CGX Energy And Frontera Energy Amend Agreement Letter

Instant Max AI

(Frontera Energy, 18.Dec.2018) — CGX Energy Inc. and Frontera Energy Corporation amended a letter agreement previously disclosed in a news release of CGX and Frontera on December 4, 2018 to enter into a debt settlement transaction and amend the convertible amount under a bridge loan facility.

Shares for Debt Settlement

CGX and Frontera have entered into a debt settlement agreement with respect to the settlement of US$1,200,000 of debt owing to Frontera by CGX through the issuance of 5,714,285 common shares of CGX at a deemed price of US$0.21 (or CDN$0.2775) per Common Share (the Debt Settlement). The deemed price per Common Share is a 25% discount to the closing price of the Common Shares on the TSX Venture Exchange (the TSXV) on December 14, 2018.  The completion of the Debt Settlement is subject to the approval of the TSXV.

The Debt Settlement is another step that CGX is seeking to undertake in order to restructure its liabilities and provide for sufficient working capital to enable it to advance its offshore exploration projects in Guyana. CGX does not have sufficient cash to repay this liability and therefore the Debt Settlement improves the liquidity position of CGX.

Frontera currently owns 50,351,929 Common Shares, which represents approximately 45.6% of the issued and outstanding Common Shares. Upon completion of the Debt Settlement, Frontera will own 56,066,214 Common Shares, which represents approximately 48.3% of the issued and outstanding Common Shares on a partially-diluted basis.

Convertible Bridge Loan

As disclosed in the news release of CGX and Frontera dated December 4, 2018, Frontera will seek regulatory approval to amend the terms of its April 25, 2018 bridge loan. Subject to TSXV approval, the amendment will now provide that the maximum amount of the principal that may be repaid in Common Shares at a conversion price of US$0.22 (being the U.S. dollar equivalent of the closing price of the Common Shares on the TSXV on December 4, 2018) shall be U.S.$8,800,000.

As a result of these transactions, Frontera could increase its ownership of the outstanding Common Shares from its current ownership of approximately 45.6% to up to approximately 61.5% if the Debt Settlement is completed and Frontera elects to exercise the conversion right attached to the bridge loan.

This press release is also issued pursuant to National Instrument 62-103 – The Early Warning System and Related Take-Over Bid and Insider Reporting Issues, which requires a report to be filed on SEDAR (www.sedar.com) containing additional information with respect to the foregoing matters. To receive a copy of the early warning report filed in respect of the above matters, please contact Grayson Andersen as outlined below.

Related Party Transaction

The transactions described herein are related party transactions under Multilateral Instrument 61-101 as Frontera holds over 10% of the issued and outstanding Common Shares. However, CGX is exempt from 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 required disclosure regarding such exemptions.

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