New Loan Provides Flexibility To Invest In Key
Strategic Initiatives
CALGARY,
AB, March 27, 2023 /PRNewswire/ - Frontera
Energy Corporation (TSX: FEC) ("Frontera" or the
"Company") announces that Frontera's wholly-owned
subsidiary, Pipeline Investment Limited ("PIL"), which owns
a 35% equity interest in Oleoducto de los Llanos Orientales S.A.
("ODL"), and Macquarie Group (the "Lender") have
entered into a credit agreement (the "Credit Agreement")
through which the Lender will provide a US$120 million loan facility (the "New
Loan") to PIL, guaranteed by Sociedad Portuaria Puerto Bahía
S.A. ("Puerto Bahía"), Frontera Bahía Holding Ltd.
("Frontera Bahia"), and Frontera ODL Holding Corp., the
parent company of PIL. The New Loan is effectively supported by the
cash flows from Frontera's standalone and growing midstream
business, is non-recourse to Frontera and remains subject to
customary closing conditions.
Gabriel de Alba, Chairman of
the Board of Directors, commented:
"Frontera continues to generate shareholder value from across
its portfolio by unlocking the sum of its parts. This Credit
Agreement refinances Puerto Bahia's
debt, extending its term to December
2027 and most importantly, provides Frontera's midstream
segment with optionality to execute its key strategic initiatives.
The Company looks forward to continuing to build value for
shareholders."
Orlando Cabrales, Chief
Executive Officer of Frontera, commented:
"Puerto Bahia is a
state-of-the-art liquids and dry cargo facility port terminal
strategically located in the Bay of Cartagena. Frontera, through
its separate midstream business, owns 99.8% of Puerto Bahia. This successful refinancing is
another positive step forward for Frontera as we seek to position
our standalone and growing midstream business to unlock shareholder
value."
Catalina Hayata, Managing
Director and Head of Latin America Private Credit in Macquarie's
Group's Commodities and Global Markets business, commented:
"This loan facility not only assists with the refinancing of
Puerto Bahia's debt, but also
demonstrates our support of Frontera's efforts to grow its
midstream business. As we expand our presence in Latin America, we look forward to providing
capital solutions to our key clients in the region and identifying
new ways to deliver innovative financing solutions in a growing
market."
The proceeds of the New Loan will be primarily used to repay in
full the existing senior loan of Puerto Bahía maturing in
June 2025, which has an outstanding
balance plus accrued interest of $106.2
million. The New Loan will also pay transaction fees and
expenses and fund a 6-month debt service reserve account. Any
remaining amounts shall be distributed to Frontera or any of its
affiliates, at Frontera's discretion, or kept by Puerto Bahia to finance future growth projects.
The Credit Agreement also includes an accordion feature for up to
$30 million, which may be drawn by
Puerto Bahia, subject to Lender'
consent in order to fund additional investment opportunities,
including potential liquids and dry terminal expansion
projects.
The New Loan pays semi-annually, amortizes during the term of
the loan, and has a scheduled $45
million payment due upon maturity in December 2027. The New Loan has two tranches
which include a $100 million
amortizing tranche that pays a Secured Overnight Financing Rate
("SOFR") 6-month term plus margin of 7.25% per annum and a
$20 million bullet maturity tranche
that pays a fixed rate of 11.00% per annum.
About PIL And ODL
In September 2022, Frontera
acquired the remaining 40.07% interest it did not already own in
PIL for an aggregate cash consideration of approximately
$47.4 million, including $21 million immediately following the closing of
the transaction. The transaction was an important milestone for the
Company as it increased Frontera's direct interest in the ODL
pipeline to 35%, strengthened Frontera's midstream cash flows, and
created a self-sustaining and growing midstream business.
The ODL pipeline is a 260-kilometre, 24-inch pipeline with
throughput capacity of 300,000 bbl/d at 18° API that transports
Frontera's heavy crude oil from the Quifa SW and Cajua fields and
part of the CPE-6 field, as well as other third-party production
from the Llanos basin, including from Ecopetrol, Hocol, Geopark and
Parex, and connects the OCENSA pipeline at Cusiana and Monterrey to
the export terminal in Coveñas. Ecopetrol's Cenit Transporte y
Logística de Hidrocarburos S.A.S. owns the remaining 65% of
ODL.
