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Frontera Resources Corporation: financing update

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Oilfield Technology,

Frontera Resources Corporation has announced that on 11 December 2018 it signed a term sheet with a New York, U.S.A.-based fund seeking to secure a loan of up to US$60 000 000.

The Term Sheet is not a commitment letter, nor a commitment to providing financing to the company.

This funding would be deployed for the operations at the Company’s Block 12 license area in Georgia in the year 2019.

Pursuant to the Term Sheet, the loan would be on a delayed senior secured basis and the initial availability would be US$45 000 000, of which up to US$20 000 000 could be used to retire the Company’s existing debt. The loan would be for a term of 5 years with interest rate varying between 8% and 11%. Other fees will include origination fee of 3% of the draw down amount which is payable at the time of the draw down, and the application fee of US$150 000 which is payable at the inception of the Term Sheet. The loan would be secured with a first lien on the Company’s Georgia assets or a pledge of shares of the Company subsidiary that holds such assets, subject to definitive agreements.

The completion of the Transaction and the entry into definitive agreements is subject to successful completion of due diligence and field survey to be undertaken by the lenders.

Zaza Mamulaishvili, President and CEO, commented:

"We are pleased to have signed this term sheet that sets basis for the new capital inflow in 2019. These funds would be used to accelerate our work programmes in the Taribani field as well as throughout Block 12, and would be instrumental in reaching our goal to achieve commercial development of Block 12 in Georgia. We look forward to continuing working with the financiers to finalise the necessary due diligence and definitive agreements, and being able to start utilising this funding for operations.”

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