Filer granted permission from the Director, pursuant to s. 38(3) of the Securities Act (Ontario), to make listing representations in its Information Circular to the effect that the filer intends to make application to the Toronto Stock Exchange, the TSXV, or such other designated offshore securities market, for its Common Shares to be admitted for listing and trading.
Securities Act, R.S.O. 1990, c. S.5, as am., s. 38(3).
July 5, 2016
Attention: Mr. Bruce Sheiner
Re: Pacific Exploration & Production Corporation
Application for Permission to Make a Listing Representation
Further to your letter submitted on behalf of Pacific Exploration & Production Corporation (the Corporation) dated June 17, 2016 (the Application), we understand that:
1. The Corporation is incorporated in the province of British Columbia under the Business Corporations Act (British Columbia) with corporation number BC0989606.
2. The common shares of the Corporation were listed on the Toronto Stock Exchange (TSX) under stock symbol PRE until May 25, 2016, on which date the common shares were delisted. The Corporation remains listed on the Colombia stock exchange (La Bolsa de Valores de Colombia) under the stock symbol PREC.
3. The Corporation is a reporting issuer in British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Quebec, New Brunswick, Nova Scotia, Prince Edward Island and Newfoundland (collectively, the Reporting Jurisdictions).
4. The Corporation is undertaking a restructuring transaction pursuant to a proceeding under the Companies' Creditors Arrangement Act (the CCAA), together with the proceedings in Columbia under Ley 1116 of 2006 and in the United States under chapter 15 of title 11 of the United States Code.
5. The proposed plan of compromise and arrangement (the Plan) will include the following general steps:
(a) U.S.$250 million principal amount of debtor-in-possession (DIP) financing will be exchanged for approximately 29.3% of the common shares of the reorganized Corporation;
(b) Warrants issued as part of the DIP financing will be exercised into approximately 12.5% of the common shares of the reorganized Corporation; and
(c) The claims of certain affected creditors (the Affected Creditors) in respect of approximately U.S.$4.1 billion under certain of the Corporation's notes, approximately U.S.$1.2 billion under certain of the Corporation's credit facilities, as well as the claims of certain other Affected Creditors, will be settled in exchange for approximately 58.2% of the common shares of the reorganized Corporation.
6. A meeting of Affected Creditors of the Corporation is expected to be held at the end of July 2016 to present a resolution to approve the Plan.
7. In connection with the proposed recapitalization and financial transaction announced by the Corporation on April 19, 2016 (the Restructuring Transaction), it is expected that Affected Creditors will be provided with an information circular and proxy statement (the Circular) describing the Restructuring Transaction.
8. The Circular will contain representations identical or substantially similar to the following (the Listing Representations):
(a) "In connection with the Plan, the Corporation has agreed to cause its common shares to be publicly listed and available for trading on the TSX, TSX-V or such other Designated Offshore Securities Market as is acceptable to the Corporation, the Plan Sponsor and certain other participants in the Plan";
(b) "The conditions to the Plan being effective include the following ... The Consolidation Common Shares shall have been conditionally approved for listing on the TSX, the TSX-V or such other Designated Offshore Securities Market acceptable to the Requisite Consenting Creditors without any vote or approval of the Existing Shareholders, subject only to receipt of customary final documentation";
(c) "It is a condition to implementation of the Plan that the New Common Shares shall have been conditionally approved for listing on the TSX, the TSX-V or such other Designated Offshore Securities Market acceptable to the Majority Consenting Creditors"; and
(d) "The Corporation has agreed with the DIP Note Purchasers that it shall cause the New Common Shares to be publicly listed and available for trading on the TSX or, if such listing is not available as a consequence of listing requirements, on the TSX-V, provided that if neither such listing is available to the Corporation following the Restructuring as a consequence of the listing requirements of such exchanges, on such other Designated Offshore Securities Market as is acceptable to the Corporation, the Requisite Consenting Creditors and the Plan Sponsor (having regard to the listing requirements of the other stock exchanges and the liquidity provided thereby".
9. While discussions have commenced with the TSX regarding relisting the Corporation's common shares on the TSX, no approval has yet been received for such listing, conditional or otherwise, nor has the TSX consented to, or indicated that they do not object to, the Listing Representations.
10. Owing to the delisting from the TSX on May 25, 2016, the Corporation can no longer rely on subsection 38(3)(a) of the Securities Act (Ontario) (the Act) to make the Listing Representations and must instead make this application.
11. The Corporation seeks permission to include the Listing Representations in the Circular to be provided and made available to Affected Creditors in the Reporting Jurisdictions.
Based upon the representations above and the representations contained in your Application, permission is hereby granted pursuant to subsection 38(3) of the Act to include the Listing Representations in the Circular.
Yours very truly,