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Frontera Energy Corporation (TSX: FEC) has completed the consent solicitation for amendments to the indenture governing its $350 million USD of senior notes due 2023.

According to the Toronto-based company, it received the consent of an overwhelming majority (91.2%) of the holders of the outstanding notes.

“These amendments give the company flexibility to use existing cash resources and projected future cash resources to implement measures expected to enhance shareholder value.” – Frontera Energy

The company said that it expects to make the consent fee payment to consenting holders on November 28 after the amendments become effective. All holders of the 9.7% notes will “be bound by the amendments,” said the firm, including any holders that did not give consent.

“These amendments give the company flexibility to use existing cash resources and projected future cash resources to implement measures expected to enhance shareholder value,” said Frontera Energy in a statement.

“These measures may include accelerating or increasing share buyback programs, dividend payments, and investments,” added the firm. “No decision has been made by the company to make any such payments at this time, other than its existing share buy-back program.”

Despite the optimism, credit rating agency Fitch Ratings has warned that the move is a “potential credit negative” given that it allows for large payouts to shareholders.

Looking at Frontera’s net income deficit and “low” reserve life levels “relative to its peers,” the New York-based rating agency believes Frontera needs to invest more into its operations. Thus, it concluded in its analysis that the “company’s credit quality could begin to deteriorate as a result of an increase in distributions to shareholders.”

Nevertheless, Gabriel de Alba, chairman of the board of directors of Frontera Energy, said that the move will give the firm more flexibility and improve cash flow.

“The successful consent solicitation is an overwhelming vote of confidence by our bondholders in Frontera’s credit profile and long-term outlook for free cash flow,” he said. “With the enhanced capital allocation flexibility it gives the company, this consent opens new avenues for the board to increase value for Frontera shareholders.

He added that, “while continuing to make disciplined decisions and taking actions to close the stock’s valuation gap, we can now move forward with evaluating additional strategic initiatives designed to enhance shareholder returns, with the full support of our bondholders.”