Court File No.: CV-16-11363-00CL COMPANIES' CREDITORS ARRANGEMENT ACT, ONTARIO

Court File No.: CV-16-11363-00CL
ONTARIO
SUPERIOR COURT OF JUSTICE
COMMERCIAL LIST
IN THE MATTER OF THE COMPANIES' CREDITORS ARRANGEMENT ACT,
R.S.C. 1985, c. C-36, AS AMENDED
AND IN THE MATTER OF A PLAN OF COMPROMISE OR ARRANGEMENT OF
PACIFIC EXPLORATION & PRODUCTION CORPORATION, PACIFIC E&P
HOLDINGS CORP., META PETROLEUM CORP., PACIFIC STRATUS
INTERNATIONAL ENERGY LTD., PACIFIC STRATUS ENERGY COLOMBIA
CORP., PACIFIC STRATUS ENERGY S.A., PACIFIC OFF SHORE PERU
S.R.L., PACIFIC RUBIALES GUATEMALA S.A., PACIFIC GUATEMALA
ENERGY CORP., PRE-PSIE COOPERATIEF U.A., PETROMINERALES
COLOMBIA CORP. AND GRUPO C&C ENERGIA (BARBADOS) LTD.
Applicants
APPLICATION RECORD
(Initial Order)
(Returnable April 27, 2016)
April 27, 2016
NORTON ROSE FULBRIGHT CANADA LLP
Royal Bank Plaza, South Tower, Suite 3800
200 Bay Street, P.O. Box 84
Toronto, Ontario M5J 2Z4 CANADA
Tony Reyes LSUC #28218V
Tel: 416.216.4825
tony.reyesnortonrosefulbright.com
Orestes Pasparakis LSUC #36851T
Tel: 416.216.4815
orestes.pasparakisnortonrosefulbright.corn
Virginie Gauthier LSUC #41097D
Tel: 416.216.4853
virginie.qauthiernortonrosefulbright.com
Fax: 416.216.3930
Lawyers for the Applicants
CAN_DMS: \65396467\2
Court File No.: CV-16-11363-00CL
ONTARIO
SUPERIOR COURT OF JUSTICE
COMMERCIAL LIST
IN THE MATTER OF THE COMPANIES' CREDITORS ARRANGEMENT ACT,
R.S.C. 1985, c. C-36, AS AMENDED
AND IN THE MATTER OF A PLAN OF COMPROMISE OR ARRANGEMENT OF
PACIFIC EXPLORATION & PRODUCTION CORPORATION, PACIFIC E&P
HOLDINGS CORP., META PETROLEUM CORP., PACIFIC STRATUS
INTERNATIONAL ENERGY LTD., PACIFIC STRATUS ENERGY COLOMBIA
CORP., PACIFIC STRATUS ENERGY S.A., PACIFIC OFF SHORE PERU
S.R.L., PACIFIC RUBIALES GUATEMALA S.A., PACIFIC GUATEMALA
ENERGY CORP., PRE-PSIE COOPERATIEF U.A., PETROMINERALES
COLOMBIA CORP. AND GRUPO C&C ENERGIA (BARBADOS) LTD.
Applicants
INDEX
Document:
Tab:
Notice of Application dated April 25, 2016
4
Page No.:
1
Affidavit of Peter Volk sworn April 27, 2016 without Exhibits
15
Supplementary Affidavit of Peter Volk sworn April 27, 2016
without Exhibits
79
Draft form of Initial Order
92
Blackline of Model Order to Initial Order
117
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TAB 1
Court File No :
ONTARIO
SUPERIOR COURT OF JUSTICE
COMMERCIAL LIST
IN THE MATTER OF THE COMPANIES' CREDITORS ARRANGEMENT ACT,
R.S.C. 1985, c. C-36, AS AMENDED
AND IN THE MATTER OF A PLAN OF COMPROMISE OR ARRANGEMENT OF
PACIFIC EXPLORATION & PRODUCTION CORPORATION, PACIFIC E&P
HOLDINGS CORP., META PETROLEUM CORP., PACIFIC STRATUS
INTERNATIONAL ENERGY LTD., PACIFIC STRATUS ENERGY COLOMBIA
CORP., PACIFIC STRATUS ENERGY S.A., PACIFIC OFF SHORE PERU
S.R.L., PACIFIC RUBIALES GUATEMALA S.A., PACIFIC GUATEMALA
ENERGY CORP., PRE-PSIS COOPERATIEF U.A., PETROMINERALES
COLOMBIA CORP. AND GRUPO C&C ENERGIA (BARBADOS) LTD.
Applicants
NOTICE OF APPLICATION
TO THE RESPONDENT:
A LEGAL PROCEEDING HAS BEEN COMMENCED by the Applicants. The claim
made by the Applicants appears on the following page.
THIS APPLICATION will come on for a hearing before a judge presiding over the
Commercial List at 330 University Avenue, Toronto, Ontario on Wednesday, April 27, 2015, at
10:00 am or as soon after that time as the matter can be heard.
IF YOU WISH TO OPPOSE THIS APPLICATION, to receive notice of any step in the
application or to be served with any documents in the application, you or an Ontario lawyer
acting for you must forthwith prepare a notice of appearance in Form 38A prescribed by the
Rules of Civil Procedure, serve it on the Applicants' lawyer or, where the Applicants do not have
a lawyer, serve it on the Applicants, and file it, with proof of service, in this court office, and you
or your lawyer must appear at the hearing.
IF YOU WISH TO PRESENT AFFIDAVIT OR OTHER DOCUMENTARY EVIDENCE TO
THE COURT OR TO EXAMINE OR CROSS-EXAMINE WITNESSES ON THE APPLICATION,
you or your lawyer must, in addition to serving your notice of appearance, serve a copy of the
evidence on the Applicants' lawyer or, where the applicants do not have a lawyer, serve it on
the applicants, and file it, with proof of service, in the court office where the application is to be
heard as soon as possible, but at least four days before the hearing.
IF YOU FAIL TO APPEAR AT THE HEARING, JUDGMENT MAY BE GIVEN IN YOUR
ABSENCE AND WITHOUT FURTHER NOTICE TO YOU. IF YOU WISH TO OPPOSE THIS
1
CAN DMS: \65398871\3
APPLICATION BUT ARE UNABLE TO PAY LEGAL FEES, LEGAL AID MAY BE AVAILABLE
TO YOU BY CONTACTING A LOCAL LEGAL AID OFFICE. „
V\
Issued by
Date: April 25, 2016
"C• 41,.edgi registrar
Registrar
TO:
THE SERVICE LIST
Address of 330 University Avenue,
court office Toronto, Ontario
ti; it'S(i I a 1-
-2CAN DMS: 165398871\3
3
APPLICATION
1
The Applicants, Pacific Exploration & Production Corporation ("Pacific"), Pacific E&P
Holdings Corp., Meta Petroleum Corp., Pacific Stratus International Energy Ltd. ("PSIE"), Pacific
Stratus Energy Colombia Corp., Pacific Stratus Energy S.A., Pacific Off Shore Peru S.R.L.,
Pacific Rubiales Guatemala S.A., Pacific Guatemala Energy Corp., PRE-PSIE Cooperatief U.A.
and Petrominerales Colombia Corp., make application for:
(a)
an Initial Order substantially in the form attached to the Application Record (the
"Initial Order"), among other things:
declaring that the Applicants are parties to which the Companies'
Creditors Arrangement Act, R.S.C. 1985, c. C-36, as amended, (the
"CCAA") applies;
(ii)
appointing PricewatershouseCoopers Inc. as the Monitor of the
Applicants (the "Monitor");
(iii)
staying all proceedings and remedies taken or that might be taken in
respect of the Applicants, their business or property, and any of their
former, current or future directors or officers, or the Monitor;
(iv)
authorizing the Applicants to file with this Court a plan of compromise or
arrangement, subject to the terms of the Initial Order;
(v)
authorizing debtor-in-possession borrowings totalling U.S.$634,000,000
(the "Interim Financing"), including a letter of credit facility in the amount
of U.S.$134,000,000;
(vi)
approving a key employee retention plan (the "KERP");
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LI
(vii)
approving the engagement letters of four financial advisors, including the
financial advisors to the Applicants, the financial advisors to the
independent committee of the board of directors of the Applicant Pacific,
the financial advisors for an ad hoc committee of noteholders, and the
financial advisors for a steering committee of bank creditors (collectively,
the "Financial Advisors");
(viii)
granting charges (collectively, the "Charges") over the Applicants' assets,
property and undertaking with respect to (I) the fees of professionals
engaged in the restructuring of the Applicants, including the Financial
Advisors, other professionals providing services to creditors of the
Applicants (but being compensated by the Applicants), the proposed
Monitor, and the proposed Monitor's counsel, (ii) parties providing the
Interim Financing, (iii) the KERP; and (iv) directors' and officers'
indemnification;
(ix)
postponing the annual general meeting of the shareholders of Pacific; and
(x)
sealing the confidential exhibits to the Affidavit of Peter Volk sworn April
27, 2016 and the Supplementary Affidavit of Peter Volk sworn April 27,
2016 ; and
(b)
such further and other relief as this Honourable Court may deem just, including
anticipated relief with respect to the conduct of a claims process, the meetings of
creditors, the approval of a Plan, and other such other matters as may arise in
this CCAA proceeding.
2
The grounds for the application are:
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5
The Applicants are parties to which the CCAA applies
(a)
Pacific and the other Applicants are affiliated corporations and face claims well in
excess of CAD$5,000,000;
(b)
Pacific's and PS1E's head and principal offices are in Toronto, Ontario and, in the
case of the other Applicants who do not have a place of business in Canada,
each maintains a bank account here in Toronto with a minimum of $1000 in
funds;
(c)
The Applicants are each insolvent;
Stay of Proceedings
(d)
The stay of proceedings in favour of the Applicants is necessary to provide a
structured and stable environment for the Applicants and their stakeholders to
work constructively to implement a restructuring and recapitalization transaction
(the "Recapitalization") and maximize value;
(e)
Without the relief sought in the proposed Initial Order, various creditors would be
in a position to take enforcement steps for certain defaults that would ultimately
lead to a disorderly shutdown and liquidation of the Applicants;
Interim Financing
(f)
The Applicants require immediate access to interim financing under the DIP
Notes in order to (a) maintain operating cash; (b) fund the costs of their
operations and their restructuring, including these proceedings; and (c) pursue
and implement the Recapitalization;
Key Employee Retention Plan
5
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6
(g)
The Applicants have identified key employees who are particularly crucial to the
restructuring and the current sale effort;
(h)
The Applicants have developed the KERP as a retention plan for the key
employees;
(i)
In the circumstances, there is a strong possibility that certain critical employees
would consider other employment options without the benefit of retention
compensation;
Approval of the Engagement Letters of the Financial Advisors
(j)
The Financial Advisors have been integral to the Solicitation Process, as defined
in the Initial Order, and have worked together to make the Recapitalization
possible, with the support of the Applicants and a majority of the Applicants' main
creditors (represented by an Ad Hoc Committee of noteholders (the "Ad Hoc
Committee") and a steering committee for a group of bank creditors (the
"Steering Committee");
(k)
Indeed, the Financial Advisors provide advice to each of these groups, including
the Applicants, the independent committee of the board of directors of Pacific,
the Ad Hoc Committee and the Steering Committee;
(I)
Since a substantial part of the fees of the Financial Advisors is payable upon the
successful implementation of a restructuring transaction such as the
Recapitalization, the Financial Advisors have requested that their engagement
letters be approved;
(m)
This relief is supported by the Applicants, the Ad Hoc Committee, the Steering
Committee, and the Monitor;
6
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7
Charges
(n)
No secured creditors will be affected by the Charges;
(o)
The Applicants believe that the granting of the Charges is necessary for the
reasons set out in the Affidavit of Peter Volk to be filed in support of this
Application, filed;
The proposed Monitor supports the granting of the Charges, as do the Ad Hoc
(p)
Committee and the Steering Committee;
Postponement of the Annual General Meeting of Shareholders
The annual general meeting of the shareholders of Pacific must be held by
(q)
August 28, 2016;
(r)
In view of the fundamental changes contemplated by the Recapitalization, and
any Plan based on the Recapitalization, there is little sense in proceeding with a
shareholders' meeting at this time, and calling and holding such a meeting would
consume valuable financial and human resources that the Applicants cannot
spare at this time;
Sealing
(s)
The information subject to the sealing request is commercially sensitive
information, and in some cases private personal information, which if disclosed
would be detrimental to the ability to compete for future engagements and to the
key employees generally;
(t)
The sealing order will not prejudice stakeholders;
7
CAN_DMS: \65398871 \ 3
Proposed Monitor
(u)
PWC has consented to act as the Court-appointed Monitor of the Applicants,
subject to Court approval;
(v)
PWC is not subject to any of the restrictions on who may be appointed as
monitor set out in section 11.7(2) of the CCAA;
General
(w)
The consent of the Ad Hoc Committee, the Steering Committee, and the Monitor,
to all of the relief sought in the Initial Order;
(x)
The provisions of the CCAA and the equitable jurisdiction of this Honourable
Court; and
(y)
Such further and other grounds as counsel may advise and this Honourable
Court may permit.
3
The following documentary evidence will be used at the hearing of the application:
(a)
The affidavit of Peter Volk to be sworn on April 27, 2016 and to be filed in support
of this Application, and the Exhibits attached thereto;
(b)
The supplementary affidavit of Peter Volk to be sworn on April 27, 2016 and to
be filed in support of this Application, and the Exhibits attached thereto;
(c)
The Pre-Filing Report of PWC, as proposed Monitor, to be signed April 27, 2016
and to be filed in support of this Application; and
(d)
Such further and other material as counsel may advise and this Honourable
Court will permit
-8-
CAN_DMS: \65398871
April 25, 2016
NORTON ROSE FULBRIGHT CANADA LLP
Royal Bank Plaza, South Tower, Suite 3800
200 Bay Street, P.O. Box 84
Toronto, Ontario M5J 2Z4 CANADA
Tony Reyes LSUC #28218V
Tel: 416.216.4825
tony.revesanortonrosefulbright.corn
Orestes Pasparakis LSUC #36851T
Tel: 416.216.4815
orestes.pasparakisnortonrosefulbricht.com
Virginie Gauthier LSUC #410970
Tel: 416.216.4853
vircinie.qauthiernortonrosefulbriqht.com
Fax: 416.216.3930
Lawyers for the Applicants
9
CAN_DMS: \65398871\3
0
Court File No.: CV-16-11363-00CL
ONTARIO
SUPERIOR COURT OF JUSTICE
COMMERCIAL LIST
IN THE MATTER OF THE COMPANIES' CREDITORS ARRANGEMENT ACT,
R.S.C. 1985, c. C-36, AS AMENDED
AND IN THE MATTER OF A PLAN OF COMPROMISE OR ARRANGEMENT OF
PACIFIC EXPLORATION & PRODUCTION CORPORATION, PACIFIC E&P
HOLDINGS CORP., META PETROLEUM CORP., PACIFIC STRATUS
INTERNATIONAL ENERGY LTD., PACIFIC STRATUS ENERGY COLOMBIA
CORP., PACIFIC STRATUS ENERGY S.A., PACIFIC OFF SHORE PERU
S.R.L., PACIFIC RUBIALES GUATEMALA S.A., PACIFIC GUATEMALA
ENERGY CORP., PRE-PSIE COOPERATIEF U.A., PETROMINERALES
COLOMBIA CORP. AND GRUPO C&C ENERGIA (BARBADOS) LTD.
