FRR, having access to the company proprietary data, he shared these with MND to engineer a deal. Actually, it was good to see in the Californian Court Papers [Discovery Order] that FRR also want all information relating to MND discussions between Hope and others.

Furthermore, they want to see the emails between him and Cairn. In some emails, it suggests that Hope was putting pressure on Jo to issue RNS. Right or wrong, Hope should not have been talking to the NOMAD unless cleared by the Chairman or the BoD. So, it seems Jo gotcaught up in Hope’s web unintentionally. There is one email where Hope says to Levan that Jo is looking for SN and Zaza. It does suggest open communications between the two.

Anyway, worth reminding ourselves how we ended up with Outrider in the first place. Hope acquired the heavily discounted CLNs from DDJ back in late 2011, although Outrider have not directly lent any money to FRR [but a debt obligation is a debt obligation]. We know that OMF bought c.$13M for around US$4.6M [so 25 cents to the dollar].

Overall, as Firefly listed, FRR is in a far better place with field operations, and discussions with industry partners and financiers.

For me, the reappointment of a NOMAD would be a big relief while the case progresses."