Frontera Announces $65 Million Substantial Issuer Bid

CALGARY, AB, June 20, 2022 /PRNewswire/ - Frontera Energy Corporation (TSX: FEC) ("Frontera" or the "Company") announces that its board of directors (the "Board") has approved the commencement of a substantial issuer bid (the "Offer") pursuant to which the Company will offer to purchase from shareholders for cancellation up to $65 million (equivalent to US$50 million) of its outstanding common shares (the "Shares"). The Offer will proceed by way of a "modified Dutch auction" procedure with a tender price range from $11.00 to $13.00 per Share.

The Company plans to fund repurchases of Shares through available cash on hand. Unless otherwise stated, the Offer is denominated in Canadian dollars, and shareholders will have the option to elect to receive payment in either Canadian or United States dollars.

The Offer is expected to commence on June 24, 2022 and remain open for acceptance until 11:59 p.m. (Eastern time) on July 29, 2022, unless extended, varied or withdrawn by the Company.

The Company will conduct the Offer through a "modified Dutch auction" procedure. Shareholders wishing to tender to the Offer may do as follows: (i) by making an auction tender pursuant to which the tendering shareholders agree to tender a specified number of Shares at a price of not less than $11.00 and not more than $13.00 per Share in increments of $0.20 per Share (an "Auction Tender"); (ii) by making a purchase price tender pursuant to which the tendering shareholders do not specify a price per Share, but rather agree to have a specified number of Shares purchased at the Purchase Price (as defined below) (a "Purchase Price Tender"); or (iii) by making a proportionate tender pursuant to which the tendering shareholders agree to sell to the Company, at the Purchase Price, a number of Shares that will result in them maintaining their respective proportionate equity ownership in the Company following completion of the Offer (a "Proportionate Tender"). The Company will deem those shareholders who validly deposit Shares without specifying the method in which they are tendering their Shares to have made a Purchase Price Tender.

The purchase price Frontera will pay for each validly deposited Share taken up by the Company (the "Purchase Price") will be determined upon expiry of the Offer. The Purchase Price will be the lowest price (which will not be less than $11.00 per Share and not more than $13.00 per Share) that enables the Company to purchase Shares up to the maximum amount available for Auction Tenders and Purchase Price Tenders, determined in accordance with the terms of the Offer. Each Shareholder who has properly deposited Shares pursuant to an Auction Tender at or below the Purchase Price, a Purchase Price Tender or a Proportionate Tender and who has not withdrawn such Shares will receive the Purchase Price, payable in cash (subject to applicable withholding taxes, if any, as will be outlined in the Offer Documents, as defined below), for all Shares taken up by the Company upon the terms and subject to the conditions of the Offer. The Company will return those Shares not taken up in connection with the Offer, including Shares deposited pursuant to Auction Tenders at prices above the Purchase Price.

If the aggregate Purchase Price for Shares validly tendered pursuant to Auction Tenders and Purchase Price Tenders is greater than the amount available for Auction Tenders and Purchase Price Tenders (after taking into consideration the Proportionate Tenders), the Company will purchase the Shares on a pro rata basis after giving effect to "odd lot" tenders (Shares tendered by shareholders beneficially owning fewer than 100 Shares), which will not be subject to pro-ration. In that case, all Shares tendered at or below the Purchase Price will be purchased, subject to pro-ration, at the same Purchase Price determined pursuant to the terms of the Offer. Shares that are tendered but not purchased, including Shares tendered pursuant to Auction Tenders at prices above the Purchase Price, will be returned to shareholders.

The Board believes that the trading price of the Shares is not fully reflective of their intrinsic value based on the value of the Company's assets and its business, future prospects and financial position. Share buybacks are a key tool to increase value for and return capital to shareholders. The Offer reflects the Board's view that the Company's Share price remains undervalued and represents a value accretive use of the Company's financial resources.

The Board remains committed to creating increased value for shareholders. In doing so, the Board will continue to consider various forms of strategic initiatives or transactions in addition to the Offer, which may include, without limitation, a further return of capital to shareholders, a merger or consolidation, recapitalization or a business combination, or the transfer, sale or other disposition of all or a significant portion of the business, assets or securities of the Company or of interests in one or more subsidiaries or in assets of the Company, whether in one or a series of transactions. There can be no assurance that any such initiative or transaction will occur or if it occurs, the timing thereof.

