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Item 1.01
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Entry into a Material Definitive Agreement.
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Purchase Agreement.
On May 20, 2019, Gran Tierra Energy Inc. (“Gran Tierra”),
and certain subsidiaries of Gran Tierra that guarantee its revolving credit facility (the “Guarantors”) entered into
a purchase agreement (the “Purchase Agreement”), with several initial purchasers listed therein, relating to the sale
by Gran Tierra of $300 million aggregate principal amount of its 7.750% Senior Notes due 2027 (the “Notes”) guaranteed
on a senior unsecured basis by the Guarantors (the “Offering”).
The Notes were issued in a private placement to 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. The sale of the Notes closed on May 23, 2019.
The Purchase Agreement contains customary representations, warranties
and agreements by Gran Tierra and the Guarantors. In addition, Gran Tierra and the Guarantors have agreed to indemnify the initial
purchasers against certain liabilities, including liabilities under the Securities Act, or to contribute to payments the initial
purchasers may be required to make in respect of those liabilities.
Gran Tierra intends to use the net
proceeds from the Offering (i) to repay the outstanding amounts borrowed under the revolving credit facility,
(ii) for capital expenditures and (iii) for general corporate purposes, which may include additional capital to appraise and
develop exploration discoveries, repayment of other indebtedness, working capital and/or acquisitions.
In the ordinary course of their respective businesses, the initial
purchasers and certain of their respective affiliates have in the past and may in the future engage in investment banking or other
transactions of a financial nature with Gran Tierra, including the provision of certain advisory services and the making of loans
to Gran Tierra and its affiliates, for which they have received customary compensation. Certain of the initial purchasers are a
direct or indirect wholly-owned subsidiary of, or have a significant shareholder who is, a lender under the revolving credit facility.
As a result, such entities will receive a portion of the net proceeds from the Offering to the extent Gran Tierra uses the net
proceeds to repay borrowings outstanding under the revolving credit facility. The initial purchasers will receive
customary compensation in connection with the Offering.
The foregoing description of the Purchase Agreement does not
purport to be complete and is qualified in its entirety by reference to the Purchase Agreement, which is attached hereto as Exhibit
10.1 and incorporated in this Item 1.01 by reference.
Indenture.
The Notes are governed by an indenture (the “Indenture”),
dated as of May 23, 2019, among Gran Tierra, the Guarantors and U.S. Bank National Association, as trustee.
The Notes bear interest at a rate of 7.750% per year, payable
semi-annually in arrears on each of May 23 and November 23 of each year, beginning on November 23, 2019. The Notes mature on May
23, 2027, unless earlier redeemed or repurchased. Gran Tierra may redeem the Notes (i) at any time prior to May 23, 2023, in whole
or in part, at a price equal to the principal amount of the Notes being redeemed plus a “make-whole” premium, together
with any accrued and unpaid interest to, but excluding the date of redemption, (ii) on or after May 23, 2023, at its option, all
or any portion of the Notes for cash at the redemption prices specified in the Indenture, together with any accrued and unpaid
interest to the date of redemption or (iii) on or before May 23, 2022, up to 35% of the aggregate principal amount of the Notes,
in an amount not greater than the net cash proceeds from certain equity offerings. No sinking fund is provided for the Notes.
If Gran Tierra undergoes a change of control, holders of the
Notes may require Gran Tierra to repurchase for cash all or any portion of their Notes at a change of control repurchase price
equal to 101% of the principal amount of the Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the change
of control repurchase date.
The foregoing description of the Indenture and Notes does not
purport to be complete and is qualified in its entirety by reference to the full text of the Indenture and the form of Note, copies
of which are attached hereto as Exhibit 4.1 and 4.2, respectively, and incorporated in this Item 1.01 by reference.