The Alberta Securities Commission, acting as the principal regulator under the Multilateral Instrument 11-102 Passport System, granted Frontera Energy Corporation (the Filer) an exemption from certain requirements of National Instrument 62-104 Take-Over Bids and Issuer Bids (NI 62-104) in connection with its proposed purchase of a portion of its outstanding common shares through a formal issuer bid (the Offer).
The exemptions granted are from:
1. The Proportionate Take Up Requirement (Section 2.26 of NI 62-104), which mandates that shares deposited pursuant to the Offer must be taken up and paid for on a pro rata basis.
2. The Proportionate Take Up Disclosure Requirement (Item 8 of Form 62-104F2), which requires disclosure of the pro rata take up and payment in the issuer bid circular.
3. The Extension Take Up Requirement (Section 2.32 of NI 62-104), which prohibits extending the Offer unless all shares deposited and not withdrawn are first taken up if all terms and conditions have been complied with or waived.
The Filer’s Offer involves a modified Dutch auction with a specified maximum purchase price of $65 million and a price range of $11.00 to $13.00 per share. The Offer is not conditional on financing and will be funded from available cash on hand. Shareholders can tender their shares through an auction tender, a purchase price tender, or a proportionate tender. The purchase price will be determined after considering all valid tenders, with provisions for odd lot tenders and pro rata purchases if the aggregate purchase price exceeds the specified maximum.
The Filer’s board has determined the Offer to be in the best interests of the company. The Filer may extend the Offer without taking up all shares if the aggregate purchase price for validly tendered shares is less than or equal to the specified maximum. The Filer intends to rely on the Liquid Market Exemption from the formal valuation requirements under Multilateral Instrument 61-101, supported by a liquidity opinion confirming a liquid market for the shares.
The exemption is conditional on the Filer taking up and paying for shares as described and being eligible to rely on the Liquid Market Exemption. The decision is based on the Filer’s representations and is consistent with the test set out in the applicable securities legislation.