About Puerto Bahia
Puerto Bahia is a
state-of-the-art liquids and dry cargo facility port terminal
strategically located on a 155-hectare site in the Bay of
Cartagena. Inaugurated in 2015, Puerto
Bahia provides loading, unloading, receipt, storage and
dispatch import and export services.
Puerto Bahia's liquid bulk
terminal operational capacity is 2.6 MMbbl, distributed amongst
eight storage tanks with heating and blending functionalities, 16
loading and unloading stations for tanker trucks, two docking
positions for barges and a liquid jetty with two docking positions
for vessels with up to 1.2 million barrels of capacity.
The barge platform features four berths and eight tanker truck
stations that are interconnected with the storage tanks.
Puerto Bahia's general dry cargo
terminal features a 290-metre long, 44-metre wide berthing platform
and covers a total area of 16 hectares (40 acres) with covered and
uncovered storage capacity and equipment for cargo handling.
Puerto Bahia's 18-metre natural
depth makes it the only private multi-purpose terminal in
Colombia capable of receiving
Panamax ships (large cargo and vessels) and Suezmax tankers (liquid
purpose vessels) simultaneously.
About Frontera
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 31
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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Corporate Presentation
See Frontera's corporate
presentations at:
https://www.fronteraenergy.ca/reports-presentations/
Social Media
Follow Frontera Energy social media channels at the following
links:
Twitter: https://twitter.com/fronteraenergy?lang=en
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LinkedIn: https://co.linkedin.com/company/frontera-energy-corp.
Advisories
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 the
Company believes, expects, or anticipates will or may occur in the
future. Forward-looking information in this news release includes,
without limitation, statements relating to the use of proceeds of
the New Loan, the amounts that will be drawn on the New Loan in
order to repay all amounts owing under Puerto Bahia's legacy debt, the material terms
of the New Loan, including the accordion feature for up to
$30 million, which may be drawn by
Puerto Bahia, subject to Lenders'
consent, in order to fund additional investment opportunities,
including potential liquids and dry terminal expansion projects;
the Company's ability to satisfy the conditions precedent to
closing the New Loan, the New Loan being effectively supported by
the cash flows from Frontera's standalone and growing midstream
business, Frontera's belief that refinancing Puerto Bahia's legacy debt is a positive step
forward for Frontera as it continues to unlock shareholder value
from its midstream business; the optionality provided by the New
Loan to Frontera's midstream segment to fund its key strategic
initiatives; and the Company's expectations that it will continue
to generate shareholder value from across its portfolio by
unlocking the sum of its parts. All information other than
historical fact is forward-looking information.
Forward-looking information reflects the current
expectations, assumptions and beliefs of the Company based on
information currently available to it and considers the Company's
experience and its perception of historical trends, including, but
not limited to, expectations and assumptions of the Company
relating to all conditions precedent to closing of the New Loan
being satisfied in a timely manner, the amounts that will be drawn
on the New Loan in order to repay all amounts owing under
Puerto Bahia's legacy debt, and that
the material terms of the New Loan do not change prior to
closing.
Although the Company believes 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 the Company. 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,
the Company. The Company's annual information form dated
March 1, 2023, its annual
management's discussion and analysis for the year ended
December 31, 2022, and other
documents it files from time to time with securities regulatory
authorities 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 charge by referring to the
Company's profile 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, the
Company disclaims any intent or obligation to update any
forward-looking information, whether as a result of new
information, future events or results or otherwise.
Certain information included in this news release may
constitute future oriented financial information and financial
outlook information (collectively, "FOFI") within the
meaning of applicable Canadian securities laws. The FOFI has been
prepared by management to provide an outlook of the Company's
activities and results and may not be appropriate for other
purposes. Management believes that the FOFI has been prepared on a
reasonable basis, reflecting management's reasonable estimates and
judgments; however, actual results of the Company's operations and
the resulting financial outcome may vary from the amounts set forth
herein. Any FOFI speaks only as of the date on which it was made,
and the Company disclaims any intent or obligation to update any
FOFI, whether as a result of new information, future events or
otherwise, unless required by applicable laws.
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SOURCE Frontera Energy Corporation