Gran Tierra Energy Inc. Announces Private Offering of an Additional Amount of its 9.500% Senior Secured Amortizing Notes due 2029
Gran Tierra Energy Inc. plans to offer an additional amount of its previously issued 9.500% Senior Secured Amortizing Notes due 2029 in a private placement. The Notes will have the same terms and provisions as the Original Notes, with the net proceeds intended for repaying outstanding amounts borrowed under its existing credit facility and general corporate purposes. The offering will be made to qualified institutional buyers in the United States, non-U.S. persons outside the United States, and pursuant to certain prospectus exemptions in Canada.
The move by Gran Tierra Energy Inc. to offer an additional amount of its 9.500% Senior Secured Amortizing Notes due 2029 is a strategic financial decision with potential implications for the company's capital structure and liquidity. By opting to repay the outstanding amounts borrowed under its existing credit facility, the company is indicating a shift towards fixed-rate debt financing, which could stabilize its interest expenses amidst fluctuating market rates. However, the high interest rate of 9.500% suggests a premium being paid by Gran Tierra for securing these funds, likely reflecting the company's credit risk assessment by the market.
Investors and analysts will be keen to monitor the issue price and demand for the Notes, as these will provide insights into the market's confidence in Gran Tierra's financial health and its prospects. The use of net proceeds for general corporate purposes, including capital to appraise and develop exploration discoveries, indicates a forward-looking growth strategy, but also introduces risks associated with the volatile nature of the energy sector.
Gran Tierra's decision to terminate its existing credit facility post-repayment and the potential diversification of its capital through the private placement could be seen as a move to optimize its financial leverage and reduce reliance on variable credit lines. This could be an attractive signal to investors who prefer companies with predictable financing costs and a clear use of proceeds. The alignment of the new Notes' terms with the Original Notes ensures continuity for investors and could facilitate trading liquidity in the secondary market.
It's important to consider the broader energy market dynamics, including oil prices and geopolitical factors, which can have material impacts on Gran Tierra's operations and, consequently, its ability to service debt. The energy sector's performance is cyclical and subject to regulatory changes, which could affect investor sentiment towards such financial instruments.
The offering's compliance with Rule 144A and Regulation S under the Securities Act of 1933, as well as prospectus exemptions in Canada, highlights the regulatory complexities associated with cross-border securities offerings. The differentiation in CUSIP numbers for the Notes sold pursuant to Regulation S until 40 days after the issue date is a compliance measure to prevent the immediate resale of these securities in the U.S. market, which could otherwise be restricted.
Prospective investors should be aware that the Notes will not be registered under the Securities Act and are therefore subject to restrictions on their transferability. This lack of registration underscores the importance of the 'qualified institutional buyer' designation, as it limits the potential investor base to those who meet specific criteria, potentially affecting the liquidity and marketability of the Notes.
02/01/2024 - 07:46 AM
CALGARY, Alberta, Feb. 01, 2024 (GLOBE NEWSWIRE) -- Gran Tierra Energy Inc. (“Gran Tierra ” or the “Company ”) (NYSE American:GTE) (TSX:GTE) (LSE:GTE) today announced that it intends, subject to market and other conditions, to offer an additional amount of its previously issued 9.500% Senior Secured Amortizing Notes due 2029 (the “Notes ”) in a private placement to persons reasonably believed to be qualified institutional buyers in the United States pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act ”), to non-U.S. persons in transactions outside the United States pursuant to Regulation S under the Securities Act, and pursuant to certain prospectus exemptions in Canada.
Gran Tierra currently has outstanding US$487,590,000 aggregate principal amount of 9.500% Senior Secured Amortizing Notes due 2029 (the “Original Notes ”). The Notes will have the same terms and provisions as the Original Notes, except for the issue date and the issue price, and will form the same series as the Original Notes, including with respect to interest payments. Upon settlement, the Notes are expected to trade under the same CUSIP number as the Original Notes, except that the Notes sold pursuant to Regulation S under the Securities Act will have a different CUSIP number than the Original Notes until 40 days after the issue date of the Notes.
