18 Jul 2011 08:15
Neither this announcement nor any part of it constitutes an offer to sell or issue or the solicitation of an offer to buy, subscribe or acquire any securities of the Company in any jurisdiction in which any such offer or solicitation would be unlawful and the information contained herein is not for publication or distribution, directly or indirectly, in or into the United States of America, Canada, Japan, Australia, The Republic of South Africa or any jurisdiction in which such publication or distribution would be unlawful. In connection with the shareholder consent mentioned in this announcement, no consents were solicited from non-accredited US investors, and no further shareholder consent solicitation is being undertaken by or on behalf of the Company.
FRONTERA RESOURCES CORPORATION
Houston, Texas, U.S.A. - 18 July 2011
FRONTERA RESOURCES ANNOUNCES SHAREHOLDER CONSENT RELATED TO POTENTIAL MAXIMUM £28.3 MILLION FUNDING AND DEBT RESTRUCTURING
Frontera Resources Corporation (London Stock Exchange, AIM Market - Symbol: FRR), an independent oil and gas exploration and production company ("Frontera" or the "Company"), today announced that it has received the requisite shareholder consent to proceed with its planned funding, debt exchange and merger, which was announced on 28 June 2011.
The Company recently announced a funding plan that could provide up to £28.3 million (US$46 million) in new funding, coupled with: (i) an exchange offer ("Exchange Offer") for the simultaneous conversion into equity of at least 75% of the Company's outstanding convertible loan notes due 2012 and 2013 and the rollover of the remaining loan notes into new convertible loan notes due 2016; (ii) the conversion of 100% of the outstanding management loans into equity; and (iii) the effective redomicile of the Company by way of merger with a new holding company, incorporated in the Cayman Islands. The transaction will serve to simplify and strengthen the Company's balance sheet, as well as enhance Frontera's operating and financial flexibility.
The Exchange Offer remains open until 26 July 2011 and is conditional upon, amongst other matters, a minimum of 75% of the convertible loan notes being exchanged for equity.
The net proceeds of the funding plan, consisting of an equity placing, including subscriptions from management, of £6.8 million (US$11 million) before expenses, coupled with a £21.5 million (US$35 million) Standby Equity Distribution Agreement ("SEDA"), could provide up to approximately £26.8 million (US$43.5 million) of new funds for investment. Initially, the net proceeds of the funding will be used to accelerate the next phase of planned development drilling campaigns from the Shallow Fields Production Unit and the Taribani Field Unit. These campaigns are designed to increase oil and gas production and associated reserve bookings from three undeveloped and underdeveloped fields.
Assuming free cashflow from operations and/or availability of funds under the SEDA, Frontera will also continue to fund exploration drilling at the highly prospective Basin Edge Play Unit, as well as to simultaneously advance efforts to seek a strategic partner for ongoing exploration work associated with this asset. In addition, the Company will continue the evaluation of the significant potential associated with its 2,000 square kilometre Shale Gas Play Unit.
The transaction is expected to become effective upon the admission to trading on AIM, of the new holding company of the group on 2 August 2011.Full details of the transaction are set out in the announcement dated 28 June 2011, and completion remains subject to satisfaction of all of the conditions set out therein. The announcement can be viewed on the Company's website at www.fronteraresources.com.
Steve C. Nicandros, Chairman and Chief Executive Officer, commented:
"Once we conclude this transaction, which represents an important and transformational milestone in Frontera's growth plans,we expect the Company's value to better reflect the significant prospectivity identified by our historical investments throughout our extensive portfolio. Moreover, Frontera will be well positioned to realize this value from its planned work programs."
Enquiries:
Frontera Resources Corporation
Liz Williamson
Vice President, Investor Relations and Corporate Communications
(713) 585-3216
lwilliamson@fronteraresources.com
Nominated Adviser:
Strand Hanson Limited
James Harris / Andrew Emmott / Paul Cocker / Liam Buswell
+44 (0)20 7409 3494
Brokers:
Arbuthnot Securities Limited
Richard Johnson / Adam Lloyd
+44 (0)20 7012 2000
Old Park Lane Capital Plc
Michael Parnes / Luca Tenuta
+44 (0)20 7493 8188
Financial PR:
Buchanan Communications
Tim Thompson / Ben Romney
+44 (0)20 7466 5000
timt@buchanan.uk.com
Notes to Editors:
1. Frontera Resources Corporation is an independent Houston, Texas, U.S.A.-based international oil and gas exploration and production company whose strategy is to identify opportunities and operate in emerging markets around the world. Frontera currently operates in the country of Georgia where it holds a 100 percent working interest in a production sharing agreement with the government of Georgia. This gives Frontera the exclusive right to explore for, develop and produce oil and gas from a 5,060 square kilometer area in eastern Georgia known as Block 12. Frontera Resources Corporation shares are traded on the London Stock Exchange, AIM Market - Symbol: FRR. For more information, please visit www.fronteraresources.com
2. This release may contain certain forward-looking statements, including, without limitation, expectations, beliefs, plans and objectives regarding the transactions, work programs and other matters discussed in this release. Exploration for oil is a speculative business that involves a high degree of risk. Among the important factors that could cause actual results to differ materially from those indicated by such forward-looking statements are: risks inherent in oil and gas production operations; availability and performance of needed equipment and personnel; the Company's ability to raise capital to fund its exploration and development programs; seismic data; evaluation of logs, cores and other data from wells drilled; inherent uncertainty in estimation of oil and gas resources; fluctuations in oil and gas prices; weather conditions; general economic conditions; the political situation in Georgia and relations with neighboring countries; and other factors listed in Frontera's financial reports, which are available at www.fronteraresources.com. There is no assurance that Frontera's expectations will be realized, and actual results may differ materially from those expressed in the forward-looking statements.
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