Pacific Announces Initial Order Obtained Under Companies' Creditors Arrangement Act in Connection With Its Previously Announced Comprehensive Restructuring Involving Catalyst Capital and Pacific's Noteholders and Lenders

ALL OPERATIONS EXPECTED TO CONTINUE AS NORMAL THROUGHOUT THE CCAA PROCESS

DIRECTOR RESIGNATIONS

TORONTO, April 27, 2016 /PRNewswire/ - Pacific Exploration & Production Corp. (TSX: PRE) (BVC: PREC) ("Pacific" or the "Company") announced, further to its announcement earlier today, that it and certain of its direct and indirect subsidiaries (collectively, the "Filing Entities") have obtained an Initial Order from the Superior Court of Justice in Ontario (the "Court") under the Companies' Creditors Arrangement Act ("CCAA").

The Initial Order:

• authorizes the Filing Entities to commence a Court-supervised restructuring proceeding;
  
  
• provides protections to allow normal operations to continue as the Filing Entities proceed to consummate a proposed comprehensive restructuring transaction (the "Restructuring Transaction") further to Pacific's previously announced agreement with certain noteholders, lenders and The Catalyst Capital Group Inc.; and
  
  
• approves: (i) a U.S. $500 million debtor-in-possession financing facility and a super priority lien over assets of the Filing Entities to secure the obligations under that facility; and (ii) a U.S. $134 million letter of credit facility and a second priority lien over assets of the Filing Entities to secure the obligations under that facility, all as part of the previously announced Restructuring Transaction.

Under the Initial Order, PricewaterhouseCoopers Inc. ("PwC") has been appointed as Monitor of the Company. PwC's role will be to monitor and report to the Court with respect to the Company's operations and the CCAA proceeding generally. PwC has established a website with further details about the CCAA proceedings. The site can be accessed at www.pwc.com/ca/pacific.

The Filing Entities will also be commencing appropriate proceedings in Colombia, under Law 1116, and recognition proceedings in the United States under chapter 15 of the U.S. Bankruptcy Code, at a later date.

All operations of the Company's subsidiaries (the "Pacific Group") are expected to continue as normal throughout this process. Importantly, the Company expects regular payments will be made to all of the Pacific Group's suppliers, trade partners, and contractors across the jurisdictions in which it operates in accordance with local regulations. Additionally, employees will continue to be paid throughout this process, without disruption. The Company's bank indebtedness and indebtedness in respect of its senior unsecured notes will be restructured pursuant to the terms of the Restructuring Transaction.

The Initial Order of the Court provides that the Company is relieved of any obligation to call and hold an annual meeting of its shareholders until further ordered by the Court.

The Company also announced that Messrs. Valdez, Millares, Betancourt and Alvarado have resigned as directors of the Company, effective immediately.

"We would like to thank Jose de Jesus Valdez, Raul Millares, Alejandro Betancourt and Orlando Alvarado for their time and contributions as directors of Pacific," said Ronald Pantin, Chief Executive Officer of the Company. "We look forward to continuing to work with ALFA, S.A.B. de C.V. as partners in Block Z-1, offshore Peru and hope to be able to continue to work together to identify and pursue opportunities in Mexico offered by the recent opening up of the energy sector to foreign investment."

The Company is being advised by Lazard Frères & Co. LLC, Norton Rose Fulbright Canada LLP (Canada), Proskauer Rose LLP (U.S.), Zolfo Cooper (U.S.) and Garrigues (Colombia). The independent committee of the board of directors of the Company is being advised by Osler, Hoskin & Harcourt LLP and UBS Securities Canada Inc. The Ad Hoc Committee is being advised by Evercore Group L.L.C. (U.S.), Goodmans LLP (Canada), Paul, Weiss, Rifkind, Wharton & Garrison LLP (U.S.) and Cardenas y Cardenas Abogados (Colombia). FTI Consulting (U.S.), Davis Polk & Wardwell LLP (U.S.), Torys LLP (Canada) and Gómez-Pinzón Zuleta Abogados (Colombia) are counsel to the agent on the revolving credit facility of the Company, and Seward & Kissel is counsel to the agent on the HSBC Bank, USA, N.A. term loan of the Company. Catalyst is being advised by Brown Rudnick LLP (U.S.), McMillan LLP (Canada) and GMP Securities L.P. Kingsdale Shareholder Services has been retained as a strategic advisor and proxy solicitation agent.

Shareholders are reminded that any questions or concerns can be directed to the Company at [email protected].  

Noteholders with questions or wishing to sign the Support Agreement under the Restructuring Transaction are encouraged to contact Kingsdale Shareholder Services at 1-877-659-1821 toll-free in North America or call collect at 1-416-867-2272 outside of North America or by email at [email protected]

About Pacific:

Pacific Exploration & Production Corp. is a Canadian public company and a leading explorer and producer of natural gas and crude oil, with operations focused in Latin America. The Company has a diversified portfolio of assets with interests in more than 70 exploration and production blocks in various countries including Colombia, Peru, Guatemala, Brazil, Guyana and Belize. The Company's strategy is focused on sustainable growth in production & reserves and cash generation. Pacific Exploration & Production is committed to conducting business safely, in a socially and environmentally responsible manner.