Applicants
SERVICE LIST
(as of April 25, 2016)
Tony Reyes
Tel: 416.216.4825
E-mail: [email protected]
NORTON ROSE FULBRIGHT CANADA LLP
200 Bay St., Suite 3800
Royal Bank Plaza, South Tower
Toronto, ON M5J 2Z4
Canada
Virginie Gauthier
Tel: 416.216.4853
E-mail: [email protected]
Lawyers for the Applicants
Orestes Pasparakis
Tel: 416.216.4815
E-mail:
[email protected]
Evan Cobb
Tel: 416.216.1929
E-mail: [email protected]
Alexander Schmitt
Tel: 416.216.2419
E-mail:
[email protected]
CAN_DMS: \102227183\5
1
1 1
Martin J. Bienenstock
Tel: 212.969.4530
E-mail: [email protected]
PROSKAUER ROSE LLP
Eleven Times Square
New York, NY 10036
United States of America
Geoffrey T. Raicht
Tel: 212.969.3165
E-mail: [email protected]
U.S. Lawyers for the Applicants
Judy G.Z. Liu
Tel: 212.969.4512
E-mail: [email protected]
Robert I. Thornton
Tel: 416.304.0560
E-mail: rthornton@tgfca
THORNTON GROUT FINNIGAN LLP
Suite 3200, 100 Wellington Street West
P. 0. Box 329, Toronto-Dominion Centre
Toronto, ON M5K 1K7
Canada
Rebecca Kennedy
Tel: 416.304.0603
E-mail: rkennedy@tgfca
Lawyers for the Proposed Monitor
Asim lqbal
Tel: 416.304.0595
E-mail: [email protected]
John L. Finnigan
Tel: 416.304.0558
E-mail: jfinnigan@tgf. ca
Greg Prince
Tel: 416.814.5752
E-mail: [email protected]
PRICEWATERHOUSECOOPERS INC.
PwC Tower
18 York Street, Suite 2600
Toronto, ON M5J OB2
Canada
Mica Arlette
Tel: 416.814.5834
E-mail: [email protected]
Proposed Monitor
Tracey Weaver
Tel: 416.814.5735
E-mail: [email protected]
Marc Wasserman
Tel: 416.862.4908
E-mail: [email protected]
OSLER, HOSKIN & HARCOURT LLP
100 King Street West
1 First Canadian Place
Suite 6200, P.O. Box 50
Toronto, ON M5X 1B8
Canada
Mark Trachuk
Tel: 416.862.4749
E-mail: [email protected]
Lawyers for the Independent Committee of the
Board of Directors of Pacific Exploration &
Production Corporation, an Applicant
CANDMS: \102227183\5
Jeremy Dacks
Tel: 416.862.4923
E-mail: [email protected]
2
1
Jeffrey Carhart
Tel: 416.595.8615
E-mail: [email protected]
MILLER THOMSON LLP
Scotia Plaza
40 King Street West, Suite 5800
Toronto, ON M5H 3S1
Canada
Lawyers for Lazard Freres & Co. LLC
Steven J. Reisman
Tel: 212.696.6065
E-mail: [email protected]
CURTIS, MALLET-PREVOST, COLT & MOSLE
LLP
101 Park Avenue
New York, NY 10178-0061
United States of America
Theresa Foudy
Tel: 212.696.8860
E-mail: [email protected]
U.S. Lawyers for Lazard Freres & Co. LLC
Brendan O'Neill
Tel: 416.849.6017
E-mail: [email protected]
GOODMANS LLP
Bay Adelaide Centre
333 Bay Street, Suite 3400
Toronto, ON M5H 2S7
Canada
Celia Rhea
Tel: 416.597.4178
E-mail: [email protected]
Lawyers for the Ad Hoc Committee and certain
of the DIP Note Purchasers
Ryan Baulke
Tel: 416.597.6954
E-mail: [email protected]
Dan Dedic
Tel: 416.597.4232
E-mail: [email protected]
Alan W. Kornberg
Tel: 212.373.3209
E-mail: [email protected]
PAUL, WEISS, RIFKIND, WHARTON &
GARRISON LLP
1285 Avenue of the Americas
New York, NY 10019
United States of America
Jacob A. Adlerstein
Tel: 212.373.3142
E-mail: [email protected]
U.S. Lawyers for the Ad Hoc Committee and
certain of the DIP Note Purchasers
CAN DMS: \102227183\5
Ann K. Young
Tel: 212.373.3234
E-mail: [email protected]
3
2
13
Scott Bomhof
TORYS LLP
79 Wellington St. W. 30th Floor
Box 270, TD South Tower
Toronto, Ontario M5K 1N2
Canada
Tel: 416.865.7370
E-mail: [email protected]
Lawyers for Steering Committee for the Bank
Lenders
Damian Schaible
DAVIS POLK & WARDWELL LLP
450 Lexington Avenue
New York, NY 10017
United States of America
Tel: 212.450.4580
E-mail: [email protected]
Angela M. Libby
Tel: 212.450.4433
E-mail: [email protected]
U.S. Lawyers for the Steering Committee for the
Bank Lenders
Andrew J.F. Kent
MCMILLAN LLP
Brookfield Place
Suite 4400, 181 Bay Street
Toronto, ON M5J 2T3
Canada
Tel: 416.865.7160
E-mail: [email protected]
Caitlin Fell
Tel: 416.865.7841
E-mail: [email protected]
Lawyers for Catalyst Capital Group Inc.
Jeffrey L. Jonas
BROWN RUDNICK LLP
7 Times Square
New York, NY 10036
United States of America
Tel: 212.209.4800
E-mail: [email protected]
Brian T. Rice
Tel: 617.856.8200
E-mail: [email protected]
U.S. Lawyers for Catalyst Capital Group Inc.
Roger Jaipargas
BORDEN LADNER GERVAIS LLP
Scotia Plaza
40 King Street West, 44th Floor
Toronto, ON M5H 3Y4
Canada
Tel: 416.367.6266
E-mail: [email protected]
Lawyers for International Finance Corporation
Bruce Darlington
DLA PIPER (CANADA) LLP
Suite 6000, 1 First Canadian Place
P.O. Box 367, 100 King Street West
Toronto, ON M5X 1E2
Canada
Tel: 416.365.3529
E-mail: [email protected]
Susan Friedman
Tel: 416.365.3503
E-mail: [email protected]
Lawyers for The Bank of New York Mellon as
Trustee, Security Registrar and Paying Agent
under the series of Indentures issued by the
subject company
CAN_DMS: \102227183\5
Mary Buttery
Tel: 604.643.6478
E-mail: mary.buttery@dlapipercom
4
IN THE MATTER OF THE COMPANIES' CREDITORS ARRANGEMENT ACT, R.S.C. 1985,
c. C-36, AS AMENDED
Court File No.:
AND IN THE MATTER OF A PLAN OF COMPROMISE OR ARRANGEMENT OF PACIFIC
EXPLORATION & PRODUCTION CORPORATION, PACIFIC E&P HOLDINGS CORP., META
PETROLEUM CORP., PACIFIC STRATUS INTERNATIONAL ENERGY LTD., PACIFIC
STRATUS ENERGY COLOMBIA CORP., PACIFIC STRATUS ENERGY S.A., PACIFIC OFF
SHORE PERU S.R.L., PACIFIC RUBIALES GUATEMALA S.A., PACIFIC GUATEMALA
ENERGY CORP., PRE-PSIE COOPERATIEF U.A., PETROMINERALES COLOMBIA CORP.
AND GRUPO C&C ENERGIA (BARBADOS) LTD.
Applicants
ONTARIO
SUPERIOR COURT OF JUSTICE
COMMERCIAL LIST
Proceeding commenced at Toronto
NOTICE OF APPLICATION
NORTON ROSE FULBRIGHT CANADA LLP
Royal Bank Plaza, South Tower, Suite 3800
200 Bay Street, P.O. Box 84
Toronto, Ontario M5J 2Z4 CANADA
Tony Reyes LSUC #28218V
Tel: 416.216.4825
tony.revesnortonrosefulbright.com
Orestes Pasparakis LSUC #36851T
Tel: 416.216.4815
orestes.pasparakisnortonrosefulbrioht.com
Virginie Gauthier LSUC #41097D
Tel: 416.216.4853
virginie.gauthiernortonrosefulbrioht.com
Lawyers for the Applicants
CAN_DMS: 165398871 \ 3
TAB 2
15
Court File No.: CV-16-11363-000L
ONTARIO
SUPERIOR COURT OF JUSTICE
COMMERCIAL LIST
IN THE MATTER OF THE COMPANIES' CREDITORS ARRANGEMENT ACT, R.S.C.
1985, c. C-36, AS AMENDED
AND IN THE MATTER OF A PLAN OF COMPROMISE OR ARRANGEMENT OF
PACIFIC EXPLORATION & PRODUCTION CORPORATION, PACIFIC E&P
HOLDINGS CORP., META PETROLEUM CORP., PACIFIC STRATUS
INTERNATIONAL ENERGY LTD., PACIFIC STRATUS ENERGY COLOMBIA CORP.,
PACIFIC STRATUS ENERGY S.A., PACIFIC OFF SHORE PERU S.R.L., PACIFIC
RUBIALES GUATEMALA S.A., PACIFIC GUATEMALA ENERGY CORP., PRE-PSIE
COOPERATIEF U.A., PETROMINERALES COLOMBIA CORP. AND GRUPO C&C
ENERGIA (BARBADOS) LTD.
Applicants
AFFIDAVIT OF PETER VOLK
(Sworn April 27, 2016)
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16
TABLE OF CONTENTS
INTRODUCTION
I.
1
A.
Procedural Overview
1
B.
Collapse of Oil and Gas Prices & Need for Restructuring under the CCAA
3
CORPORATE STRUCTURES OF THE APPLICANTS AND PACIFIC GROUP
II.
6
A.
Pacific
6
B.
The Guarantors & Grupo C&C
8
C.
Grupo C&C
III.
BUSINESSES AND OPERATIONS
10
11
A.
The Pacific Group's Businesses and Operations
11
B.
The Pacific Group's Employees
16
C.
Cash Management and Inter-Company Financing Arrangements
16
IV.
THE LONG-TERM DEBT
19
A.
The Notes
19
B.
Credit Facilities
21
PACIFIC GROUP CONSOLIDATED FINANCIAL STATEMENTS
V.
23
A.
Assets
24
B.
Liabilities
25
C.
Letters of Credit
26
VI.
THE PACIFIC GROUP'S LIQUIDITY CONCERNS
27
VII. RESTRUCTURING EFFORTS IN 2015
28
VIII. RESTRUCTURING EFFORTS in 2016 TO DATE
30
IX.
FORMAL SALES AND INVESTMENT SOLICITATION PROCESS
33
A.
First Phase of the Sales and Investment Solicitation Process
34
B.
Second Phase of the Solicitation Process
35
C.
Meetings between Noteholders, Banks and Bidders
37
D.
Selection of a Bid
39
The PROPOSED FINANCING AND REORGANIZATION
X.
42
A.
Overview of the Proposed Financing and Reorganization
42
B.
Review of the Recapitalization by the Board and Independent Committee
45
C.
Stakeholder Support
46
XI.
THE NEED FOR CCAA RELIEF
XII. REQUESTED RELIEF UNDER THE INITIAL ORDER
A.
Administration Charge
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48
49
49
17
B.
The DIP Charges
50
C.
Directors' and Officers' Charge
54
D.
Key Employee Retention Plan and Charge
55
E.
Charge in Favour of Catalyst as Plan Sponsor
Error! Bookmark not defined.
F.
Proposed Ranking of Court Ordered Charges
55
G.
Approval of Financial Advisor Engagements
56
H.
Postponement of Annual General Meeting
57
I.
Proposed Monitor
58
J.
Coordinated Proceedings
58
XIII.
CASH FLOW FORECAST
58
XIV. CONCLUSION
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59
is)
Court File No.: CV-16-11363-00CL
ONTARIO
SUPERIOR COURT OF JUSTICE
COMMERCIAL LIST
IN THE MATTER OF THE COMPANIES' CREDITORS ARRANGEMENT ACT, R.S.C. 1985, c.
C-36, AS AMENDED
AND IN THE MATTER OF A PLAN OF COMPROMISE OR ARRANGEMENT OF PACIFIC
EXPLORATION & PRODUCTION CORPORATION, PACIFIC E&P HOLDINGS CORP., META
PETROLEUM CORP., PACIFIC STRATUS INTERNATIONAL ENERGY LTD., PACIFIC
STRATUS ENERGY COLOMBIA CORP., PACIFIC STRATUS ENERGY S.A., PACIFIC OFF
SHORE PERU S.R.L., PACIFIC RUBIALES GUATEMALA S.A., PACIFIC GUATEMALA
ENERGY CORP., PRE-PSIE COOPERATIEF U.A., PETROMINERALES COLOMBIA CORP.
AND GRUPO C&C ENERGIA (BARBADOS) LTD.
Applicants
AFFIDAVIT OF PETER VOLK
(Sworn April 27, 2016)
I, Peter Volk, of the city of Toronto, in the Province of Ontario, MAKE OATH AND SAY:
1
I am the General Counsel of Pacific Exploration & Production Corporation (formerly known as
Pacific Rubiales Energy Corp.) ("Pacific"). I have held that position since February, 2008. As
such, I have personal knowledge of the matters to which I hereinafter depose, except where
otherwise stated, and where so stated I believe that information to be true.
2
All references to dollars or $ herein are to U.S. dollars.
I.
INTRODUCTION
A.
3
Procedural Overview
Pacific is a corporation amalgamated under the British Columbia Business Corporations Act and
is the direct or indirect parent of over 100 subsidiaries and Colombian branches, including the
other Applicants in this proceeding: Pacific E&P Holdings Corp. (formerly known as Rubiales
Holdings Corp.) ("Pacific Holdings"), Meta Petroleum Corp. ("Meta"), Pacific Stratus
International Energy Ltd. ("PSIE"), Pacific Stratus Energy Colombia Corp. ("PSECC"), Pacific
1
1?
Stratus Energy S.A. ("PSE"), Pacific Off Shore Peru S.R.L. ("POP"), Pacific Rubiales Guatemala
S.A. ("PRG"), Pacific Guatemala Energy Corp. ("PGEC"), PRE-PSIE Cooperatief U.A. ("PSIE
Cooperatief") and Petrominerales Colombia Corp. ("Petrominerales") (collectively, the
"Guarantors") as well as Grupo C&C Energia (Barbados) Ltd. ("Grupo C&C") (collectively with,
the Guarantors and Pacific, the "Applicants"). Attached as Exhibit "A" is a corporate chart that
may be extracted for ease of reference (the "Corporate Chart").
4
Pacific and its direct and indirect subsidiaries and branches, as shown in the Corporate Chart,
are referred to herein as the "Pacific Group". The Pacific Group is involved in the exploration,
development and production of oil and natural gas interests, primarily located in Colombia, and
to a lesser extent, in Peru, Brazil and Belize.
