Outrider Management LLC, a California-based investment firm, has asked Georgia Prime Minister Giorgi Gakharia to award it the license to produce oil and gas from Block 12 in the country’s Karu Basin. The award would allow Georgia to derive more value from the field and enable Outrider to recover its investment in the troubled company that currently holds the license.
Outrider is the largest stakeholder in the existing licensee, Frontera Resources Corporation, and has sought Frontera’s liquidation over the firm’s unpaid debts, which now total over $35 million in principal and interest. Outrider told the Prime Minister it faces “a potential total loss” of its investment after nearly a decade of working with Frontera.
Forbes Georgia has obtained a letter that was sent by the CEO of Outrider Management, Stephen Hope to the Prime Minister of Georgia, Giorgi Gakharia.
According to the letter, Outrider Management is willing to help Georgia to resolve Frontera’s debt problem and to help in stabilizing the oil production.
The Outrider Management has several lawsuits with Frontera. According to Stephen Hope, CEO of Outrider, as a result of the steps taken by the directors of Frontera, Steve Nicandros and Zaza Mamulaishvili, the company wasted the opportunity to fully implement the Georgian project.
“Frontera has an established pattern of making meritless allegations through any available court to avoid satisfying its obligations to Outrider. At every turn, Outrider has fully and successfully defended its position and actions, but the costs have been extreme. Specifically, Outrider has endured the following legal proceedings filed by Frontera, each designed to avoid payment to Outrider under then-existing secured obligations,”- Hope wrote to Prime Minister Gakharia last month.
The letter tells about the court proceedings in different jurisdictions that Frontera Resources has initiated to cancel its obligations towards Outrider. Among those proceedings are The U.S. Bankruptcy Filing and Related Suit (2016); Litigation in Cayman Islands – In 2018, after defaulting on the notes issued by the Outrider Management, Frontera has started a legal proceeding on the Cayman Islands, alleging breach of fiduciary duty and conspiracy Approximately two months later, the Grand Court discharged that preliminary injunction. On April 14, 2019, after losing in the Cayman Islands, Frontera filed for nearly identical litigation against Outrider Management in the United States District Court of California. “Although the lawsuit is still pending, the Court denied Frontera’s requests for injunctive relief, thereby permitting the Outrider Management Fund to begin taking steps to take ownership of its Collateral.
Outrider has spent several million dollars in legal defense and prosecution fees attempting to protect its secured interests in Frontera,”- reads the letter.
“Our company has long been the victim of Frontera’s business practices and prays that Outrider will have an opportunity to participate in efforts to realize value from the field; or, at bottom, requests that any entity awarded with the license assume responsibility for Outrider’s unpaid note,” Hope wrote to Prime Minister Gakharia last month. “Outrider and its United States investors believe that it would be a valuable partner in any future licensing.”
Stephen Hope said his company wants to be constructive and helpful by stabilizing the existing production and recruiting a skilled operator that can explore and assess the field, which contains an estimated 700 million barrels of oil in a challenging structure. Hope said he looked forward to discussions with the Georgian government to seek a resolution that works for both sides.