About Catalyst:

The Catalyst Capital Group Inc., a private equity investment firm with more than $6 billion in assets under management founded in 2002, is a leader in operationally focused turnaround investing. The firm's mandate is to manufacture risk adjusted returns, in keeping with its philosophy of "we buy what we can build." Catalyst's Guiding Principles of investment excellence through operational involvement, superior analytics, attention to detail, intellectual curiosity, team and reputation are key to the firm's success. The Catalyst team collectively possesses more than 110 years of extensive experience in restructuring, credit markets and merchant and investment banking in Canada, the United States, Latin America and Europe.

Advisories:

Cautionary Note Concerning Forward-Looking Statements 

This news release contains forward-looking statements. All statements, other than statements of historical fact, that address activities, events or developments that the Company believes, expects or anticipates will or may occur in the future (including, without limitation, statements regarding estimates and/or assumptions in respect of production, revenue, cash flow and costs, reserve and resource estimates, potential resources and reserves and the Company's exploration and development plans and objectives and its strategy) are forward-looking statements. These forward-looking statements reflect the current expectations or beliefs of the Company based on information currently available to the Company. Forward-looking statements are subject to a number of risks and uncertainties that may cause the actual results of the Company to differ materially from those discussed in the forward-looking statements, and even if such actual results are realized or substantially realized, there can be no assurance that they will have the expected consequences to, or effects on, the Company. Factors that could cause actual results or events to differ materially from current expectations include, among other things: the Company's ability to continue as a going concern; volatility in market prices for oil and natural gas; a continued depressed oil price environment with a potential of further decline; default under the Company's credit facilities and/or the Company's senior notes due to a breach of covenants therein; amounts becoming due and payable under the credit facilities and/or the senior notes, notwithstanding the entering into of support arrangements, whether through the actions of holders of senior notes or the trustee under the respective senior note indentures or otherwise; the impact of events of defaults in respect of the credit facilities and/or senior notes on other material contracts of the Company, including but not limited to, cross-defaults resulting in acceleration of amounts payable thereunder or the termination of such agreements notwithstanding the protection obtained by the Company under the CCAA proceedings in Canada and/or sought in proceedings under other applicable jurisdictions (including Colombia and the United States); failure of the Company to complete the Restructuring Transaction, which is subject to a number of conditions and other risks and uncertainties including, without limitation, court, creditor and required regulatory approvals or otherwise; failure to satisfy any terms or conditions of any other agreement with the Company's creditors on a proposed restructuring; any negative impact on the Company's current operations as a result of the Restructuring Transaction or any other proposed restructuring or failure to reach any other agreement with the creditors thereon; perceptions of the Company's prospects and the prospects of the oil and gas industry in Colombia and the other countries where the Company operates and/or has investments as the result of the entering into of the Restructuring Transaction or commencing voluntary insolvency proceedings or otherwise; expectations regarding the Company's ability to raise capital and to continually add to reserves through acquisitions and development; inability to continue meeting the listing requirements of the exchanges on which the Company's securities are listed due to the Restructuring Transaction; the cancellation or extensive dilution of the Company's equity securities as a result of the Restructuring Transaction; the effect of the Restructuring Transaction on the Company's business and operations; political developments in Colombia, Guatemala, Peru, Brazil, Guyana and Mexico; liabilities inherent in oil and gas operations; uncertainties associated with estimating oil and natural gas reserves; competition for, among other things, capital, acquisitions of reserves, undeveloped lands and skilled personnel; incorrect assessments of the value of acquisitions and/or past integration problems; geological, technical, drilling and processing problems; fluctuations in foreign exchange or interest rates and stock market volatility; delays in obtaining required environmental and other licences; uncertainty of estimates of capital and operating costs, production estimates and estimated economic return; the possibility that actual circumstances will differ from estimates and assumptions; uncertainties relating to the availability and costs of financing needed in the future; changes in income tax laws or changes in tax laws, accounting principles and incentive programs relating to the oil and gas industry; and the other factors discussed under the heading entitled "Risk Factors" and elsewhere in the Company's AIF dated March 18, 2016 filed on SEDAR at www.sedar.com. Any forward-looking statement speaks only as of the date on which it is made and, except as may be required by applicable securities laws, the Company disclaims any intent or obligation to update any forward-looking statement, whether as a result of new information, future events or results or otherwise. Although the Company believes that the assumptions inherent in the forward-looking statements are reasonable, forward-looking statements are not guarantees of future performance and accordingly undue reliance should not be put on such statements due to the inherent uncertainty therein.

Translation

This news release was prepared in the English language and subsequently translated into Spanish. In the case of any differences between the English version and its translated counterparts, the English document should be treated as the governing version.

SOURCE Pacific Exploration and Production Corporation

Related Links

http://www.pacific.energy