5
This affidavit is sworn in support of the Applicants' application for an order (the "Initial Order")
pursuant to the Companies' Creditors Arrangement Act, R.S.C. 1985, c. C-36 (the "CCAA") to
facilitate the reorganization of the Pacific Group for the benefit of all stakeholders.
6
In particular, the principal objective of these proceedings is to effect a restructuring and
financing transaction (the "Recapitalization") on an expedited basis to allow the Pacific Group
to continue as a going concern by providing a stronger financial foundation for the Pacific Group
going forward and additional liquidity to allow the Pacific Group to continue to work towards its
operational and financial goals. As I will describe in more detail later in this affidavit, the primary
purpose of the Recapitalization is to restructure Pacific's obligations under certain indentures
and loan facilities (collectively, the "Long-Term Debt"), which obligations are guaranteed by the
Guarantors and which total approximately $5.32 billion in principal as at the date hereof.
7
In addition to these proceedings under the CCAA (the "Canadian Proceedings"), the Pacific
Group intends to have these main proceedings for the Applicants recognized in the United
States pursuant to chapter 15 of title 11 of the United States Code (the "Bankruptcy Code")
and, for each of the Colombian branches of Meta, Pacific Stratus, Petrominerales and Grupo
2
2_0
C&C (as identified in the Corporate Chart),' in Colombia as well, pursuant to Law 1116 of 2006
(Ley 1116 de 2006) ("Ley 1116").
8
The proceedings in Canada are primarily intended to deal with Pacific's obligations relating to
the Long-Term Debt, whereas it is contemplated that the proceedings in (i) the US will serve to
enforce the discharge of the Long Term Debt as against the Guarantors to the same extent
such relief is granted in the proceedings in Canada, and (ii) Colombia will serve to protect the
operating assets of the Pacific Group during the restructuring period (rather than to compromise
any claims in those proceedings).
9
For consistency and ease of reference, the Bankruptcy Code proceedings will be referred to as
the "U.S. Proceedings", and the Ley 1116 proceedings will be referred to as the "Colombian
Proceedings". The Canadian Proceedings, the U.S. Proceedings and the Colombian
Proceedings are collectively referred to as the "Coordinated Proceedings".
10
If required for protective or restructuring purposes, other entities within the Pacific Group may
seek relief in Canada, the United States, Colombia or other jurisdictions.
B.
11
Collapse of Oil and Gas Prices & Need for Restructuring under the CCAA
The Pacific Group holds interests in hydrocarbon properties in Colombia pursuant to exploration
and production contracts and licences with Ecopetrol, S.A. ("Ecopetrol"), a Colombian oil and
gas company in which the Colombian government holds a majority interest, and the Agencia
Nacional de Hidrocarburos ("ANN"), the Colombian national hydrocarbons agency. In the other
countries in which it operates, Pacific Group's interests in hydrocarbon properties are also held
pursuant to licences issued by relevant national hydrocarbons agencies or regulatory bodies
(such as Perupetro S.A. in Peru and the Agencia Nacional do PetrOleo, Gas Natural e
Biocombustiveis in Brazil).
1 Such branches being, Meta Petroleum Corp. Sucursal Colombia, Pacific Stratus Energy Colombia Corp. Sucursal
Colombia, Petrominerales Colombia Corp. Sucursal Colombia and Grupo C&C Energia (Barbados) Sucursal Colombia.
3
Zl
12
Over the course of 2015, the Pacific Group's oil and natural gas properties produced on a gross
basis an average of 303,882 boe2 per day, with an average daily net production (after royalties
and payments to its joint venture partners) of 154,472 boe per day.
13
In 2015, the Pacific Group reported total sales of approximately $2.825 billion.
14
The Pacific Group is the largest independent oil and natural gas producer in Colombia in terms
of production; specifically, the total oil production from fields it operates comprises
approximately 30% of total oil production in Colombia.
15
Notwithstanding its operational strengths, the Pacific Group has experienced significant financial
challenges since early 2015. Substantially all of the revenues of the Pacific Group are derived
from the extraction and sale of oil (approximately 90%) and natural gas (approximately 10%) in
Colombia and, to a lesser extent, in Peru. However, the price of crude oil has declined
drastically since the second half of 2014—from a high of $107.26 per barrel of West Texas
Intermediates ("WTI") crude on June 20, 2014 to $26.67 per barrel on February 11, 2016, a near
13 year low. The Henry Hub4 natural gas spot price has similarly declined; from approximately
$6.90/Mbtu5 on February 6, 2014 to a low of $1.63/Mbtu on March 4, 2016.
16
The prices of oil and natural gas have rebounded somewhat since the lows hit earlier this year,
but remain unstable. In addition, the Pacific Group has been unable to enter into hedging
transactions to insulate it from the fluctuations in oil and gas prices, with the last of its existing
hedges having rolled off the first quarter of this year. Charts showing the average price of WTI
for the last twenty-four months, and the Henry Hub spot prices for the same period, are attached
2
The barrel of oil equivalent or "boe" is a unit of energy based on the approximate energy released by burning one
barrel of crude oil. The boe is used by oil and natural gas companies in their financial statements as a way of combining
oil and natural gas reserves and production into a single measure.
3
One of the three primary global oil benchmark prices, along with Brent Blend and Dubai Crude.
4The Henry Hub pipeline is the pricing point for natural gas futures on the New York Mercantile Exchange.
5 The abbreviation "MBtu" is defined as a million British thermal units, which is a traditional measurement unit for natural
gas.
4
as Exhibits "B" and "C" hereto. On April 22, 2016, the price of oil was $39.74 per barrel of
WTI and the Henry Hub natural gas spot price was $1.76/Mbtu.
17
Low oil and natural gas prices, together with operating costs and substantial debt service costs,
compelled the Pacific Group to begin to explore various restructuring options in late 2015.
18
The Pacific Group now faces an imminent liquidity crisis and Pacific itself has committed events
of default on its Long-Term Debt. Neither Pacific nor the Guarantors would have any means of
repaying or re-financing these obligations if they were accelerated.
19
Pacific must now complete a restructuring and financing transaction as soon as possible to
address its liquidity crisis, resolve its outstanding obligations on the Long-Term Debt, and deal
more generally with the new reality of low oil and gas prices.
20
CCAA protection in the form proposed by the Applicants will provide the additional time and
funding needed to address these financial challenges and to pursue and effect the
Recapitalization. Absent the protections sought in the Coordinated Proceedings, significant and
imminent impairment of the operations of the Applicants—and the Pacific Group as a whole—is
inevitable.
21
Recognizing the profound impact of lower oil and gas prices on its business, and the pending
defaults on its Long-Term Debt, the Pacific Group retained restructuring advisors, engaged with
its main creditor groups as represented by an ad hoc committee (the "Ad Hoc Committee") of
holders of its Notes (as defined below) and the steering committee (the "Bank Steering
Committee") of the banks (the "Banks") under its Credit Facilities (as defined below) and
undertook a comprehensive review of its options. Following significant consultation with its
advisors and the Ad Hoc Committee and the Bank Steering Committee, the Pacific Group
designed and ran an investment or sale solicitation process (the "Solicitation Process") to
identify parties potentially interested in submitting offers for an investment or purchase
5
23
transaction for the Pacific Group, which I describe in more detail below. That process resulted in
the Recapitalization, the commercial terms of which have now been finalized.
22
I describe the Recapitalization in greater detail below; however, in broad terms, the
Recapitalization would result in a net reduction of Pacific's indebtedness by approximately $5.3
billion, a net reduction of its annual interest expense by approximately $253 million, and provide
new liquidity in the amount of approximately $634 million ($250 million in long term exit
financing, $250 in new equity financing, and a $134 million letter of credit facility).
23
The commencement of the Coordinated Proceedings and the intended restructuring of the
Long-Term Debt under the Recapitalization is already supported, subject to certain conditions,
by creditors who collectively hold approximately $2.96 billion (approximately 55%) of the
outstanding principal value of the Long-Term Debt. The Long-Term Debt represents most of the
liabilities of Pacific that the Recapitalization would affect. This support is comprised of support
by the Ad Hoc Committee members whose debt totals approximately $2.16 billion (52.6% of
Noteholder debt) and Bank lenders whose debts total approximately $799 million (approximately
65.5% of total Bank debt). A Restructuring Support Agreement (the "Support Agreement"),
evidencing this support, is attached hereto as Exhibit "D". At the request of the Ad Hoc
Committee, the names and holdings of certain individual Noteholder signatories have been
redacted.
24
The board of directors of Pacific (the "Board") has authorized both this application and the
Recapitalization to be effected thereunder, as have the respective boards and/or shareholders
(as applicable) of each of the other Applicants. In addition, PricewaterhouseCoopers Inc. has
consented to act as Monitor in the Canadian Proceedings.
IL
CORPORATE STRUCTURES OF THE APPLICANTS AND PACIFIC GROUP
A.
25
Pacific
Pacific is a public company, the common shares of which are listed on the Toronto Stock
Exchange as well as on the Colombia Stock Exchange (La Bolsa de Valores de Colombia).
6
211
Pacific's head and principal office is located at 333 Bay Street, Suite 1100, Toronto, Ontario and
its registered office is located at 1188 West Georgia Street, Suite 650, Vancouver, British
Columbia. Pacific also has offices in Calgary, Alberta. Much of its operational management and
direction takes place out of offices maintained by certain of its subsidiaries in Panama City,
Panama and in Bogota, Colombia.
26
The Pacific Group employs approximately 2,318 employees as a whole. Pacific itself employs
63 employees, of which 25 are located in Toronto, 23 are located in Calgary and a further 15
are executives who work out of the Pacific Group's offices in Panama City and Bogota.
27
The Board of Pacific is comprised of 12 individuals: Serafino Iacono, Miguel de la Campa,
Ronald Pantin, Monica de Greiff, Orlando Alvarado, Alejandro Betancourt, Augusto Lopez, Raul
Millares, Hernan Martinez, Jose de Jesus Valdez, Dennis Mills and Francisco Sole. Messrs.
Iacono and de la Campa serve as Executive Co-Chairmen of the Board, and Ronald Pantin is
Pacific's Chief Executive Officer. Mr. Betancourt (together with joint actors) is Pacific's largest
shareholder and an executive director of Pacific. Mr. Alvarado is a director of O'Hara
Administration Co. S.A. ("O'Hara"), a company controlled by Mr. Betancourt, and a nominee,
along with Mr. Betancourt, of O'Hara on the Board. Messrs. Millares and Valdez are
representatives of Alfa S.A.B. de C.V. ("Alfa"), Pacific's second largest shareholder and
nominees of Alfa on the Board.
28
Due to the potential for conflicts that might arise in connection with the design and
implementation of any proposed restructuring of the Pacific Group, on January 14, 2016 the
Board established an independent committee (the "Independent Committee") comprised of
independent directors to consider strategic matters relating to the restructuring of the Pacific
Group. The Independent Committee consists of Ms. de Greiff, and Messrs. Mills, Martinez, and
Sole. Mr. Mills is the Chair of the Independent Committee and also is the Lead Independent
Director on the Board. The members are not employees of the Pacific Group nor nominees of
Pacific's two significant shareholders.
7
29
As at April 25, 2016, the authorized capital of Pacific consisted of an unlimited number of
common shares, of which 316,094,858 were issued and outstanding, and an unlimited number
of preferred shares, none of which have ever been issued. Pacific also had:
(a)
12,420,867 stock options outstanding and issued to employees under a stock option plan of
Pacific most recently approved by shareholders on May 29, 2014;
(b)
5,140,443 deferred share units for employees outstanding and issued under a deferred share
unit plan for employees approved by the Board of Pacific on May 30, 2014; and
(c)
3,516,026 deferred share units for independent directors outstanding and issued under a
deferred share unit plan for independent directors dated February 3, 2012.
30
As at April 25, 2016, Pacific's two largest shareholders were (i) Mr. Betancourt, through O'Hara
and various individuals and entities associated, or acting jointly or in concert, with O'Hara (at
19.95% collectively) and (ii) Alfa (at 18.95%).
31
As the public parent corporation of the Pacific Group, Pacific has been the main corporate
vehicle through which financing has been raised for the operations of the Pacific Group. Pacific
currently has in the aggregate approximately $5.32 billion principal amount of the Long-Term
Debt, together with accrued and unpaid interest of approximately $163 million, owing under (a)
the Notes and (b) the Credit Facilities, in each case as defined and described further below.
32
This indebtedness is guaranteed by the Guarantors, each of which is an Applicant in this
proceeding and is discussed in turn below.
B.
33
The Guarantors & Grupo C&C
Each of the Guarantors is a 100% wholly-owned direct or indirect subsidiary of Pacific. Each of
the Guarantors (other than PSIE) is a foreign corporation, but each (including PSIE) has a
corporate bank account in Canada, with funds on deposit in each case being in excess of
CDN$1000. Their corporate structures are as follows:
8
-2_
(a)
Meta — Meta is one of the Pacific Group's primary operating subsidiaries. Meta's branch in
Colombia owns and operates many of the Pacific Group's material Colombian production and
exploration assets as well as certain infrastructure assets. It is incorporated under the laws of
Schaffhausen, Switzerland and is a wholly-owned direct subsidiary of Pacific Holdings. Its
Colombian branch, Meta Petroleum Corp. Sucursal Colombia, will be one of the entities that is
filing in Colombia under the Colombian Proceedings.
(b)
Pacific Holdings — Pacific Holdings is a holding company through which Pacific indirectly holds
its interest in Meta. Like Meta, it is incorporated under the laws of Schaffhausen, Switzerland.
(c)
Petrominerales — Petrominerales is one of the Pacific Group's primary operating subsidiaries
incorporated under the laws of Panama. It holds and operates some of the Pacific Group's
most material exploration and development properties in both Colombia and Peru.
Petrominerales also holds a small equity interest in a Colombian pipeline. Its Colombian
branch, Petrominerales Colombia Corp. Sucursal Colombia, will be one of the entities that is
filing in Colombia under the Colombian Proceedings.
PSIE — PSIE is an intermediary holding company through which Pacific holds interests in
certain of its operating subsidiaries, including PSE, POP, PGEC, PSECC and PRG. PSIE
maintains the same registered office as Pacific at 1188 West Georgia Street, Suite 650,
Vancouver, British Columbia. It is also incorporated under the British Columbia Business
Corporations Act.
(d)
PSECC — PSECC is another of the Pacific Group's main operating subsidiaries. PSECC
operates one of the Pacific Group's primary gas fields, located in northwestern Colombia, as
well as certain light and medium oil exploration and production assets in Colombia. PSECC is
incorporated under the laws of Panama. Its Colombian branch, Pacific Stratus Energy
Colombia Corp. Sucursal Colombia, will be one of the entities that is filing in Colombia under
the Colombian Proceedings.
9
(e)
POP — POP is a holding company through which Pacific holds a working interest in an offshore
oil production block operated by a third party in Peru. POP is incorporated under the laws of
Peru.
(f)
PSE — PSE is an operating subsidiary that operates a significant oil production and exploration
block in Northern Peru, which in September 2015 represented 17% of Peru's oil production.
PSE also wholly owns POP and is incorporated under the laws of Panama.
(g)
PRG — PRG is a holding company through which Pacific formerly held a working interest in
certain oil exploration assets in Guatemala. It is incorporated under the laws of Guatemala.
