FINANCING SUPPORTS ADVANCING THE JOINT VENTURE'S PLAN FOR
CORENTYNE BLOCK AND OTHER ASSETS
TORONTO, March 10, 2022 /CNW/ - Frontera Energy
Corporation (TSX: FEC) ("Frontera") and CGX Energy Inc.
(TSXV: OYL) ("CGX"), joint venture partners (the "Joint
Venture") in the Petroleum Prospecting License for the
Corentyne block offshore Guyana, announced today that they
have entered into a financing agreement for a U.S.
$35 million loan
(the "Loan") that will enable CGX to continue to
finance part of its share of costs related to the Corentyne Block,
the Berbice Deepwater Port, and other budgeted costs as agreed to
with Frontera.
"We are pleased to complete this financing agreement in
support of our joint venture as we build momentum towards spudding
the Wei-1 exploration well in the second half of this year,"
said Orlando Cabrales, Chief
Executive Officer of Frontera. "These are exciting times for our
joint venture and we look forward to working with our partner, CGX,
as we build on our recent exploration success at the Kawa-1
exploration well and generating value for our shareholders and the
people of Guyana in one of the
most exciting basins in the world."
"The Kawa- 1 exploration well represents a transformative
discovery for CGX, in partnership with Frontera. With positive
results and data supporting the 200 feet of net pay indicated, we
have de-risked our exploration program and can continue to move
forward with our overall plans, beginning with Wei-1,"
said Professor Suresh Narine,
Executive Co-Chairman of CGX. "We look forward to adding
to our positive momentum and creating value and opportunity for our
stakeholders."
The Loan to CGX will be available for drawdown in tranches on a
non-revolving basis until the earlier of July 31, 2022 or the date on which CGX has drawn
down the maximum amount of the Loan. The Loan, together with all
interest accrued, shall be due and payable July 31, 2022, or such later date as determined
by Frontera, at its sole discretion. Interest payable on the
principal amount outstanding shall accrue at a rate of 9.7% per
annum payable monthly in cash, with interest on overdue interest.
If the Loan is extended by Frontera past July 31, 2022, in its sole discretion, the new
interest rate will be 15% per annum. The Loan will be secured by
all of the assets of CGX. A standby fee of 2% per annum multiplied
by the daily average amount of unused commitment under the Loan in
excess of U.S. $19 million shall be
payable quarterly in arrears by CGX, on the last business day of
each fiscal quarter, during the drawdown period.
Subject to the approval of the TSX Venture Exchange
("TSXV"), Frontera in its sole discretion, on or after
July 31, 2022, may elect to convert
all or a portion of the principal amount of the Loan outstanding,
including accrued interest that has not been repaid, into common
shares of CGX at a conversion price equal to U.S. $2.42 per common share (being the U.S. dollar
equivalent of Cdn. $ 3.10 per common
share), provided Frontera provides CGX with 15 business days notice
of such conversion.
CGX has the right to prepay all or any portion of the Loan,
including any unpaid interest, on 15 business days notice to
Frontera before July 31, 2022.
CGX is also required to repay all of the Loan that is outstanding
in the event that without the consent of Frontera, it issues
any security that would dilute Frontera's current ownership of CGX,
or any of its subsidiaries enters into any transaction the proceeds
of which are used by CGX to pay its part of the authorized costs of
Wei-1.
The maximum number of common shares of CGX which may be acquired
by Frontera upon the conversion of only the Loan principal is
approximately 14.46 million common shares of CGX. If only the Loan
principal was converted, Frontera would hold approximately 77.93%
of the currently issued and outstanding common shares of CGX
(compared to its current ownership of 76.97%).
The Loan remains subject to customary conditions, including
obtaining all required regulatory approvals.
The transactions described herein between Frontera and CGX are
related party transactions under Multilateral Instrument 61-101 but
are exempt from the obligations to obtain a formal valuation and
approval from a minority of shareholders. The material change
report to be filed by CGX in connection with this news release will
contain the required disclosure regarding such exemptions.
NEITHER THE TORONTO
STOCK EXCHANGE, TSX VENTURE
EXCHANGE NOR THEIR REGULATION SERVICES PROVIDERS (AS THAT TERM IS
DEFINED IN THE POLICIES OF THE TORONTO STOCK
EXCHANGE AND TSX VENTURE EXCHANGE) ACCEPTS RESPONSIBILITY FOR THE
ADEQUACY OR ACCURACY OF THIS RELEASE.
About CGX:
CGX is a Canadian-based oil and gas exploration company focused
on the exploration of oil in the Guyana-Suriname Basin and the
development of a deep-water port in Berbice, Guyana.
About Frontera:
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
midstream facilities. Frontera has a diversified portfolio of
assets with interests in 34 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.
If you would like to receive News Releases via email as soon as
they are published, please subscribe here:
http://fronteraenergy.mediaroom.com/subscribe.
Advisories:
Cautionary Note Concerning Forward-Looking
Statements.
This news release contains forward-looking information within
the meaning of Canadian securities laws. Forward-looking
information relates to activities, events or developments that CGX
and Frontera believe, expect or anticipate will or may occur in the
future (including, without limitation, statements regarding the
terms of the Loan, the Guyana
exploration program and obtaining regulatory approvals for the
Loan. All information other than historical fact is forward-looking
information.
Forward-looking information reflects the current
expectations, assumptions and beliefs of CGX and Frontera based on
information currently available to them and considers their
experience and perception of historical trends.
Although CGX and Frontera believe that the assumptions
inherent in the forward-looking information are reasonable,
forward-looking information is not a guarantee of future
performance and accordingly undue reliance should not be placed on
such information. Forward-looking information is subject to a
number of risks and uncertainties, some that are similar to other
oil and gas companies and some that are unique to CGX or Frontera.
The actual results may differ materially from those expressed or
implied by the forward-looking information, and even if such actual
results are realized or substantially realized, there can be no
assurance that they will have the expected consequences to, or
effects on, CGX or Frontera. Documents filed by CGX and Frontera
from time to time with securities regulatory authorities (including
annual information forms for fiscal 2021) describe the risks,
uncertainties, material assumptions and other factors that could
influence actual results and such factors are incorporated herein
by reference. Copies of these documents are available without
change by referring to the respective profiles of CGX and Frontera
on SEDAR at www.sedar.com. All forward-looking information speaks
only as of the date on which it is made and, except as may be
required by applicable securities laws, CGX and Frontera disclaim
any intent or obligation to update any forward-looking information,
whether as a result of new information, future events or results or
otherwise.
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content:https://www.prnewswire.com/news-releases/cgx-and-frontera-announce-us-35-million-loan-agreement-301500696.html
SOURCE Frontera Energy Corporation