The Notes will be guaranteed by certain subsidiaries of Gran Tierra. Gran Tierra intends to use the net proceeds from the offering to repay the outstanding amounts borrowed under its existing credit facility (after which the credit facility will be terminated), and any remaining net proceeds from the offering for general corporate purposes, which may include additional capital to appraise and develop exploration discoveries, repayment of other indebtedness, working capital and/or acquisitions.
This press release does not constitute an offer to sell or the solicitation of an offer to buy the Notes, nor shall there be any sale of the Notes in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such jurisdiction. The Notes will not be registered under the Securities Act or the securities laws of any other jurisdiction and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act and applicable state securities laws.
The offering will be made, and the Notes will be offered and issued, only (a) in the United States to investors who are reasonably believed to be “qualified institutional buyers” (as defined in Rule 144A under the Securities Act) in reliance upon the exemption from the registration requirements of the Securities Act, (b) outside the United States to investors who are persons other than “U.S. persons” (as defined in Rule 902 under the Securities Act) in reliance upon Regulation S under the Securities Act, and (c) pursuant to certain prospectus exemptions in Canada.
This press release is being issued pursuant to and in accordance with Rule 135c under the Securities Act.
Cautionary Statement Regarding Forward-Looking Statements
This press release includes forward-looking statements within the meaning of Section 27A of the Securities Act, Section 21E of the Securities Exchange Act of 1934, as amended, and the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 or “forward-looking information” within the meaning of applicable Canadian securities laws. All statements other than statements of historical facts included in this press release, and those statements preceded by, followed by or that otherwise include the words “may,” “might,” “will,” “would,” “could,” “should,” “believe,” “expect,” “anticipate,” “intend,” “estimate,” “project,” “target,” “goal,” “guidance,” “budget,” “plan,” “objective,” “potential,” “seek,” or similar expressions or variations on these expressions are forward-looking statements. The Company can give no assurances that the assumptions upon which the forward-looking statements are based will prove to be correct or that, even if correct, intervening circumstances will not occur to cause actual results to be different than expected. Because forward-looking statements are subject to risks and uncertainties, actual results may differ materially from those expressed or implied by the forward-looking statements. There are a number of risks, uncertainties and other important factors that could cause Gran Tierra’s actual results to differ materially from the forward-looking statements, including, but not limited to, statements related to Gran Tierra’s expectations regarding the completion, timing and size of the proposed offering and use of proceeds; and those factors set out in Part I, Item 1A, “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, and in the Company’s other filings with the U.S. Securities and Exchange Commission. Although the Company believes the expectations reflected in the forward-looking statements are reasonable, the Company cannot guarantee future results, level of activity, performance or achievements. Moreover, neither the Company nor any other person assumes responsibility for the accuracy or completeness of any of these forward-looking statements. Investors should not rely upon forward-looking statements as predictions of future events. The information included herein is given as of the date of this press release and, except as otherwise required by the securities laws, the Company disclaims any obligation or undertaking to publicly release any updates or revisions to, or to withdraw, any forward-looking statement contained in this press release to reflect any change in the Company’s expectations with regard thereto or any change in events, conditions or circumstances on which any forward-looking statement is based.
ABOUT GRAN TIERRA ENERGY INC.
Gran Tierra Energy Inc. together with its subsidiaries is an independent international energy company currently focused on international oil and natural gas exploration and production with assets currently in Colombia and Ecuador. The Company is currently developing its existing portfolio of assets in Colombia and Ecuador and will continue to pursue additional growth opportunities that would further strengthen the Company’s portfolio. The Company’s common stock trades on the NYSE American, the Toronto Stock Exchange and the London Stock Exchange under the ticker symbol GTE.
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SOURCE Gran Tierra Energy Inc.
What type of notes does Gran Tierra Energy Inc. plan to offer?
Gran Tierra Energy Inc. plans to offer an additional amount of its previously issued 9.500% Senior Secured Amortizing Notes due 2029 in a private placement.
What will the net proceeds from the offering be used for?
The net proceeds from the offering will be used to repay the outstanding amounts borrowed under its existing credit facility and for general corporate purposes, which may include additional capital to appraise and develop exploration discoveries, repayment of other indebtedness, working capital, and/or acquisitions.
To whom will the offering be made?
The offering will be made to qualified institutional buyers in the United States, non-U.S. persons outside the United States, and pursuant to certain prospectus exemptions in Canada.