(h)
PGEC — PGEC is an intermediary holding company through which Pacific indirectly holds its
interest in PRG. PGEC is incorporated under the laws of Panama.
(i)
PSIE Cooperatief — PSIE-Cooperatief formerly held Pacific's indirect interest in the Sabanero
block in Colombia which was subsequently transferred to Meta. PSIE Cooperatief currently
holds a 49.99% interest in Maurel & Prom Colombia B.V., which in turn holds a working
interest and operatorship in an exploration block in Peru. PSIE-Cooperatief is incorporated in
the Netherlands.
34
Taken together, Pacific and the Guarantors represented 95.9% of the consolidated total sales of
the Pacific Group for the nine months ended September 30, 2015 and 88.7% of the Pacific
Group's consolidated total assets at book value as at September 30, 2015.
C.
35
Grupo C&C
The final Applicant, Grupo C&C is a 100% wholly-owned direct subsidiary of Pacific. It holds a
100% working interest in five properties, including three development blocks and two
exploratory blocks, which are in the Llanos basin of Colombia, as well as a 0.5% equity interest
in a key oil pipeline utilized by the Pacific Group. As with the other Applicants, its operations are
highly integrated with those of the other members of the Pacific Group.
10
2_,Se
36
It is incorporated under the laws of Barbados. Its Colombian branch, Grupo C&C. Sucursal
Colombia, will be one of the entities that is filing in Colombia under the Colombian Proceedings.
37
III.
It also has a corporate bank account in Canada, with funds on deposit in excess of CDN$1000.
BUSINESSES AND OPERATIONS
A.
38
The Pacific Group's Businesses and Operations
The Pacific Group operates four primary lines of business to meet the needs of its customers: (i)
production and development, (ii) exploration, (iii) pipelines and other hydrocarbon infrastructure,
and (iv) commercialization.
(i)
39
Production and Development
The Pacific Group currently has 29 producing blocks8 (26 in Colombia and three in Peru), which
in 2015 produced on average 303,882 boe per day on a gross production basis. As at
December 31, 2015, these blocks were estimated' to have an aggregate of 290.8 MMboe8 of
total proved plus probable net (after royalties) reserves. The following chart provides a brief
description of Pacific's principal producing blocks and fields.
Producing Block/Field
Description
Rubiales Field
(Colombia)
Through Meta, the Pacific Group holds a 40% working interest in the
Rubiales block and a 50% working interest in the Piriri block within the
Rubiales field. Ecopetrol owns the remaining interests. In 2015,
production from the Rubiales field represented 40.9% of Pacific's total
net production.
Quifa Block
(Colombia)
Through an indirect subsidiary of Meta, the Pacific Group holds a 60%
interest in the Quifa block.
In 2015, production from the Quifa field represented approximately
16.1% of Pacific's total net production.
La Creciente Field
6
Through PSECC, the Pacific Group holds a 100% working interest
A "block" is an acreage sub-division whose precise size varies based on the jurisdiction and contract under which it is
awarded.
As estimated by Pacific's independent reserves evaluators, pursuant to Multilateral Instrument 51-101.
8
The abbreviation "MMboe" represents millions of barrels of oil equivalents.
11
Producing Block/Field
(Colombia)
Description
(subject to adjustment by Ecopetrol based on the benchmark price of
natural gas) in the La Creciente block.
In 2015, gas production from the La Creciente field represented
approximately 7.0% of Pacific's total net production.9
Other Principal Producing
Fields/Blocks
(Colombia and Peru)
The Pacific Group's other principal producing fields are as follows: (i)
the Sabanero Block in the Llanos Basin (held through Meta); (ii) the
Cravoviejo Block in the Llanos Basin (held through Grupo C&C Energia
Ltd. an indirect wholly-owned subsidiary); (iii) the Cubiro Block in the
Llanos Basin (held through PSECC) ; (iv) the Casanare Este (Curito)
Block in the Llanos Basin (held through Petrominerales); (v) the Rio
Ariari Block in the Llanos Basin (held through Petrominerales); (vi) Block
Z-1 in the offshore Tumbes Basin in Peru (held through POP) ; and the
Guatiquia Block in the Llanos Basin (held through Petrominerales).
In 2015, production from these other principal producing fields
represented approximately 23% of Pacific's total net production.
40
Notably, the Rubiales and Piriri contracts are due to expire in June 2016. The Pacific Group
intends to increase production at the Quifa block to partially offset this loss of production.
(ii)
41
Exploration
With the impending expiration of Pacific's interests in the Rubiales and Piriri blocks, exploration
has been playing an increasingly important role in the Pacific Group's activities in recent years.
42
Hydrocarbon basins for which the Pacific Group has Colombian exploration and development
contracts (or in some cases "technical evaluation agreements") are listed below:
Property
Description
Llanos Basin
The Llanos Basin is the most prolific hydrocarbon basin in Colombia.
The Pacific Group has working interests in 17 exploratory blocks in the
Llanos Basin.
Lower Magdalena Valley and
Cesar Rancheria Basins
The Pacific Group has identified 16 exploration prospects in the four
contracted areas in the Lower Magdalena Valley Basin and Cesar
9
Based on a gas to oil production conversion standard of 5.7 Mcf of gas to 1 barrel of oil as required by the Colombian
Ministry of Mines and Energy. Note that "Mcf" denotes 1000 cubic feet of gas.
12
30
Property
Description
Rancheria Basin
Caguan-Putumayo Basin
The Pacific Group has rights in eight exploratory blocks and has
identified 21 exploration prospects in this basin.
Cordillera Oriental Basin
(Santander-Boyaca)
The Pacific Group has an interest in three exploration blocks and has
identified 12 exploration opportunities in this basin.
43
The Pacific Group has also signed exploration and production contracts for more than 20
additional exploratory blocks located in Peru, Brazil, and Belize.
44
In addition, Pacific has contracts in place that contemplate the future establishment of jointventures to develop assets in Mexico. In October of 2014, Pacific entered into a memorandum
of understanding with Petroleos Mexicanos and its subsidiary entities in connection with
potential joint venture initiatives. Subsequently, in December of 2014, Pacific entered into a
memorandum of understanding with Alfa in connection with the development of a joint-venture
company on a 50/50 basis. Both memoranda of understanding contemplated the development
of petroleum and natural gas assets in Mexico as well as businesses ancillary to such assets,
including midstream projects. However, as a result of low oil and gas prices, the joint ventures
have not yet been established.
(iii)
45
Pipelines and Other Hydrocarbon Infrastructure Assets
The Pacific Group holds interests in pipelines and other hydrocarbon-related infrastructure
through various subsidiaries and minority investments.
46
Pacinfra Holding Ltd. ("Pacinfra"), a direct wholly owned subsidiary of Pacific, currently holds a
41.79% interest10 in Pacific Infrastructure Ventures, Inc. ("Pacific Infrastructure"), a company
10 As of December 4, 2015, the International Finance Corporation and related entities held a 27.96% interest in Pacific
Infrastructure Ventures, Inc., 20.6% was held by Kiber Ltd., a party affiliated with certain of Pacific's officers and
directors, and the balance was widely held by 47 further parties.
13
31
that owns and operates a large scale, public access terminal in Cartagena. In addition, Pacific
Infrastructure is planning to construct a pipeline in Colombia spanning from Cartagena to
Covenas (a coastal town in northern Colombia), which is Colombia's principal oil terminal and
export port. The construction of the pipeline has been temporarily suspended.
47
Pacific Infrastructure also holds a 100% interest (94.84% direct and 5.16% indirect) in Sociedad
Portuaria Puerto Bahia S.A. ("Puerto Bahia"), which on October 4, 2013 entered into a
financing arrangement for the development of a large-scale multi-purpose port facility in
Cartagena Bay, Colombia (the "Port Project"). Puerto Bahia was established to own, develop,
construct, test, operate and maintain the Port Project. The first phase of the project, consisting
of the construction of five oil storage tanks, an access road bridge to Cartagena and a double
berth tanker pier, was completed and began operations on August 28, 2015.
48
The Pacific Group views the Port Project as a key infrastructure project that is expected to
significantly improve Pacific's cost structure and operating efficiency by providing additional
export and storage capacity. That said, Puerto Bahia is an asset with material value that is not
directly linked to the Pacific Group's production capabilities, and the Pacific Group has therefore
been engaged in discussions to sell its interest in Puerto Bahia, on terms that would permit it
continued access to the Port Project as a customer after any potential sale.
49
Pacific Midstream Holding Corp., a wholly owned direct subsidiary of Pacific, currently holds a
63.64% interest in Pacific Midstream Ltd. ("Pacific Midstream")," which in turn holds certain
infrastructure assets, including (i) a 35% interest in the Oleoducto de los Llanos Orientates, S.A.
pipeline, (ii) a 41.5% shareholding interest in Oleoducto Bicentenario de Colombia S.A.S., the
company that owns and operates the Bicentenario pipeline, and (iii) a 100% interest in
Petroelectrica de los Llanos Ltd., a private company responsible for constructing and operating
11 As of December 31, 2015, the International Finance Corporation held the remaining 36.36% interest in Pacific
Midstream Ltd., which it acquired from Pacific Midstream Holding Corp. in December 2014.
14
3z
a new 230 kilovolt power transmission line that connects the Rubiales field with Colombia's
electrical grid.
50
Pacific currently intends to sell its equity interests in Pacific Midstream in order to monetize its
investments in these pipelines, while maintaining rights to use the pipelines' transportation
capacity.
51
The Pacific Group currently has a 100% direct interest in Agro Cascada S.A.S., a Colombianbased private company responsible for a new process by which the oil industry disposes of its
residual water, through its Agrocascada Water Irrigation Project. Through the process of reverse
osmosis, treated water is made available to third parties to use in the irrigation of industrial
crops.
52
The Pacific Group also engages in electric power production through two key operating assets:
Asset
Description
Proelectrica
As at January 1, 2016, the Pacific Group had a 20.1% indirect interest
in Promotora de Energia Electrica de Cartagena & Cia, S.C.A. E.S.P.
("Proelectrica"), a private Colombia-based 90 megawatt electric utility
company. Proelectrica is paid a premium as a peak demand energy
supplier to the fast growing Cartagena area.
Termomorichal
Pacific Power Generation Corp. a company in which Pacific is a 20.9%
indirect shareholder, has a 51% indirect interest in TermoMorichal
S.A.S. which owns and operates a power generation facility for the
Rubiales field.
(iv)
53
Commercialization
Through its final line of business, the Pacific Group tries to maximize sales income by taking
advantage of international market prices, a process it refers to as "commercialization". As part of
this strategy, since mid-2009, the Pacific Group has transported certain of its oil production from
the Rubiales field to Covenas via the Bicentenario pipeline, facilitating the export of crude oil
directly to the international market when international prices were more favorable than domestic
prices.
15
33
54
Similarly, the Pacific Group partnered with Exmar N.V. ("Exmar"), a gas transportation
company, to develop a liquefied natural gas ("LNG") project in Northern Colombia, to allow
significant LNG to be stored and exported. The project was intended to allow the Pacific Group
to take advantage of LNG opportunities in international oil markets, but this project is currently
suspended as capital expenditures have been refocused on the Pacific Group's highest return
and most material near-term projects. In March of 2016, PSECC agreed to a settlement with
Exmar that relieves the Pacific Group of its commitments to the LNG project, in exchange for an
initial payment of $5 million and subsequent payments of $1 million per month for 15 months.
Since this settlement was entered into during the forbearance period agreed to with the Ad Hoc
Committee and the Banks, the Ad Hoc Committee and the Banks were advised of this proposed
settlement in advance, and did not object to it.
B.
55
The Pacific Group's Employees
As of the date of this affidavit, the Pacific Group had approximately 2,318 employees at its
offices in Toronto, Bogota, Lima, Calgary, Panama City, Madrid, Neuhausen (Switzerland) and
Houston, as well as at its various field offices throughout Colombia and Peru.
56
Approximately 50% of the Pacific Group's employees (and some of its contractors) in Colombia
are represented by one or more labour unions. The Pacific Group has negotiated bargaining
agreements with the unions as provided by Colombian labour law. The Pacific Group's labour
relations are stable and constructive.
57
Pacific itself employs 48 employees in its Toronto and Calgary offices, and employs a further 15
executives who work out of the Pacific Group's Panama City and Bogota offices. None of these
employees are unionized.
C.
58
Cash Management and Inter-Company Financing Arrangements
In the ordinary course of business, the Pacific Group utilizes an integrated, centralized cash
management system (the "Cash Management System") to collect, concentrate, and disburse
funds generated by its international operations. The Cash Management System is comprised of
16
approximately 360 bank and investment accounts at various banks and with various trustees
around the world. Of these, 21 accounts are maintained by Pacific at Canadian Imperial Bank of
Commerce, Royal Bank of Canada, Bank of America, J.P. Morgan, Bank of Nova Scotia, UBS
and BNP Paribas.
59
Some entities in the Pacific Group have their own active treasury desks, while others do not.
The absence of an active treasury desk at an entity means that it has no bank accounts in its
own name and no credit cards, and therefore has no vehicle by which money may directly go in
or out of the company. All payments made to or by such an entity must instead be made to or by
its most immediate parent with an active treasury desk on the entity's behalf. Where a nontreasury desk entity has more than one immediate parent with an active treasury desk, the
choice as to which of them will make or receive any particular payment on behalf of the entity
could depend on several factors but in most cases, the parent with the larger equity stake is
chosen.
60
Once per week, Pacific assesses on a 13-week projection basis whether the entities with active
treasury desks hold sufficient cash to satisfy their current obligations or a surplus of cash. The
analysis is revalidated weekly for every company in the Pacific Group and if any such entities
hold a surplus of cash and the surplus is in US dollars, the surplus is paid up through a series of
dividends or repayment of intercompany loans to Pacific as the ultimate parent entity. If
subsidiaries of Pacific require cash to make ordinary course payments, then Pacific contributes
cash down to the appropriate entity with an active treasury desk, via either non-interest bearing
unsecured loans or direct equity injections. If any subsidiary is determined to hold a surplus of
cash in currency other than US dollars, the surplus cash is placed in either (i) local, highly-liquid
investments with cash available for withdrawal on demand or (ii) a local chequing account.
61
In the ordinary course of business, if a subsidiary needs cash for significant capital
expenditures, Pacific or its financing subsidiary, Pacific Global Capital, S.A. ("Pacific Global"),
will fund such need through the provision of an interest-bearing unsecured loan to the
17
35
subsidiary. Where a given loan is to be made by Pacific Global, it receives those funds from
Pacific in exchange for the issuance of mandatory redeemable preferred shares.
62
The intercompany obligations that exist as between the Applicants and the other entities in the
Pacific Group arise on account of (i) the interest-bearing and non-interest bearing unsecured
loans made by Pacific and/or Pacific Global, as described above; (ii) payments made or
received by parent entities that have treasury desks on behalf of subsidiaries who do not; (iii)
interest-free loans made to parent and subsidiary entities that have treasury desks in
accordance with general entity-by-entity movement of cash within the Cash Management
System; and (iv) obligations on payments made or received between subsidiaries as a result of
core business activities, such as intercompany crude oil purchases or sales
63
Intercompany balances are tracked on an ongoing basis through the Pacific Group's third party
SAP software system as well as through its own independent balance accounts.
