Frontera's Bid Amendment: Impact on Small Shareholders and Participation

Frontera Energy Corporation (TSX: FEC) has announced an amendment to its substantial issuer bid, removing the preferential acceptance of odd lots. This change, effective from September 11, 2024, will impact small shareholders and potentially influence participation in the bid. This article explores the implications of this amendment on Frontera and its shareholders.


The removal of odd lot preferential acceptance means that small shareholders, who own fewer than 100 shares, will no longer be guaranteed their shares will be purchased. Instead, their shares will be subject to proration, along with larger holdings, if more than 3,375,000 shares are tendered. This change could reduce the likelihood of small shareholders having their shares purchased, potentially leading to a lower participation rate among this group.


Frontera's decision to amend the bid terms may have both benefits and drawbacks. On one hand, removing odd lot preferential acceptance could increase the number of shares available for purchase, potentially reducing the overall cost of the bid. On the other hand, it may discourage small shareholders from participating, which could negatively impact Frontera's relationship with this group in the long term.

The amendment aligns with Frontera's previous statements regarding fairness and transparency in its substantial issuer bid. By removing the preferential treatment of odd lots, the company is ensuring that all shareholders, regardless of the size of their holdings, are treated equally in the proration process.

To mitigate potential disadvantages for small shareholders, Frontera could consider providing alternative options, such as allowing shareholders to tender a minimum number of shares (e.g., 100 shares) to ensure their shares are purchased. This would help maintain small shareholders' interest in the bid while still achieving the company's goal of purchasing up to 3,375,000 shares.

In conclusion, Frontera's amendment to its substantial issuer bid, removing the preferential acceptance of odd lots, has the potential to impact small shareholders and influence participation in the bid. While the change may have both benefits and drawbacks for the company and its shareholders, Frontera can mitigate potential negative effects by considering alternative options to support small shareholders.