Post by
westcanpride on Jul 25, 2022 2:40pm
Frontera Ownership of CGX & how the Stole 20% WI!
Let's take a look at how Frontera has come to own such a large ownership of CGX.
Couple notes:
- The numbers below are based on online press releases for major acquisitions.
- I also took the liberty of converting the shares acquired by Pacific (now Frontera) from 2011-2013 to today's converted 10:1 split (as per May 2013).
- The final share count below only differs about 4 million (non-diluted) from the latest press release, meaning some shares likely got purchased in minor amounts and never publically disclosed (likely exercised warrants).
Shares Paid Date Price Paid (CAD)
5,870,000 $41,104,000 Oct 29, 2011 $7.00
8,571,000 $30,000,000 May 28, 2012 $3.50
35,000,000 $35,000,000 April 26, 2013 $1.00
5,714,285 $1,571,428 Dec 17, 2018 $0.275
12,181,000 $60,905 Mar 13, 2019 $0.005
101,316,916 $25,319,229 Mar 14, 2019 $0.25
40,000,000 $11,600,000 Sept 25, 2019 $0.29
45,083,314 $73,596,618 Nov 1, 2021 $1.63
253,673,515 $218,252,180 $0.86 (rough break-even)
Couple Notes
1) Clearly, CGX's old management team from 2011-13 derived far greater value from Pacific for shares in the company... the current management team and BOD is truly a bunch of useless stiffs. Like hell, Frontera since 2018 has only paid ~$112 MM CAD for over 204 million CGX shares. Yes, I know CGX was very distressed before Frontera showed up... but the fact CGX has literally given them the entire company for literal pennies on the dollar is pretty pathetic... especially in light of the Guyana/Suriname success in the Golden Lane over the past couple years.
2) Its clear Frontera could care less about maximizing CGX share price value. Other than in Nov 2021, Frontera has paid very little for CGX shares and has literally acted like a loan shark. For Nov 2019 shares, Frontera literally had to pay more money just cause Kawa-1 was actively being drilled and it was near impossible to low ball a price below $1. But even then, share price was over $2 before they made the loan at $1.63.
3) At this point, Frontera owns close to 80% of CGX and their value (going back to 2011) has not increased very much (at least in terms of break-even).
4) Based on what I can see above, I think the entire goal of De Alba/Frontera all these years was to increase their share count in CGX at the lowest price possible so that they could keep ultimately increase their Working Interest in Corentyne (since they could in essence veto any third party deal that actually would have benefited CGX).
5) The deal on Friday was the culmination of years of work and they in essence played CGX (and us shareholders) for a bunch of losers. Why do I say this... CGX gave Frontera 29.73% WI for a max total of ~$74MM CAD (36.27% total cost of the Wei-1 well plus $29MM USD payback of previous costs incurred). Now lets compare this with the additional 4.94% WI Frontera obtained for previous loan conversions.
Shares Paid Date Price Paid (CAD)
26,685,393 $23,500,000 Mar 28, 2021 $0.88 (converted to WI)
14,460,000 $44,800,000 Mar 10, 2022 $3.10 (converted to WI)
* The two loans, combined with the 3.8MM USD cash loan, amounts to ~$73MM CAD or roughly $1.66 CAD per share. For this amount, Frontera only recieved 4.94% WI. As seen above, this total outstanding loan amount is almost identical to the same conversion rate of $1.63 for the Nov 1, 2021 loan to fund Kawa-1!
Furthermore, as you can see above, Frontera got 29.73% WI for ~$74M CAD (to fund operations). Based on the two previous loans, at max, CGX should have only given Frontera close to 5% WI to fund Wei-1, not literally an additional 24% for pretty much nothing. Talk about absolutely horrific asset management and I have no idea how something like this can pass the regulators.
6) De Alba/Frontera truly did steal Corentyne for pennies. No wonder the share price has plummted since early March (poor press releases) and again from $1.50 from early June. De Alba put into attack of steal of CGX WI and used price manipulation (in conjunction with usless management) to make it happen. Hell, even using a conversion of close to $1CAD for shares (using the previous loans as an example) should have only see like maximum 10% WI transferred, not close to 30%.
7) At this point, it would not shock me to see Frontera buy-out the remaining ~20% shares at say $1.3-$1.4 CAD. Obviously, it wouldn't make that much of a value increase to Frontera on a big picture basis. Instead, I think the ultimate goal would then be to farm down their 100% Working Interest in Corentyne in the future for far greater value than anything they have ever given to CGX. Given how useless CGX is at deriving value, I could see them making such a bad deal as well... even with Wei-1 hitting pay dirt. Look at how useless they have been with Kawa-1