64
The Cash Management System permits the Pacific Group to efficiently collect and disburse
cash generated by its operations, satisfy its financial obligations, and centrally control corporate
funds. To ensure the seamless continuation of revenue collection and cash disbursement, it is
essential that both Pacific and the other Applicants be allowed to continue to participate in the
Cash Management System as its central "hub" and "spokes", respectively.
65
Pacific does not generate revenue from direct operations. Therefore, the Cash Management
System does not result in an outflow of cash that would be generated in Canada. Rather, the
Cash Management System simply allows the cash generated by operations in the South
American jurisdictions in which the Pacific Group operates to flow up the corporate chain as
available, and down the corporate chain as required.
66
I note that the Applicants will request an Order that they be permitted to continue to utilize the
Cash Management System, "or replace it with another substantially similar cash management
system including such modifications as may be required to comply with the terms of the DIP
18
36
Financing Documents". The Commitments Documents, as such term is currently defined in the
draft Initial CCAA Order, permit the DIP Note Purchasers to require changes to the Cash
Management System, in order to, among other things, establish 'cash dominion' for the
purposes of perfecting their security and to secure any new intercompany loans.
IV.
67
THE LONG-TERM DEBT
As at the date hereof, Pacific's unsecured Long-Term Debt stood at approximately $5.32 billion
in principal and $163 million in accrued and unpaid interest, the entirety of which was
guaranteed by each of the Guarantors. This debt is comprised of (a) four different tranches of
senior unsecured notes (the "Notes") (b) the Revolving Credit Facility (as defined below), and
(c) three other credit facilities (these three credit facilities, together with the Revolving Credit
Facility, the "Credit Facilities"), in each case as described in further detail below.
A.
68
The Notes
The Notes are currently outstanding in an approximate aggregate principal amount of $4.1
billion and are issued in four series as set out below.
(a)
2021 Notes: In December 2011, Pacific issued unsecured senior notes (the "2021 Notes")
under and pursuant to an indenture dated December 12, 2011, as supplemented December
20, 2011, January 5, 2012, May 22, 2013, December 3, 2013, December 27, 2013 and June 4,
2015. The 2021 Notes bear interest at an annual rate of 7.25%, due and payable semiannually in arrears on June 12 and December 12, of each year until maturity on December 12,
2021.
As at the date hereof, there were approximately $690.5 million of 2021 Notes outstanding.
(b)
2019 Notes: In November 2013, Pacific issued unsecured senior notes (the "2019 Notes")
under and pursuant to an indenture dated November 26, 2013, as supplemented December
27, 2013. The 2019 Notes bear interest at an annual rate of 5.375%, due and payable semi-
19
37
annually in arrears on January 26 and July 26, of each year until maturity on January 26,
2019.
As at the date hereof, there were approximately $1.3 billion of 2019 Notes outstanding.
(c)
2023 Notes: On March 28, 2013, Pacific issued senior notes (the "2023 Notes") under an
indenture dated March 28, 2013, as supplemented May 22, 2013, and December 27, 2013.
The 2023 Notes bear interest at an annual rate of 5.125% payable on March 28 and
September 28 of each year until maturity on March 28, 2023.
As at the date hereof, there were approximately $1 billion of 2023 Notes outstanding.
(d)
2025 Notes: In September 2014, Pacific issued unsecured senior notes (the "2025 Notes")
under an indenture dated September 19, 2014, as supplemented on October 6, 2014, on
October 23, 2014, May 5, 2015, and June 4, 2015. The 2025 Notes bear interest at an annual
rate of 5.625%, due and payable on January 19 and July 19 of each year until maturity on
January 19, 2025.
As at the date hereof, there were approximately $1.114 billion of 2025 Notes outstanding.
69
All of the Notes are fully and unconditionally guaranteed by each of the Guarantors.
70
The interest payments due on the Notes in the first quarter of 2016 were as follows:
12
(a)
approximately $31.9 million due on January 19, 2016 under the 2025 Notes;
(b)
approximately $34.9 million due on January 26, 2016 under the 2019 Notes; and
(c)
approximately $25.6 million due on March 28, 2016 under the 2023 Notes.12
Although each of these interest payments was due on January 19, 2016, January 26, 2016 and March 28, 2016,
respectively, the non-payment of interest only becomes an event of default under the respective note indentures upon
non-payment for 30 days after the relevant due date.
20
71
These interest payments have not been paid. However, Pacific executed an extension
agreement on February 18, 2016 (the "Notes Extension Agreement") with the Ad Hoc
Committee, pursuant to which the members of the Ad Hoc Committee have agreed to forbear
from declaring the 2019 Notes and 2025 Notes due for such failure to pay.
72
The Notes Extension Agreement contains various conditions. Most notably, it required that
Pacific and its advisors initiate the Solicitation Process.
73
The forbearance period under the Notes Extension Agreement originally expired on March 31,
2016, but was subsequently extended to April 29, 2016. Copies of the Notes Extension
Agreement and an amending agreement dated February 18, 2016 are attached hereto as
Exhibit "E". I note that the copy of the Notes Extension Agreement attached hereto does not
contain the names of the individual Noteholders, at the Ad Hoc Committee's request.
B.
74
Credit Facilities
In addition to its borrowings under the Notes, Pacific also has long term unsecured debt due
under the Credit Facilities in an aggregate total amount of approximately $1.22 billion as at the
date hereof. Each of the Credit Facilities is described below.
(a)
The Revolving Credit Facility: On April 30, 2014, Pacific entered into a $1 billion unsecured
revolving credit facility (the "Revolving Facility") with a syndicate of 21 lenders. The
Revolving Facility is governed by a credit agreement made as of April 30, 2014, as amended
on October 21, 2014 and March 3, 2015 (the "Revolving Agreement") among Pacific as
borrower, the Guarantors as guarantors, BofA as administrative agent (the "Agent") and a
syndicate of lenders. The interest rate for the facility is determined in accordance with credit
ratings assigned to the Notes, and based on Pacific's current rating, the interest rate would be
either an adjusted LIBOR plus 3.50% or a base rate plus 2.50%, depending on the type of
borrowing. In addition, a commitment fee of 0.95% per annum is payable on unutilized
commitments under the Revolving Facility.
21
3cf
The Revolving Facility is at present fully drawn, with the $1 billion principal amount owing as at
the date hereof. The Revolving Facility matures on April 30, 2017.
(b)
Bank of America Bilateral Facility: On May 2, 2013, Pacific entered into a $109 million
unsecured credit facility (the "BofA Facility") with Bank of America, N.A. ("BofA"). The BofA
Facility is governed by a credit and guaranty agreement with BofA made as of May 2, 2013, as
amended August 4, 2014, November 6, 2014, and March 3, 2015 between Pacific, as
borrower, the Guarantors as guarantors, and BofA as lender.
The BofA Facility is payable in three annual installments commencing November 3, 2014 and
accrues interest either at an adjusted LIBOR plus 1.50% or a base rate plus 0.50%, depending
on the type of borrowing. As at the date hereof, Pacific had $2.94 million of principal
outstanding under the BofA Facility.
(c)
Bladex Bilateral Facility: The second significant bilateral credit facility that Pacific currently has
in place is a unsecured $75 million facility (the "Bladex Facility") entered into with Banco
Latinoamericano de Comercio Exterior, S.A. ("Bladex"). The Bladex Facility is governed by a
master credit agreement entered into as of April 2, 2014, as amended on February 3, 2015,
March 3, 2015, June 11, 2015 and November 27, 2015 between Pacific, as borrower, the
Guarantors, as guarantors and Bladex as lender. The Bladex Facility has a grace period on
payments of two years and subsequent semi-annual installments of $18.75 million starting on
October 4, 2016. The Bladex Facility accrues interest at LIBOR plus 2.70%.
As at the date hereof, Pacific did not have any borrowings outstanding under the Bladex
Facility, though it did have a full $75 million of letters of credit issued under it.
(d)
HSBC Facility: Pacific borrowed $250 million pursuant to an unsecured credit and guaranty
agreement dated April 8, 2014, as amended January 16, 2015, March 2, 2015 and June 12,
2015 (the "HSBC Agreement") between Pacific, as borrower, the Guarantors, as guarantors,
HSBC Bank USA, N.A., as administrative agent, and a syndicate of five banks. This facility
22
carries an interest rate of LIBOR plus 2.75% and the principal is to be repaid as follows: 15%
in April 2016, 25% in October 2016 and 60% in April 2017, with interest payments on the
outstanding principal due quarterly.
As at the date hereof, Pacific had $212.5 million in borrowings outstanding under the HSBC
Agreement.
75
As with the Notes, each of the Credit Facilities is unsecured and guaranteed by each of the
Guarantors.
76
On September 28, 2015, under pressure from continuing low oil prices and a potential
impending default as a result, the Applicants obtained waivers from the lenders under each of
the Credit Facilities in respect of a covenant that requires Pacific to maintain a consolidated net
worth above $1 billion.
77
Each of the waivers terminated on December 28, 2015, but on that same date the Applicants
procured additional waivers in respect of each of the Credit Facilities (as amended, the
"December 28 Waivers") and certain financial covenant defaults thereunder.
78
The December 28 Waivers were replaced by forbearance agreements on February 19, 2016
(the "Lender Forbearance Agreements") as required under the Notes Extension Agreement.
79
As with the Notes Extension Agreement, the forbearance periods under the Lender
Forbearance Agreements were originally scheduled to terminate on March 31, 2016, but were
subsequently extended such that each forbearance period now expires on April 29, 2016. The
four Lender Forbearance Agreements contain provisions substantially similar to the Notes
Extension Agreement.
V.
PACIFIC GROUP CONSOLIDATED FINANCIAL STATEMENTS
80
Copies of Pacific's consolidated audited financial statements for the twelve months ended
December 31, 2015 (the "Consolidated Financial Statements") are attached as Exhibit "F".
23
A.
81
Assets
As at December 31, 2015, the Pacific Group's assets were valued on a consolidated book basis
at approximately $3.98 billion, summarized as follows:
Current Assets
Cash and equivalents
Restricted cash
Accounts receivable
Inventory
Income tax receivable
Prepaid expenses
Risk management assets
Total Current Assets
(in thousands of USD)
$342,660
$18,181
$517,997
$27,411
$200,813
$5,424
$172,783
$1,285,269
Non-Current Assets
Oil and gas properties
Exploration and evaluation assets
Plant and equipment
Intangible assets
Investments in associates
Other assets
Goodwill
Restricted cash
Total Assets
(i)
82
(in thousands of USD)
$1,821,330
$115,619
$40,877
$448,266
$257,019
$17,741
$3,986,121
Current Assets
The Pacific Group's accounts receivable consist mainly of (i) amounts due on oil and gas sales;
(ii) receivables from loans made to the owners of certain key infrastructure utilized by the Pacific
Group; (iii) recoverable VAT and withholding tax; and (iv) receivables from joint arrangements
with Ecopetrol.
83
Other current assets consisted of (a) certain operating expenses that had been prepaid; (b)
inventory of oil and gas as well as of materials and supplies used in their production; (c) the
Pacific Group's "in the money" currency and oil price hedges (being accounted for in the "risk
management assets" category above); and (d) income tax receivables.
24
II 2_
(ii)
84
Oil and Gas Properties, Plant & Equipment
As I described above, the Pacific Group's main assets consist of its oil and gas properties.
Pacific's plant and equipment property consists largely of (i) the equipment and facilities it uses
in the course of the exploration, evaluation, development and production of oil and gas, and (ii)
the Proelectrica power utility.
(iii)
85
Investments in Associates
This category of assets is comprised of the Pacific Group's investments in various associates
largely established for the purpose of holding and operating infrastructure projects in which the
Pacific Group has an interest, including, but not limited to: (i) two oil pipelines, and (ii) the Port
Project.
(iv)
86
Other (intangible assets, etc.)
As at December 31, 2015, the Pacific Group's significant intangible and other assets were
largely comprised of (i) capacity rights to pipelines; (ii) receivables due on a loan to the owner of
the Bicentenario pipeline; (iii) long-term receivables from the sale of one of the Pacific Group's
former pipeline assets; (iv) advances for pipeline usage and on the development of certain gas
facilities; and (v) minority equity interests in various public and private companies.
B.
87
Liabilities
As at December 31, 2015, the Pacific Group on a consolidated basis had liabilities totalling
approximately $6.97 billion, summarized as follows:
Current
Accounts payable and accrued liabilities
Deferred revenue
Risk management liability
Income tax payable
Current portion of long-term debt
Current portion of obligations under
finance leases
Asset retirement obligation
(in thousands of USD)
$1,216,891
$74,795
$53,066
$838
$5,377,346
$13,559
$3,449
25
Total Current Liabilities
$6,739,944
Non-Current
Long term debt
Obligations under finance leases
Deferred tax liability
Asset retirement obligation
Total Liabilities
$22,952
$6,308
$207,148
$6,976,352
(i)
88
Current Liabilities
Beyond the obligations owed on the Notes and Credit Facilities, Pacific's most significant
current liabilities are its accounts payable and accrued liabilities, which as at December 31,
2015 were composed primarily of trade payables and accruals, amounts payable on withholding
taxes in Colombia and Peru, and, to a lesser extent, advances and warranties.
89
Other current liabilities of the Pacific Group as at December 31, 2015 include (i) amounts due
on certain of its currency and oil price hedges (accounted for under "risk management liability"),
(ii) the current portion of certain finance lease obligations for facilities and equipment, and (iii)
amounts recognized as deferred revenue liabilities where Pacific's subsidiaries Meta, PSECC
and Petrominerales have entered into contracts with a particular customer under which the
customer has prepaid for the future delivery of a certain amount of oil.
(ii)
90
Non-Current Obligations (finance leases, deferred tax, asset retirement, etc.)
In the "asset retirement obligation" category, the Pacific Group makes full provision for the
present value of anticipated decommissioning costs relating to oil and gas properties in the
amount of approximately $172 million. The Pacific Group also owes nominal amounts of
deferred tax, and certain Pacific subsidiaries also have obligations under various lease or takeor-pay arrangements for facilities and equipment that are accounted for as finance leases.
C.
91
Letters of Credit
Although not recognized on the consolidated balance sheet of the Pacific Group, significant
contingent liabilities exist related to standby letters of credit issued for exploration and
26
operational commitments in the normal course of its business. Primarily, the Pacific Group has
provided letters of credit for regulatory obligations, such as the licences granted by ANH. As at
April 8, 2016, the Pacific Group had letters of credit in respect of an outstanding amount of
approximately $221 million in the aggregate (the "Current LCs"), of which 4.2% were cash
collateralized. Of that total, approximately $127 million must be renewed or replaced during the
remainder of 2016, and these expirations are heavily "front loaded"; approximately $116 million
require renewal by the end of June 2016. As of the date of this Affidavit, none of the Current
LCs have been drawn and there are no reimbursement obligations owing thereunder. Absent a
new letter of credit facility, it is expected that a significant portion of the expiring letters of credit
will need to be cash-collateralized by the Pacific Group in order to be renewed. The
beneficiaries of many of the Current LCs have the right to require that a new letter of credit be
posted, even if the Current LCs held by these beneficiaries are drawn upon.
92
As part of the Recapitalization, Pacific has negotiated a new letter of credit facility with certain of
the Banks. Details of this new letter of credit facility are set out below.
