Mr. Brent Anderson reports
FRONTERA PRICES OVERSUBSCRIBED AND UPSIZED US$400 MILLION SENIOR UNSECURED NOTES OFFERING AT 7.875%
Frontera Energy Corp. has priced an oversubscribed and upsized offering of $400-million (U.S.) in senior unsecured notes due 2028 at a coupon rate of 7.875 per cent pursuant to Rule 144A and Regulation S of the U.S. Securities Act of 1933, as amended, with closing expected to occur on or about June 21, 2021. However, there can be no assurances that the issuance and sale of the 2028 notes will be consummated.
The proceeds from the offering will be used: (i) to repurchase the company's $350-million (U.S.) 9.70 per cent senior secured notes due 2023 pursuant to a tender offer, at a premium of 104.85 per cent per $1,000 principal amount of notes; (ii) to pay accrued and unpaid interest on the same notes; and (iii) for general corporate purposes. The 2028 notes have been assigned a rating of B plus with a stable outlook by S&P Global Ratings and a rating of B with a stable outlook by Fitch Ratings.
Based on publicly available information, The Catalyst Capital Group Inc. manages funds that hold approximately 35.8 per cent of the common shares of the company. Frontera understands that the Catalyst funds have subscribed for and will purchase $8-million (U.S.) principal amount of the 2028 notes. As a result of the equity holdings of the Catalyst funds, the purchase of 2028 notes by the Catalyst funds is a related-party transaction of the company as defined under Multilateral Instrument 61-101 (Protection of Minority Security Holders in Special Transactions) of the Canadian Securities Administrators. The purchase will be exempt from the valuation and minority approval requirements of MI 61-101 pursuant to sections 5.5(a) and 5.7(a) of MI 61-101, respectively. The material change report to be filed by the company in connection with the closing of the offering will contain additional disclosure required under MI 61-101. In addition, the closing of the offering of the 2028 notes is subject to the approval of the Toronto Stock Exchange. The TSX has granted approval subject to certain conditions that the company believes it will satisfy.
About Frontera Energy Corp.
Frontera is a Canadian public company involved in the exploration, development, production, transportation, storage and sale of oil and natural gas in South America, including related investments in both upstream and mid-stream facilities. The company has a diversified portfolio of assets with interests in 39 exploration and production blocks in Colombia, Ecuador and Guyana, and pipeline and port facilities in Colombia. Frontera is committed to conducting business safely and in a socially, environmentally and ethically responsible manner. Frontera's common shares trade on the Toronto Stock Exchange under the ticker symbol FEC.
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