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.
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