VI.
93
THE PACIFIC GROUP'S LIQUIDITY CONCERNS
The Pacific Group is the largest independent oil and natural gas producer in Colombia in terms
of both assets and production. It has a balanced portfolio of oil and natural gas reserves. It also
remains a low cost producer, and has historically relied upon sustainable and ongoing cost
leadership.
94
However as noted above, the international price of oil has declined precipitously since the
second half of 2014, losing just over 75% of its market value, hitting a 13 year low on February
11, 2016. The price of natural gas has similarly declined during this same period, hitting a
historic low on March 4, 2016. Although the prices of oil and natural gas have rebounded
somewhat since these lows, current prices are still significantly lower than in 2014.
27
45
95
As substantially all of the Pacific Group's revenues are derived from the extraction and sale of
oil (approximately 90%) and natural gas (approximately 10%), these low prices have had a
severe and detrimental impact on the Pacific Group. In particular, the low price environment has
reduced the Pacific Group's production revenue, decelerated its exploration and development
programs, negatively and severely impacted the volume of its reserves (by reducing the amount
of reserves that can be economically exploited) and made access to capital significantly more
difficult.
96
As a result of the above factors and based on current oil and natural gas prices, the Pacific
Group is not expected to have sufficient cash resources to continue operations after the third
week of May, 2016. Even without debt service on the Long-Term Debt (which for 2016 would
have been approximately $260 million), and despite recent cost reductions, Pacific needs
substantial new working capital to fund the Pacific Group's operations. The Pacific Group, with
its advisors, has determined that it will need new financing of approximately $500 million to
sustain itself through 2016, with its funding needs projected to peak in August of this year.
97
Continued investment in the Pacific Group's production and exploration properties is needed.
Capital investment is required to: (i) continue operations and maintain operating efficiency in the
normal course; and (ii) replace oil and gas reserves depleted by ongoing production. Due to
liquidity issues and cost-reduction efforts, the Pacific Group's capital investments have been
severely reduced or postponed. As time goes by, the reduction of capital expenditures will
decrease production and will irreparably harm the Pacific Group's future prospects.
VII.
98
RESTRUCTURING EFFORTS IN 2015
In early 2015 as the decline in oil prices continued to worsen, the Pacific Group made a
concerted effort to consider all of its strategic alternatives. At the same time, the Pacific Group
embarked on an aggressive initiative to improve its liquidity runway.
28
11L7
99
Over the course of 2015, the Pacific Group worked to reduce the Pacific Group's cash operating
costs by 24.7% from an average of $30.51/boe in 2014 to a record low of $22.96/boe in 2015;
100
The Pacific Group drastically restricted planned capital expenditures to all but the highest return
and most material near-term projects—resulting in a reduction of its capital expenditures from
approximately $2.4 billion in 2014 to just $726 million in 2015.
101
The Pacific Group also proactively sought out sale opportunities for the divestiture of non-core
high value assets, such as (a) its remaining interest in Pacific Midstream, the holder of much of
Pacific's pipeline assets, (b) its equity interest in the Puerto Bahia Port Project, (c) its equity
interest in Agro Cascada S.A.S. and (d) longer term farm-outs of its exploration portfolio.
102
To enable negotiations with the Banks, and to resolve an impending covenant default, Pacific
and the Guarantors also obtained initial waivers in respect of the Credit Facilities on September
28, 2015 (which were subsequently extended under the December 28 Waivers and thereafter
as I described above).
103
Yet while the above initiatives gave the Pacific Group additional "runway" to consider its options,
oil prices continued to decline, and it became clear that more fundamental changes were
needed. Specifically, Pacific concluded that its existing capital structure was unsustainable and
that it had liquidity concerns that operational changes and/or near term sales could not respond
to.
104
To this end, Lazard Freres & Co. LLC and Lazard Asesores Financieros, S.A. (together,
"Lazard") was engaged as the Pacific Group's financial advisors in December 2015 to assist
with the design and implementation of a restructuring strategy for the Applicants and other
members of the Pacific Group. A copy of Lazard's engagement letter, together with an
amending letter dated April 18, 2016 (collectively, the "Lazard Engagement Letter") is attached
hereto as Confidential Exhibit "C-1".
105
Lazard was mandated to, among other things:
29
(a)
review the Pacific Group's business plans, budgets and financial analyses;
(b)
assess the capital structure of Pacific and the Pacific Group more broadly with a view to
determining an appropriate debt load and structure; and
(c)
advise on the design and execution of potential transactions to improve Pacific's capital
structure.
106
To assist with the financial analysis needed with respect to Pacific Group's operations, business
plan, financing needs, capital expenditure requirements, etc., Pacific also retained Zolfo Cooper
Management LLC ("Zolfo Cooper"), which has had a financial team at the Pacific Group's
offices in Bogota since January of 2016. With the assistance of the Pacific Group's internal
financial team and Zolfo Cooper, Lazard identified immediate liquidity issues and financing
needs, prepared updated business plans, and developed the Solicitation Process.
107
The Pacific Group also retained legal counsel in three jurisdictions to assist in its analyses and
to prepare for whatever legal relief might be required. In particular, Pacific retained J&A
Garrigues S.L.P. in Colombia, Proskauer Rose LLP in the United States, and Norton Rose
Fulbright Canada LLP ("Norton Rose") in Canada.
108
On December 22, 2015, Goodmans LLP ("Goodmans") wrote to Pacific advising that they had
been retained to represent an ad hoc committee (as defined above, the "Ad Hoc Committee")
of six institutional holders of Notes (the "Noteholders", and together with the Banks, the
"Creditors") who held approximately 28.5% of the aggregate principal amount of the Notes.
VIII.
109
RESTRUCTURING EFFORTS IN 2016 TO DATE
Lazard's initial liquidity analysis was completed in early January 2016 and confirmed that the
Pacific Group's liquidity was indeed in jeopardy. More specifically, the initial cash flow forecasts
showed (at that time) that the Pacific Group would not have sufficient operating cash much
beyond the end of March 2016.
30
try
110
At about the same time, the price of oil hit a 13-year low (as it did again on February 11, 2016),
and the Pacific Group was therefore compelled to make some immediate and difficult decisions.
111
On January 14, 2016, Pacific announced that it would not make the interest payments due on
the 2025 Notes and the 2019 Notes, on January 19 and January 26, 2016 respectively, and
instead utilize the 30-day grace periods under the governing indentures to attempt to reach a
consensual restructuring of its obligations and businesses.
112
By January 2016, the Ad Hoc Committee represented by Goodmans had grown to include
Noteholders representing approximately 40% of the aggregate principal amount of the Notes
and on January 11, 2016, given that the urgency had by that time been more clearly identified,
Pacific entered into a retainer arrangement with Goodmans as counsel to the Ad Hoc
Committee. The Ad Hoc Committee is also represented by financial advisors, Evercore Group
L.L.C. and Evercore Partners International LLP (together, "Evercore"). Following retention,
Goodmans and Evercore promptly entered into confidentiality agreements.
113
Like the Ad Hoc Committee, the Banks have established a Bank Steering Committee,
comprised of Bank representatives from each of the Credit Facilities, with Davis Polk &
Wardwell LLP as legal counsel and FTI Consulting, Inc. ("FTI") as a financial advisor. Torys LLP
and Gomez-PinzOn Zuleta Abogados also advise Bank of America N.A., as administrative agent
under the Revolving Facility and lender under the BofA Facility.
114
During the week of January 18, 2016, the Applicants interviewed potential candidates for the
Monitor role, to prepare for the possibility that a proceeding under the CCAA might became
necessary. On February 3, 2016, the Applicants retained PricewaterhouseCoopers Inc. for this
purpose. From February 18, 2016 to the end of March, the Applicants' management and legal
and financial advisors have had twice-weekly update calls with them as proposed Monitor. After
that time, the proposed Monitor and its counsel became much more actively involved, as noted
below.
31
4'3
115
On February 3, 2016, Pacific and its advisors made presentations to advisors to the Ad Hoc
Committee and the Banks. The Pacific Group and its advisors have been in frequent contact
with the Ad Hoc Committee's advisors and the Banks' advisors (including their respective
financial advisors) since those presentations were made. It can fairly be said that the Pacific
Group and its advisors have been constantly in contact with these advisors, over the course of
the last two months.
116
In early December 2015, two electronic data rooms (together, the "Data Room") were
established to facilitate a potential exchange offer transaction involving the Notes and
subsequently for the upcoming Solicitation Process. Advisors for the Ad Hoc Committee and the
Banks have had access to the Data Room since early January 2016. The proposed Monitor has
also had access to the Data Room since it was retained on February 3, 2016. Pacific also
provided access to the data rooms relating to the sale of certain non-core assets, including for
Pacific Midstream, Pacific Infrastructure and Agro Cascada S.A.S.
117
In late February, each of the members of the Ad Hoc Committee executed a confidentiality
agreement with Pacific and became restricted.
118
Given the defaults that would occur after the 30-day grace period noted above, the Pacific
Group entered into negotiations with the Ad Hoc Committee and Banks to finalize the terms of
an "Extension Agreement" with the Ad Hoc Committee and a "Forbearance Agreement" with
each of the four sets of Banks. After extensive negotiation, Pacific and the Guarantors executed
the Lender Forbearance Agreements and Notes Extension Agreement (together, the
"Forbearance Agreements") as described above on February 19, 2016.
119
As evidenced by the "FA Protocol" appended to the Forbearance Agreements, it was a
fundamental term of the Creditors' willingness to forbear on their acceleration right that Pacific
work with the Creditors to develop the Solicitation Process and that the Creditors have real
involvement in that process.
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50
120
Concurrently with the discussions amongst Pacific, the Ad Hoc Committee and the Banks, the
Pacific Group also initiated frequent communication with the Superintendencia de Sociedades
de Colombia (the "Superintendencia"), to determine the Superintendencia's position in respect
of the Pacific Group's process. The Superintendencia is the regulatory body that oversees
insolvencies in Colombia.
121
In particular, Pacific was mindful of the Superintendencia's powers under Colombian law to take
control of the Pacific Groups' local Colombian branches and/or to initiate reorganization
proceedings in respect of such branches if the Superintendencia is of the view that their
Colombian operations are in imminent financial danger.
122
From its discussions with the Superintendencia, it has become clear to the Pacific Group that
the Superintendencia's focus is on protecting the Pacific Group's local Colombian branches in
order to safeguard their employees and local trade counterparties. As indicated above, the
Pacific Group accounts for approximately 30% of Colombia's oil production and is an important
player in Colombia's economy.
123
At the request of the Superintendencia, the Colombian advisors to the Pacific Group provide
frequent, almost daily, updates to the office of the Superintendencia.
124
On April 20, 2016, the Superintendencia issued an injunction ordering, among other things, that
it be informed within 24 hours following steps taken in "insolvency procedures carried out by the
parent of the [three branches of Meta, PSECC and Petrominerales, and Grupo C&C]". The
injunction also stipulates that it may be "broadened ex officio at any time." A copy of this
injunction, together with an unofficial translation of the same, is attached as Exhibit "G".
IX.
125
FORMAL SALES AND INVESTMENT SOLICITATION PROCESS
Lazard had some contact with potential investors in late January and early February, 2016,
including some potential investors put forward by the advisors to the Ad Hoc Committee and the
Banks. From late January to mid-February, it contacted over 50 such parties.
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51
126
In late February 2016, Pacific commenced a formal process to solicit interest from prospective
investors with respect to either; (i) an investment to effect its Recapitalization, or (ii) an
acquisition of all or part of Pacific's assets. Through their advisors, and pursuant to the terms of
the Forbearance Agreements, the Ad Hoc Committee, the Banks and the Independent
Committee had input into the design and implementation of this process, and have been
generally supportive of it.
A.
127
First Phase of the Sales and Investment Solicitation Process
On February 19 and 20, 2016, Lazard sent the first 'process letter' (the "First Process Letter")
to parties who had signed confidentiality agreements and who had indicated potential interest in
pursuing a transaction, including those parties identified by the financial advisors to the Ad Hoc
Committee and the Banks. A copy of the form of the First Process Letter is attached as Exhibit
"H". In addition, it is fair to say that other potential financers or buyers of the Pacific Group
would have been aware of the fact that the Pacific Group was undergoing this type of solicitation
process, since the Pacific Group has been the subject of much media attention.
128
Numerous documents were added to the Data Room as they became available, including
revised business plans and, significantly, on February 18, 2016, a draft year-end reserves report
on the Pacific Group's oil and gas assets. The Applicants view this updated report as a key
document that has informed the Pacific Group's own business plans. After this reserve report
became available, Lazard produced an updated business plan, which was also added to the
Data Room. This updated business plan shows revenues and cash needs, based on different
pricing scenarios and which accounted for various scenarios, such as the availability of pipeline
transportation capacity.
129
As interested parties contacted Lazard, they were given access to the Data Room immediately
after the execution of a non-disclosure agreement (preserving the confidentiality of the material
in the Data Room).
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130
In response to the First Process Letter, Lazard received six expressions of interest in various
forms. Some of those expressions of interest were received in a highly-developed 'term sheet'
form, while others were in the form of letters or presentation decks.
131
All expressions of interest were reviewed by the Pacific Group and its advisors. In early March
2016, Lazard prepared two "Investment Solicitation Updates" summarizing the terms of the six
expressions of interest. Copies of the Investment Solicitation Updates are attached as
Confidential Exhibits "C-2" and "C-3". The Investment Solicitation Updates were provided to
the legal and financial advisors for the Ad Hoc Committee and the Banks, and later to the
proposed Monitor and its counsel. Due to confidentiality restrictions contained in the nondisclosure agreements with the bidders, copies of the offers themselves could not initially be
provided to the Ad Hoc Committee or the Banks. However, copies of the offers were provided to
the proposed Monitor, after notice to the bidders.
132
Lazard, in consultation with the Pacific Group and with the advisors to the Ad Hoc Committee
and the Banks, entered into discussions with each of the bidders, and elected to allow each of
them to progress to the second phase of the Solicitation Process.
B.
133
Second Phase of the Solicitation Process
All six bidders received a 'second process letter' from Lazard on March 10, 2016 (the "Second
Process Letter"). A copy of the form of the Second Process Letter is attached as Exhibit "I".
134
The Second Process Letter set a deadline for offers on Wednesday, March 16 at 5:00 p.m., and
also set out the requirements for the form of offers, stipulating that offers provide a proposed
transaction structure and include: (a) a minimum capital commitment of $500 million, (b) details
of the proposed treatment of stakeholders and (c) details of the bidder's business plan for the
Pacific Group. The Second Process Letter further required that all offers be binding and open
for acceptance for a minimum of 45 days.
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53
135
On February 26, 2016, the two Executive Co-Chairmen of Pacific (Serafino Iacono and Miguel
de la Campa) notified Pacific and Lazard that they were entering into discussions with a
potential financing party (The Catalyst Capital Group Inc.; "Catalyst") in order to assist that
party in preparing an offer for investment in the Pacific Group. Mssrs. Iacono and de la Campa
thereafter absented themselves from all discussions with the Pacific Group and its advisors
relating to any of the offers received under the formal Solicitation Process.
136
Messrs. Iacono and de la Campa have stated that they will receive no personal benefit from the
Creditor / Catalyst Proposal (as described and defined below), and Catalyst has confirmed this.