The Offer will be for up to approximately 6.355% of the total number of issued and outstanding Shares on a non-diluted basis (based on a Purchase Price equal to the minimum Purchase Price per Share and 92,982,495 Shares issued and outstanding as of June 17, 2022).

The Offer is optional for all shareholders, who are free to choose whether to participate, how many Shares to tender, and the manner in which they tender their Shares. Any shareholders who do not deposit their Shares (or whose Shares are not purchased under the Offer) will realize a proportionate increase in their equity interest in the Company, to the extent that Shares are purchased under the Offer.

In connection with the Offer, Frontera has suspended Share repurchases under its normal course issuer bid ("NCIB"), and therefore the Company shall not repurchase any of its Shares under its NCIB during the term of the Offer. The Company shall resume Share repurchases under its NCIB, which is for up to 10% of the Company's public float, calculated as of March 7, 2022, following closing of the Offer.

The terms and conditions of the Offer, including instructions for tendering Shares, will be included in the formal offer to purchase and issuer bid circular, letter of transmittal, notice of guaranteed delivery and other related documents (the "Offer Documents"). In respect of the Offer, including any applicable withholding taxes, shareholders are urged to consult their own tax advisors with respect to their particular circumstances. On or about June 24, 2022, the Offer Documents will be mailed to shareholders, filed with applicable Canadian securities regulatory authorities, and made available without charge on SEDAR at www.sedar.com.

The Offer is not conditional upon any minimum number of Shares being tendered. However, the Offer will be subject to other conditions described in the Offer Documents. Frontera reserves the right, subject to applicable laws, to withdraw, extend or amend the Offer, if certain events occur at any time prior to the payment for tendered Shares.

The Catalyst Capital Group Inc. ("Catalyst") is the beneficial owner of, or exercises control or direction over, 34,775,609 Shares, which represent approximately 37.400% of all issued and outstanding Shares. Catalyst has advised the Company that it will not be depositing any Shares pursuant to the Offer.

The Company intends to engage Computershare Investor Services Inc. to act as depository for the Offer and has engaged BMO Nesbitt Burns Inc. to act as financial advisor and dealer manager. Shareholders who have questions regarding the Offer or require any assistance tendering Shares may contact Computershare Investor Services Inc. by telephone at 1-800-564-6253 (North America) or 514-982-7555 (International), or by e-mail at corporateactions@computershare.com, or BMO Nesbitt Burns Inc. by email at FronteraSIB@bmo.com.

The Offer referred to in this news release has not yet commenced. This news release is for informational purposes only and does not constitute an offer to buy or the solicitation of an offer to sell Shares. The solicitation and the offer to buy Shares will only be made pursuant to the Offer Documents to be filed with the applicable Canadian securities regulatory authorities. The Offer remains subject to obtaining the necessary exemptive relief under applicable securities laws in Canada. The Offer will not be made to, nor will tenders be accepted from or on behalf of, holders of Shares in any jurisdiction in which the making or acceptance of offers to sell Shares would not be in compliance with the laws of that jurisdiction. None of Frontera, its Board or the depositary makes any recommendation to shareholders as to whether to tender or refrain from tendering any or all of their Shares pursuant to the Offer or the price or prices at which shareholders may choose to tender Shares. Shareholders are strongly urged to read the Offer Documents carefully and to consult with their financial, tax and legal advisors prior to making any decision with respect to the Offer.

Frontera Energy Corporation 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. The Company has a diversified portfolio of assets with interests in 33 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.

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This news release contains forward-looking information or forward-looking statements (collectively, "forward-looking statements") within the meaning of applicable securities laws, including statements as to the Company's current intentions regarding commencement of the Offer, the timing, terms and conditions of the Offer, and the ultimate purchase price, the number of Shares purchased and the amount of capital returned to shareholders under the Offer, the resumption of Share purchases under the Company's NCIB, and the consideration of strategic initiatives or transactions. Any such forward-looking statements are based on information currently available to us and are based on assumptions and analyses made by us in light of our experience and our perception of historical trends and current market and other conditions. Readers should also refer to the risk factors set forth in the Company's annual information form and management's discussion and analysis for the year ended December 31, 2021, each dated March 2, 2022, available on SEDAR at www.sedar.com. There can be no assurance that the plans, intentions or expectations upon which forward-looking statements are based will be realized. Actual results may differ, and the difference may be material and adverse to the Company and its shareholders.

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SOURCE Frontera Energy Corporation