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 January 13, 2016 - 11:50 PM EST
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EIG Proposes Restructuring of Pacific Exploration & Production Corp.

EIG Believes Pacific E&P Faces Overwhelming Financial Challenges That Threaten Its Ability to Operate as a Going Concern

EIG Committed to Investing in Pacific E&P to Maintain Operations and Position for Growth

Announces Tender Offers for Any and All of $4.10 Billion of Pacific E&P Senior Notes

EIG Pacific Holdings Ltd. (the “Offeror”), a Cayman Islands limited company and subsidiary of Harbour Energy Ltd. (“Harbour Energy”), announced today that it has commenced tender offers and proposed to sponsor a restructuring of Pacific Exploration and Production Corp (TSX: PRE) (“Pacific E&P”). Harbour Energy, managed by EIG Global Energy Partners (“EIG”), believes that Pacific E&P faces significant near-term insolvency concerns and requires a large infusion of new capital in order to restructure its balance sheet, avoid value-destructive asset-level reorganizations or distressed sales, and degradation of Pacific E&P’s assets through under-investment and deferred maintenance. As of September 30, 2015, Pacific E&P had approximately $5.4 billion of debt outstanding, including $4.10 billion aggregate principal amount of senior bonds that are trading at levels equivalent to approximately thirteen cents on the dollar as of January 13, 2016, indicating that no value remains in its equity. Harbour Energy and EIG are committed to investing in Pacific E&P to ensure that its operations remain intact, partnerships are maintained and, upon restructuring, Pacific E&P is once again positioned for operational excellence and growth.

R. Blair Thomas, CEO of EIG and Co-Chairman of Harbour Energy’s Board of Directors, said, “We believe Pacific E&P is on the verge of insolvency and out of other options. We have an appreciation for the company and its operations, partners and stakeholders and are committed to shepherding the company through an expeditious reorganization that will permit it to continue operating, remain intact and thrive once again. We are offering to inject substantial capital by acquiring the senior notes of the company and sponsoring an overall reorganization of Pacific E&P. We hope to work with the Board and management to ensure continuity, job preservation and an efficient restructuring process. EIG, through Harbour Energy, is uniquely positioned to support Pacific E&P in making the necessary financial and operational decisions to restore Pacific E&P’s credit quality and allow the company to get back to the business of growth.”

As part of this process, Harbour Energy has commenced tender offers to purchase for cash, subject to certain terms and conditions, any and all of the outstanding senior notes of Pacific E&P, consisting of approximately $4.10 billion aggregate principal amount of (i) 5.375% Senior Notes due 2019 (the “2019 Notes”), (ii) 7.250% Senior Notes due 2021 (the “2021 Notes”), (iii) 5.125% Senior Notes due 2023 (the “2023 Notes”) and (iv) 5.625% Senior Notes due 2025 (the “2025 Notes” and, together with the 2019 Notes, the 2021 Notes and the 2023 Notes, the “Notes”). The offer to purchase each series of Notes is referred to as a “Tender Offer” and collectively as the “Tender Offers.”

The Tender Offers are scheduled to expire at 5:00 p.m., Eastern Standard Time, on February 10, 2016 (unless extended or earlier terminated with respect to a Tender Offer, the “Expiration Date”). The Tender Offers are being made pursuant to an Offer to Purchase dated January 13, 2016 (the “Offer to Purchase”), a related Letter of Transmittal dated January 13, 2016 and a related Power of Attorney dated January 13, 2016 (together, the “Tender Offer Materials”), which set forth a more detailed description of the Tender Offers. Holders of the Notes are urged to carefully read the Tender Offer Materials before making any decision with respect to the Tender Offers.

The following table sets forth certain terms of the Tender Offers:

Description of Notes CUSIP/ISIN Nos. Outstanding Principal Amount(1) Tender Offer Consideration(2) Early Tender Payment(2) Total Consideration(2)(3)
5.375% Senior Notes due 2019 C71058AD0, 69480UAH0/ USC71058AD08, US69480UAH05 U.S. $1,300,000,000 U.S. $125.00 U.S. $50.00 U.S. $175.00
7.250% Senior Notes due 2021 C71058AB4, 69480UAC1/ USC71058AB42, US69480UAC18 U.S. $690,000,000 U.S. $125.00 U.S. $50.00 U.S. $175.00
5.125% Senior Notes due 2023 C71058AC2, 69480UAF4/ USC71058AC25, US69480UAF49 U.S. $1,000,000,000 U.S. $125.00 U.S. $50.00 U.S. $175.00
5.625% Senior Notes due 2025 C71058AF5, 69480UAK3/ USC71058AF55, US69480UAK34 U.S. $1,114,000,000 U.S. $125.00 U.S. $50.00 U.S. $175.00

(1) From Pacific E&P’s publicly filed interim financial statements for the three months ended September 30, 2015, available on SEDAR.

(2) Per U.S. $1,000 principal amount of Notes.

(3) Includes the Early Tender Payment for Notes validly tendered and not validly withdrawn, prior to the Early Tender Date and accepted for purchase.