As well, the Independent Committee was asked to review all offers, so that it could formulate an
independent recommendation to the Board of Pacific. The advisors to the Ad Hoc Committee
and to the Banks were advised of these developments, as was the proposed Monitor and its
counsel.
137
The Independent Committee had already retained independent legal counsel (Osier Hoskin &
Harcourt LLP), and elected at that time to also retain an independent financial advisor (UBS
Securities Canada Inc. ("UBS")), which was retained on February 24, 2016.
138
Lazard received four offers by 5:00 p.m. on March 16th. I note that there were other offers for
`streaming' support and possible loan support, but these did not present the comprehensive
solution that Pacific was seeking. Promptly thereafter, copies of the offers were made available
to all interested parties, specifically the advisors for each of the Ad Hoc Committee and the
Banks, the proposed Monitor and its counsel, the Independent Committee, its counsel and its
financial advisor. After the Pacific Group and its advisors reviewed the offers and identified
certain issues and questions with respect to those offers, Lazard then prepared a third
Investment Solicitation Update. A copy of the third Investment Solicitation Update is attached
hereto as Confidential Exhibit "C-4". The third Investment Solicitation Update was also
provided to each of the parties noted above.
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54
139
As I explained above, the Second Process Letter required that offers be binding and open for
acceptance for a minimum of 45 days. I am advised by Ari Lefkovits of Lazard that this
requirement was intended to ensure that the Pacific Group and its stakeholders had sufficient
time to thoroughly review and respond to the offers in an orderly manner. However,
notwithstanding this requirement, some of the bidders set their own deadlines for the
acceptance of their offers, including deadlines that fell short of the 45-day requirement. Those
bidders extended their deadlines incrementally, but these deadlines created additional time
pressure for the parties involved in the Solicitation Process.
C.
140
Meetings between Noteholders, Banks and Bidders
The advisors for the Ad Hoc Committee and the Banks requested that they and their respective
clients have an opportunity to meet with some of the bidders. These meetings were scheduled
for Tuesday, March 22 and Wednesday, March 23. I will refer to these meetings as the "Bidder
/ Lender Meetings". By the time of the Bidder / Lender Meetings, Goodmans had advised that
the Ad Hoc Committee had grown to include Noteholders representing approximately 50% of
the aggregate principal amount of the Notes.
141
One of the bidders, who had set a deadline of March 21, was unwilling to participate in the
Bidder / Lender Meeting unless it was given exclusivity by its deadline. The Independent
Committee considered the bidder's position, with the advice of its independent advisors, and
recommended that Pacific refuse this demand, presumably since that would have meant that
the other Bidder / Lender Meetings could not proceed, and that the period for consultation and
discussion with the Ad Hoc Committee and Banks would have been cut short.
142
Ultimately, the Bidder / Lender Meetings were held on March 21st and 22nd, with three bidders.
Approximately 80 individuals attended at these meetings, being representatives and advisors for
each of the Ad Hoc Committee, the Banks, the Pacific Group, and the Independent Committee,
as well as representatives and advisors from each of the bidders who attended.
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55
143
Each of the bidders that attended expressed a willingness to consider points raised, both
previously by Pacific and its advisors, and also by the Ad Hoc Committee, the Banks and their
respective advisors at the Bidder / Lender Meetings.
144
The advisors to the Ad Hoc Committee and the Banks communicated to Lazard and to Pacific
that they wanted to have further discussions with each of the three bidders who attended the
Bidder / Lender Meetings, and that they (the Ad Hoc Committee and the Banks) wished to have
the week of March 28 to finalize discussions with these bidders.
145
Additional Bidder / Lender Meetings were held on March 30, March 31 and April 1. These
meetings were again attended by representatives of the Ad Hoc Committee and the Banks, in
addition to their respective advisors, and of course various bidders. The proposed Monitor and
its counsel also attended these meetings, as did the advisors for the Independent Committee.
146
The bidder who had opted not to attend the previous week came to this second round of
meetings, as did an additional bidder who had not submitted an offer in response to the Second
Process Letter. As a result, five bidders in total attended the second round of Bidder / Lender
Meetings and made presentations and engaged in direct discussions with the representatives of
and advisors to the Ad Hoc Committee and the Banks.
147
During that week, good progress was made toward finalizing an offer and a restructuring
roadmap. Both the Ad Hoc Committee and the Bank Steering Committee stated that they were
satisfied that the most serious bidders for the Pacific Group were present, and that those
bidders were actively engaged in the Solicitation Process. At the meetings with bidders,
representatives of and advisors to the Ad Hoc Committee proposed a structure to bidders
whereby members of the Ad Hoc Committee and Banks would participate in a restructuring by
providing one-half of the $500 million debtor-in-possession commitment required by the
Company, with the other one-half to be provided by the bidder. Certain of the bidders were
38
S6
amenable to this approach and provided revised terms that contemplated creditor participation
in the financing, including Catalyst.
148
During this time the Pacific Group continued to have urgent liquidity constraints, and was now
projected to be illiquid in early May. It was therefore important to come to a consensus on a
bidder and the 'restructuring roadmap', as the Pacific Group had just over one month left to
decide upon and implement its restructuring. Indeed, numerous steps needed to take place
quickly:
(a)
the Independent Committee would need to decide on a recommendation to the Board and
make a report to the Board;
(b)
the Board would need to review the report of the Independent Committee and vote on the
recommended transaction;
(c)
many of the members of the Ad Hoc Committee and the Banks would need to engage their
own internal approval processes for any acceptable offer to be selected, and these Ad Hoc
Committee members and Banks represented numerous separate institutions worldwide;
(d)
the transaction documents would need to be drafted, finalized and executed;
(e)
the transaction would likely need to be presented to and approved by a Canadian court
pursuant to the terms of the CCAA, and perhaps by other courts (the process and jurisdiction
issues had not yet been settled); and
(f)
the transaction itself would need to be implemented by the Pacific Group, the bidder and a
potential array of other parties.
D.
149
Selection of a Bid
On April 5, 2016, the Independent Committee met in hopes of selecting a bid to recommend to
the Board. At that meeting, the Independent Committee was informed that the Ad Hoc
Committee and Pacific management had all voiced their support for one proposal in particular,
39
57
that made by Catalyst. This proposal was based on certain significantly revised terms that
included creditor participation and that had been negotiated by the Ad Hoc Committee and the
Banks directly with Catalyst, including with respect to governance of Pacific, and which those
parties referred to as the "Creditor/Catalyst Proposal".
150
The Independent Committee reviewed the principal terms of all proposals received and
concluded that the Creditor/Catalyst Proposal was the most likely:
(a)
to result in a consensual agreement with the Ad Hoc Committee and the Banks;
(b)
to be implemented through a pre-arranged insolvency filing;
(c)
to be implemented within the expedited timeframe dictated by the Pacific Group's financing
needs; and
(d)
151
to obtain the best result for all of the Pacific Group's stakeholders.
As such, following extensive deliberation and in light of the need to enter into a definitive
agreement on an expedited basis, the Independent Committee unanimously resolved to instruct
management of Pacific and its advisors, as well as those of the Independent Committee, to halt
negotiations with other bidders, and engage with Catalyst, the Ad Hoc Committee, the Banks,
and their respective advisors to take all reasonable steps to reach an agreement on the final
terms of its restructuring transaction as quickly as possible. This was supported by the advisors
to the Ad Hoc Committee, who were also of the view that the correct (and necessary) course of
action was to focus on the leading bid in order to try to get agreements in place with that leading
bidder.
152
For the several days that followed, there were intense negotiations amongst the Ad Hoc
Committee, various advisors for the Banks, Pacific, and Catalyst to develop and refine the terms
of a Creditor/Catalyst Proposal. Some of the Banks were negotiating a new L/C Facility (as
40
defined below), and the general form of the restructuring was being refined with the input of all
of these parties.
153
As well, an additional meeting was held on April 6, 2016 with the Superintendencia at its
request, to inform him of the status of the selection process.
154
The Independent Committee was tracking the process of negotiations very carefully, and met on
April 8th, April 9th and April 11th to discuss the status of transaction documents and to consider
whether it should continue to support the effort to finalize the Creditor/Catalyst Proposal. In each
case, it concluded that Pacific should continue to work toward finalizing the Creditor/Catalyst
Proposal.
155
On April 13, 2016, a meeting of the Board of Pacific was held to consider and possibly approve
proceeding with the Creditor/Catalyst Proposal. By that time, the features of the
Creditor/Catalyst Proposal had been almost entirely settled, although the documentation was
still not finalized. I attended that Board meeting.
156
At the meeting, the two Executive Co-Chairmen of Pacific (Messrs. Iacono and de la Campa)
recused themselves shortly after the meeting was opened, since they had assisted Catalyst in
formulating earlier versions of Catalyst's bid. Although the Executive Co-Chairman have stated
that they will receive no personal benefit from the Creditor/Catalyst Proposal (and Catalyst has
confirmed this), there had been repeated media speculation that the Executive Co-Chairmen
were benefitting from the Creditor/Catalyst Proposal. In light of that, they did not participate in
the Board discussion of the bids.
157
During this meeting, the members of the Board representing O'Hara made numerous unfounded
accusations about the propriety of the process. While I understand that they are undoubtedly
upset at the prospect of losing their significant equity investment, their approach was not
conducive to an orderly meeting.
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158
The representatives of Alfa on the Board also attended this meeting by telephone, although they
acknowledged that they could not vote on any proposed transaction (since they had been one of
the bidders). They too were unhappy with the recommendation being made at that meeting and
the consideration of the bids, although they were not as disruptive as the O'Hara
representatives.
159
Lazard provided the Board with an overview of the Solicitation Process and the economics of
the various bids that were made, including the Creditor/Catalyst Proposal. Dennis Mills, the
chairman of the Independent Committee, then presented the recommendation of the
Independent Committee, which was to proceed with the Creditor/Catalyst Proposal. A vote of
the non-conflicted Board was then taken. The Chief Executive of Pacific (Ronald Pantin)
abstained from voting due to a perceived conflict, the Executive Co-Chairmen were not present,
and the Alfa representatives on the Board also abstained from voting. Of the seven members of
the Board who voted, five approved proceeding with the Creditor/Catalyst Proposal; the other
two (the O'Hara representatives) voted against this Board resolution.
X.
THE PROPOSED FINANCING AND REORGANIZATION
A.
160
Overview of the Proposed Financing and Reorganization
The terms of the proposed Recapitalization are now finalized, and are as set out in the term
sheets attached hereto. The Recapitalization Term Sheet attached hereto as Exhibit "J" is a
general overview of the Recapitalization. In general terms, the Recapitalization contemplates:
(a)
that Pacific will be reorganized utilizing the CCAA and proceedings in Colombia and the United
States, and a plan of arrangement and compromise (a "Plan") with Catalyst acting as Plan
sponsor will be filed under the CCAA to implement the Recapitalization and upon exit will be a
public company that is listed on the Toronto Stock Exchange or another exchange acceptable
to the stakeholders;
(b)
the DIP Note Purchasers will purchase from Pacific notes up to $500 million as a senior
secured first-lien debtor-in-possession financing (the "DIP Notes"); $250 million of which will
42
60
be purchased by Catalyst and $250 million of which will be purchased by a group of
Noteholders (the "DIP Noteholders", and together with Catalyst, the "DIP Note Purchasers");
(c)
in the event that the DIP Noteholders do not purchase their portion of the $250 million of DIP
Notes or perform their obligations under the DIP Notes, then pursuant to the terms of the DIP
Notes Catalyst will backstop the DIP Noteholders' commitment. This backstop will ensure that
the Pacific Group has access to the required funding during the CCAA proceedings in order to
effect the Recapitalization.
(d)
a $134 million letter of credit facility (the "UC Facility") will be made available to Pacific by a
group of the Banks;
(e)
the $250 million portion of the DIP Notes purchased offered by certain of the Noteholders will
remain outstanding as 'exit financing' after the Recapitalization is completed (assuming that
the Plan is approved), whereas the $250 million portion of the DIP Notes purchased by
Catalyst will be exchanged for 16.8% of the Reorganized Common Stock (again, assuming
that the Plan is approved);
(f)
the consideration for purchasing the DIP Notes shall be the issuance of warrants carrying
rights to 25% of the "Reorganized Common Stock" of Pacific (being the new common stock
of Pacific available upon implementation of the Plan); assuming that the warrants are
exercised, one-half of this amount (12.5%) will go to Catalyst, which is purchasing one-half of
the DIP Notes (which would at that point bring its holdings to a total of 29.3% of the
Reorganized Common Stock), and one-half of this (another 12.5%) will go to the Noteholders
who are purchasing the other one-half of the DIP Notes;
(g)
the remaining 58.2% of the Reorganized Common Stock will be available to Affected Creditors
(as defined below) under the Plan, if approved; Catalyst has committed to provide a backstop
of at least an additional $200 million to fund a "Cash Out Offer" that will permit Affected
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61
Creditors to elect to receive cash instead of the Reorganized Common Stock which they would
otherwise receive;
(h)
the Plan will provide that the existing equity of Pacific will be cancelled, or diluted to a nominal
amount;
(i)
the affected creditors under the Plan (the "Affected Creditors") will be the Noteholder claims
and the Banks' claims under the Credit Facilities, although there is a provision that allows
Pacific to treat "unknown, unreported, contingent or contested" claims as Affected Claims,
together with restructuring claims from, for example, the repudiation of contracts;
(j)
a Key Employee Retention Plan (the "KERP") will be implemented. The KERP serves a
number of purposes. As its name indicates, it is a program designed to help retain key
employees during the restructuring period. As well, it was enhanced somewhat (on agreement
of the Ad Hoc Committee, the Banks and Catalyst) in exchange for executives (a) giving up
change of control payments to which they would otherwise be entitled, and (b) amending
contractual severance claims as against Pacific. This is described in more detail in my
Supplementary Affidavit, filed in support of the KERP;
(k)
a new board of directors (the "New Board") will be appointed upon implementation of the Plan,
consisting of three nominees of Catalyst, one individual selected by the Noteholders, one
individual selected by the Banks, and two independent directors, selected jointly by Catalyst
and a certain number of Supporting Creditors (as defined below);
(I)
a Chief Restructuring Officer and a Deputy Chief Financial Officer will be appointed during the
CCAA process; and
(m)
there will be an assessment process with respect to a number of the members of senior
management.
44
B.
161
Review of the Recapitalization by the Board and Independent Committee
As noted above, the Independent Committee and its advisors were mandated to review
strategic alternatives available to the Pacific Group, including the proposed bids. To that end,
the Independent Committee analyzed and considered each expression of interest and offer
received throughout the Solicitation Process, mindful in particular towards its late stages of the
urgency of the Pacific Group's liquidity constraints and need to obtain financing in the very near
term.
162
The Independent Committee reviewed and considered the Recapitalization and determined, in
consultation with its own legal and financial advisors as well as those of Pacific, that the
Recapitalization is fair, reasonable and in the best interests of both the Pacific Group and its
stakeholders. The Independent Committee therefore unanimously recommended that the Board
of Pacific approve the steps necessary to implement the Recapitalization, which (as noted
above) the Board approved on April 13, 2016. The Independent Committee's recommendation
to the Board was set out in its Report dated April 11, 2016, a copy which is attached as
Confidential Exhibit "C-5".
