Ad Hoc Committee of Pacific Noteholders Comments on EIG Tender Offer

TORONTO, Jan. 21, 2016 /CNW/ - As announced on January 15, 2016, the Ad Hoc Committee of Pacific Exploration Noteholders consists of holders of the 5.625% notes due January 19, 2025 (the "5.625% Notes"), the 5.375% notes due January 26, 2019 (the "5.375% Notes"), the 5.125% notes due March 28, 2023 and the 7.25% notes due December 21, 2021 (collectively, the "Notes") issued by Pacific Exploration & Production Corp. (TSX: PRE) (BVC: PREC) (the "Company"). The Ad Hoc Committee holds in the aggregate approximately 40% of the approximately US$4.1 billion principal outstanding amount of the Notes, and is in regular contact with holders of a significant additional amount of the Notes. The Ad Hoc Committee was formed in response to the Company's announcement on January 14, 2016 regarding its election to utilize the 30 day grace period under the indentures governing the 5.625% Notes and the 5.375% Notes rather than making the interest payments due on January 19, 2016 and January 26, 2016 in respect of those Notes, and other matters, including (i) the tender offer for the Notes first announced on January 13, 2015 (the "EIG Tender Offer") by EIG Pacific Holdings Ltd. ( "EIG") and (ii) more generally, to dialogue with the Company and its advisors, and the Company's other stakeholders and their advisors, regarding the exploration and development of consensual solutions to the Company's current financial circumstances.

The Ad Hoc Committee has reviewed the terms of the EIG Tender Offer and, without commenting on the adequacy of the tender offer price, has the following key concerns regarding the EIG Tender Offer:

• Highly Conditional Offer: While EIG is offering between US$125 and US$175 per US$1,000 plus accrued interest, there is no certainty as to when or if any such amounts will be paid. As a result of multiple other terms of the offer, the offer is highly conditional and can be amended, modified and/or terminated in the sole discretion of EIG. EIG is under no obligation to accept any tendered Notes and there is no guarantee that EIG will complete the offer. The offer is contingent on, among other things, (i) agreement by the Company's bank lenders to new debt financing arrangements, which are not described and (ii) EIG obtaining Power of Attorney rights over 80% of the aggregate principal amount of the Notes, which condition cannot be met without participation by Ad Hoc Committee members.
  
  
• Lack of Information: The EIG Tender Offer has been structured to require holders to quickly tender their Notes and submit powers of attorney to preserve favourable treatment under EIG's proposed reorganization plan and before holders have received full details on EIG's intentions for the Company and the implications or feasibility of its proposed reorganization plan. Noteholders have only been given until January 27, 2016 to take advantage of the early tender premium while being told that if they fail to tender at all they risk being treated substantially less favourably under EIG's proposed reorganization plan than holders who tender.
  
  
• Tendering Holders May Lose Control of their Investment for an Extended Period of Time: Holders who tender to the offer may be forced to wait for an extended period of time before receiving consideration for their Notes, if any, and will not have the ability to withdraw or trade tendered notes following the January 27, 2016 withdrawal deadline. One of the many conditions to the offer is the completion of an EIG-sponsored reorganization plan for the Company. The proposed EIG reorganization plan is itself also subject to a number of conditions, including agreement by the Company's bank lenders to certain bank financing arrangements, which are not described, and the completion of a court process. Corporate reorganizations similar to EIG's proposed reorganization plan are often lengthy and can have uncertain timelines, particularly if there is a lack of stakeholder support for the proposed plan. Tendering holders will have no control over their investment or input on any reorganization during this process, nor will they receive any consideration for giving up this control for a potentially extended period of time.

For these reasons, the Ad Hoc Committee has significant concerns with the current structure and terms of the EIG Tender Offer. The Ad Hoc Committee intends to engage in discussions with EIG (and other interested parties) regarding their overall interest in the Company, in light of the Ad Hoc Committee's objective of considering any and all available overall solutions to the Company's current financial circumstances.

This announcement is being made for information purposes only, and is not intended to be, and does not constitute, and must not be taken as, legal or financial advice of any kind or the basis for a tender decision or any investment activity of any kind. Noteholders are encouraged to seek their own professional advice.

SOURCE Goodmans

Goodmans LLP