The applicable total consideration (the applicable “Total Consideration”) payable for each $1,000 principal amount of Notes validly tendered at or prior to 5:00 p.m., Eastern Standard Time, on January 27, 2016 (such date and time with respect to each Tender Offer, as it may be extended, the “Early Tender Date”) and accepted for purchase pursuant to the Tender Offers will be the applicable Total Consideration for such series of Notes set forth in the table above. The applicable Total Consideration includes the applicable early tender payment for such series of Notes also set forth in the table above (the applicable “Early Tender Payment”). Holders must validly tender and not subsequently validly withdraw their Notes at or prior to the Early Tender Date in order to be eligible to receive the applicable Total Consideration for such Notes purchased in the Tender Offers.

Subject to the terms and conditions of the Tender Offers, each Holder who validly tenders and does not subsequently validly withdraw their Notes at or prior to the Early Tender Date will be entitled to receive the applicable Total Consideration if and when such Notes are accepted for payment. Holders who validly tender their Notes after the Early Tender Date but at or prior to the Expiration Date will be entitled to receive only the applicable tender offer consideration equal to the applicable Total Consideration less the applicable Early Tender Payment (the applicable “Tender Offer Consideration”) if and when such Notes are accepted for payment.

Subject to all conditions to the Tender Offers having been satisfied or waived by the Offeror, the Offeror will purchase Notes that have been validly tendered by the Expiration Date on a date promptly following the Expiration Date (the “Settlement Date”).

To receive either the applicable Total Consideration or the applicable Tender Offer Consideration, holders of the Notes must validly tender and not validly withdraw their Notes prior to the applicable Early Tender Date or the Expiration Date, respectively. Notes tendered may be withdrawn from the applicable Tender Offer at or prior to, but not after, 5:00 p.m., Eastern Standard Time, on January 27, 2016, unless extended, by following the procedures described in the Tender Offer Materials.

In addition to the applicable Tender Offer Consideration or the applicable Total Consideration, as applicable, all holders of Notes accepted for purchase pursuant to the Tender Offers will also receive accrued and unpaid interest on those Notes from, and including, the last interest payment date with respect to those Notes to, but not including, the earliest of (i) the applicable Settlement Date, (ii) the date on which Issuer Reorganization Proceedings (as defined in the Offer to Purchase) are commenced or (iii) February 19, 2016, as applicable.

The obligation of the Offeror to accept for purchase and to pay either the applicable Total Consideration or applicable Tender Offer Consideration pursuant to the Tender Offers is conditioned upon, among other things, (i) the receipt by the Offeror of valid tenders (that are not withdrawn) of a minimum of (a) 80.0% aggregate outstanding principal amount of the Notes in the aggregate and (b) 66.67% aggregate outstanding principal amount of each series of the Notes; (ii) the Reorganization Condition (as defined in the Offer to Purchase); and (iii) the other conditions described under “Conditions to the Tender Offers” in the Offer to Purchase.

The Offeror has retained Citigroup Global Markets Inc. as an exclusive Financial Advisor in this transaction and to serve as sole Dealer Manager for the Tender Offers. MacKenzie Partners, Inc. has been retained to serve as the Information and Tender Agent for the Tender Offers. Questions regarding the Tender Offers may be directed to Citigroup Global Markets Inc. at 390 Greenwich Street, 1st Floor, New York, New York 10013, Attn: Liability Management Group, (800) 558-3745 (toll-free), (212) 723-6106 (collect). Requests for the Tender Offer Materials may be directed to MacKenzie Partners at (800) 322-2885 (toll-free), (212) 929-5500 (collect) or via email at tenderoffer@mackenziepartners.com.

The Offeror is making the Tender Offers only by, and pursuant to, the terms of the Tender Offer Materials. None of the Offeror, the Dealer Manager or the Information and Tender Agent make any recommendation as to whether holders of the Notes should tender or refrain from tendering their Notes. Holders must make their own decision as to whether to tender Notes and, if so, the principal amount of the Notes to tender. The Tender Offers are not being made to holders of Notes in any jurisdiction in which the making or acceptance thereof would not be in compliance with the securities, blue sky or other laws of such jurisdiction. In any jurisdiction in which the securities laws or blue sky laws require the Tender Offers to be made by a licensed broker or dealer, the Tender Offers will be deemed to be made on behalf of the Offeror by the Dealer Manager, or one or more registered brokers or dealers that are licensed under the laws of such jurisdiction.

This press release does not constitute an offer to purchase securities or a solicitation of an offer to sell any securities or an offer to sell or the solicitation of an offer to purchase any new securities, nor does it constitute an offer or solicitation in any jurisdiction in which such offer or solicitation is unlawful. Capitalized terms used in this press release but not otherwise defined herein have the meanings assigned to them in the Tender Offer Materials.

About EIG and Harbour Energy

Harbour Energy is an energy investment vehicle formed by EIG Global Energy Partners (“EIG”) and the Noble Group to pursue control and near control investments in high-quality upstream and midstream energy assets globally. Harbour Energy is externally managed by EIG. EIG specializes in private investments in energy and energy-related infrastructure on a global basis and had $14.3 billion under management as of September 30, 2015. During its 33-year history, EIG has invested $21.4 billion in the sector through more than 300 projects or companies in 35 countries on six continents. For more information, please visit www.harbourenergy.com.

Media:
Sard Verbinnen & Co
Dan Gagnier / Brandon Messina
212-687-8080


Source: Business Wire (January 13, 2016 - 11:50 PM EST)

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