163
As explained in detail in the Independent Committee's Report, the Independent Committee
considered key characteristics of the process and the Recapitalization in reaching its
recommendation. In particular, the Independent Committee concluded, among other things,
that:
(a)
the Solicitation Process that resulted in the Recapitalization being selected as the "winning"
bid was extensive, competitive, and transparent. The process was conducted with extensive
consultation with and involvement by the representatives of and advisors to the Banks and the
Ad Hoc Committee, and the Recapitalization was negotiated at arm's-length between the
interested parties;
45
(b)
the Recapitalization provides the best opportunity to allow the Pacific Group to continue as a
going concern. It is the best offer received by Pacific in the Solicitation Process for all of the
Pacific Group's stakeholders. In addition, if approved, the Recapitalization will ensure that, in
keeping with the Superintendencia's concerns, the Recapitalization will leave local Colombian
trade claims as unaffected;
(c)
without a rescue plan such as the Recapitalization, the Pacific Group would be illiquid in the
very near term, the most likely result of which would be a disorderly "free fall" liquidation, or the
Superintendencia would take actions permitted under Colombian law to control the Pacific
Group. Neither of these alternatives would be in the best interests of the Pacific Group or its
stakeholders;
(d)
the Creditors' recovery under the Recapitalization is expected to be significantly higher than
what would be received in bankruptcy or receivership, or any Colombian proceedings that may
be commenced if the Recapitalization is not pursued; and
(e)
the advisors to the Ad Hoc Committee and the Banks indicated that the Recapitalization is
more likely to result in a consensual arrangement amongst their clients than any other
proposal received. In fact, as described below, the Recapitalization has received broad
support from the Noteholders and the Banks.
164
This morning, further to the receipt of formal approval of the Pacific Board for the
Recapitalization, the Independent Committee presented to the Board a further supplemental
report dated April 25, 2016 , detailing certain further factors that it had considered in making its
previous recommendation . A copy of that Supplemental Report is attached hereto as
Confidential Exhibit "6".
C.
165
Stakeholder Support
As at the date of this affidavit, the Application and the restructuring that would be effected under
the Recapitalization is supported by:
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64
(a)
The unanimous approval of the members of the Ad Hoc Committee, including the five Ad Hoc
Committee members who are not participating in the DIP Notes;
(b)
Noteholders representing approximately 44% of the outstanding principal amount of the Notes;
(c)
Other Noteholders who did not sign the Support Agreement but who are part of the Ad Hoc
Committee and have indicated that they support the Recapitalization (constituting
approximately another 8.7% of Noteholder claims);
(d)
Some individual Noteholders who have contacted Pacific (nothing has yet been formalized, but
Pacific will solicit and confirm additional support in the coming weeks); and
(e)
Banks representing approximately 65.5% of the obligations under the Credit Facilities (the
"Supporting Banks"),
collectively, the "Supporting Creditors". The Noteholders in subparagraph (a) above, and the
Supporting Banks, have executed the Support Agreement attached as Exhibit "D". As noted above,
the names of some of the Noteholders have been redacted from the Support Agreement at the
request of the Ad Hoc Committee.
OTHER DOCUMENTATION RELATING TO THE RESTRUCTURING
166
For the sake of completeness, and in addition to the Restructuring Term Sheet and the Support
Agreement, I have attached other documents that have been entered into with respect to the
Recapitalization. These are:
(a)
a commitment letter between Pacific and Catalyst dated April 20, 2016 (the "Catalyst
Commitment Letter", attached as Exhibit "K");
(b)
a commitment letter between Pacific and the DIP Note Purchasers, dated April 20, 2016
(Exhibit "L")
(c)
a DIP Notes and exit notes financing term sheet (the "DIP Term Sheet") (Exhibit "M");
47
(d)
a commitment letter between the providers of the L/C Facility and Pacific dated April 20, 2016
(Exhibit "N"); and
(e)
XI.
167
the UC Facility Term Sheet (the "UC Term Sheet") (Exhibit "0").
THE NEED FOR CCAA RELIEF
The Applicants and the Pacific Group have made substantial progress in advancing their
restructuring by identifying the Recapitalization transaction and negotiating its terms. However,
in order to actually effect the Recapitalization, the Applicants require the relief provided by the
CCAA.
168
Indeed, the Applicants face a foreseeable liquidity crisis and are insolvent. Without the
protection of a comprehensive stay of proceedings in their favour under the CCAA, in
conjunction with the protective relief sought in the other Coordinated Proceedings, Pacific and
the other Applicants are exposed to the immediate risk that some of the Applicants'
counterparties may take enforcement steps under their contractual arrangements. Not only do
Pacific's obligations under the Long-Term Debt remain in default, but most of the contracts on
which the Pacific Group relies are contracts of the Applicants themselves. Pacific and the other
Applicants need protection from remedies and proceedings that might otherwise be taken by
creditors, counterparties and others while they attempt to complete their restructuring. Absent
such protection, there could be very significant and permanent damage to the Pacific Group's
business during the restructuring period.
169
Further, the indentures governing the Notes provide that 100% of Noteholders would have to
agree, in an ordinary contractual context, to the compromise of the obligations owing under
those indentures. I am advised by Tony Reyes of Norton Rose that a proceeding under the
CCAA is not only desirable but necessary in light of this fact, since the provisions of the CCAA
allow for the compromise of claims based on the statutory thresholds and procedures set out in
that statute.
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V.6,
170
In light of the current financial state of Pacific and the other Applicants and after a broad review
of alternatives and upon the recommendation of the Independent Committee, the Board of
Pacific as well as the boards and/or shareholders (as applicable) of each of the other Applicants
has determined that the Applicants must seek protection under the provisions of the CCAA, and
that seeking the approval of a Plan to implement the Recapitalization is the best available option
to the Applicants.
XII.
REQUESTED RELIEF UNDER THE INITIAL ORDER
A.
171
Administration Charge
Pacific retained a number of professional advisors to assist with its restructuring. In addition to
its own advisors, Pacific has funded various other advisors who have been retained to provide
advice to others.
172
The first group (advisors providing advice to the Pacific Group) consists of (a) Norton Rose,
Canadian counsel, (b) Proskauer Rose LLP, U.S. counsel, (c) J&A Garrigues S.L.P., Colombian
counsel, (c) Lazard, and (d) Zolfo Cooper. In addition, the Independent Committee retained
Osier, Hoskin & Harcourt LLP and UBS, to provide the Independent Committee with
independent legal and financial advice.
173
The second group (advisors funded by Pacific but providing advice to others) includes (a)
Goodmans, Evercore, Paul, Weiss, Rifkind, Wharton & Garrison LLP and Cardenas y Cardenas
Abogados (the Ad Hoc Committee's Canadian counsel, financial advisor, U.S. counsel and
Colombian counsel, in that order); (b) Torys LLP, FTI, Davis Polk & Wardwell LLP, GOrriezPinion Zuleta Abogados, and Seward & Kissel LLP (the Agent's Canadian counsel, financial
advisor, U.S. counsel, Colombian counsel and counsel to one of the Banks, in that order); and
(c) Brown Rudnick LLP, McMillan LLP (Catalyst's US counsel, Canadian counsel and financial
advisor, in that order).
174
To secure the fees, disbursements and success fees incurred in connection with services
rendered by each of above-named advisors under their respective retainers with Pacific, the
49
67
Applicants seek a charge on the Applicants' current and future assets in the maximum amount
of $45 million (the "Administration Charge"). The signatories to the Support Agreement have
agreed to this. The Administration Charge will have the highest priority of the court-ordered
charges (collectively, the "Charges") created by the proposed form of Initial Order.
175
The Applicants have worked with the proposed Monitor to determine the proposed quantum of
the Administration Charge and believe it to be reasonable and appropriate in view of the
significant size and complexity of the Applicants' business, the complexity of the Coordinated
Proceedings as a whole, and the services to be provided by beneficiaries of the proposed
Administration Charge.
176
The proposed Monitor and its counsel are also beneficiaries of the proposed Administration
Charge.
B.
177
The DIP Charges
With the Pacific Group's cash resources projected to run out in the very near term, the
Applicants seek debtor-in-possession financing as a part of the Recapitalization under each of
the DIP Notes and the L/C Facility. Each are addressed in turn below.
(i)
178
The DIP Notes
The Applicants require access to debtor-in-possession financing in the amount of $500 million in
order to (a) maintain operating cash; (b) fund the costs of their operations and the Coordinated
Proceedings; and (c) pursue and implement the Recapitalization.
179
For this reason, Pacific required as a part of the Solicitation Process that all bidders make a
minimum capital commitment in Pacific of such amount, and received not less than five such
offers for the provision of debtor-in-possession financing, though not all in sufficient amounts.
One such proposal was provided by Catalyst as a key element of the transaction that was
ultimately approved by the Board of Pacific.
50
6R
180
The terms of the DIP Notes (including quantum, conditions, price, ranking and execution risk)
were key considerations in the evaluation process that led to the approval of the
Creditor/Catalyst Proposal by the Board.
181
The DIP Notes term sheet contains many commercial terms. The financial terms of the DIP
Notes include the following terms:
(a)
an interest rate of 12% per annum, compounded monthly and payable in arrears monthly in
cash;
(b)
a discount on the issue price of 4% (such that the proceeds of the issuance of the DIP Notes
available to the company will be the maximum amount of $480 million); and
(c)
a break fee equal to 5% of the $500 million issuance amount, would be payable to the DIP
Note Purchasers in the event that funding of the DIP Notes does not occur or a restructuring
transaction other than the Recapitalization is consummated (the "Break Fee").
182
The purchase of the DIP Notes is conditional upon the provision of an order of the Court, among
other things, approving the DIP Notes arrangement and approving a security interest, lien and
charge on substantially all of the Applicants' and certain of their subsidiaries' property, subject to
the terms of the DIP Note Term Sheet. It is proposed that the DIP Notes Charge will rank
second, behind the Administration Fee.
183
The DIP Note Term Sheet contains covenants and events of default that are reflective of the
circumstances of the Applicants and Pacific Group, as well as the DIP Notes role in the
Recapitalization as the source of "plan sponsorship" funds. Thus for instance, it is an event of
default if (a) the Applicants fail to implement the Recapitalization within an agreed upon timeline,
(b) the Plan implementing the Recapitalization fails to be approved; or (c) the Support
Agreement is terminated.
51
9.
184
In order to effect the Creditor/Catalyst Proposal, Pacific entered into the Catalyst Commitment
Letter. The Catalyst Commitment Letter provides that Catalyst will act as plan sponsor and has
committed to backstop the purchase of the entire amount of the DIP Notes, being $500 million
as well as backstop the Cash Out Offer, pursuant to which Affected Creditors can receive cash
instead of their entitlement to shares.
185
In consideration for backstopping the DIP commitment and in lieu of Catalyst taking a
commitment fee or backstop fee, Catalyst agreed to only take equity in the newly restructured
company and accordingly required: (i) a Break Fee equal to 3% of $500 million if the Company
entered into an alternative DIP facility or alternative restructuring transaction, (2% of the 5%
Break is to be payable to the DIP Noteholders); and (ii) reimbursement for Catalyst's out of
pocket expenses. The Catalyst Commitment Letter sets out Catalyst's agreement to support the
proposed Recapitalization Transaction as set out above and provides for incidental transactional
protection.
186
In submitting its bid, negotiating the Recapitalization and the terms of the DIP Notes, Catalyst
has expended considerable time and expenses to commit its support as plan sponsor to Pacific
and the Pacific Group stakeholders. The DIP Notes Charge is intended to secure the obligations
of Pacific to Catalyst under the Catalyst Commitment Letter.
(ii)
187
The L/C Facility
As a part of the Recapitalization, the Applicants also seek debtor-in-possession financing under
the L/C Facility, the terms of which are set out in the L/C Term Sheet.
188
As noted above, as at April 8, 2016 the Pacific Group had letters of credit posted in the amount
of $221 million, of which approximately $127 million must be renewed or replaced during 2016,
with $116 million of this to be replaced or renewed through June 2016. The L/C Facility is
intended to allow the Pacific Group to replace these letters of credit during a restructuring period
52
70
in which it is not anticipated that renewal or replacement will be possible without the posting of
significant cash collateral.
189
As with the DIP Notes, the L/C Facility is conditional upon the provision of an order of the Court,
among other things, approving the L/C Facility arrangement and approving a Charge in favour
of the UC Providers (the "L/C Charge"). This L/C Charge will rank fourth, according to the terms
of the proposed Initial Order.
190
The L/C Term Sheet contains covenants and events of default that are substantially similar to
those under the DIP Term Sheet, and include the requirement that the Applicants implement the
Recapitalization pursuant the Coordinated Proceedings under the same timeline as required by
the DIP Notes.
191
The Applicants believe that each of the DIP Notes and UC Facility is in the Applicants' best
interests and in the best interests of stakeholders, as a crucial component of the
Recapitalization. The Applicants have considered, among other things, that:
(a)
The DIP Notes have been designed as a cash collateral financing pursuant to which the
Applicants may draw down from proceeds of the DIP Notes in such amounts as are required in
order to maintain operating cash at $100 million, such that funds will not be made available in
an amount above the Applicants' cash requirements at any particular time in these
proceedings;
(b)
Similarly, the L/C Facility is only available to the extent that predetermined, existing letters of
credit need to be renewed, extended or replaced, and thus will only be utilized to allow the
Pacific Group to maintain letters of credit required for the continued operation of its business;
(c)
Both the DIP Notes and UC Facility have the support of the Applicants' major creditor groups,
with creditors representing 55% of the Long-Term Debt having signed up to the Support
Agreement or are otherwise already supporting such financings;
53
7/
(d)
The Applicants have, with the assistance of Lazard and Zolfo Cooper, established a business
plan to ensure that costs can be reduced to the greatest extent possible during the Canadian
and Coordinated Proceedings;
(e)
Both the L/C Facility and DIP Notes represent fundamental elements of the Recapitalization;
(f)
Should the L/C Facility not be approved, it is unlikely that the Pacific Group would be able to
post the cash collateral that they expect would be required in order to renew, extend or replace
the significant amount of letters of credit that are due to expire in the near term and which are
necessary to the continued operation of the Applicants' business; and
(9)
Should the DIP Notes not be approved, the Applicants are projected to run out of sufficient
cash to operate their business by the third week of May.
C.
192
Directors' and Officers' Charge
To ensure the ongoing stability of the Applicants' business during the CCAA period and the
successful and expedited implementation of the Recapitalization, the Applicants require the
continued participation of the directors and officers who oversee the management of their
business and commercial activities. The directors and officers of the Applicants have
considerable and valuable experience that will assist in keeping Pacific Group stable and
productive during the CCAA period.
193
Due to the potential for personal liability, the Applicants' directors and officers may not remain
during the CCAA period unless the Initial Order grants the Directors' Charge (as defined below)
to secure the Applicants' respective indemnity obligations to the directors and officers that arise
post-filing.
194
With the assistance of the proposed Monitor, Pacific calculated that certain director liabilities,
namely wages, vacation pay, statutory employee deductions, and value added tax amounts may
accrue to approximately $11 million between the payment cycles applicable to those amounts.
The Applicants therefore request a Charge (the "D&O Charge") in favour of the Applicants'
54
7Z
directors and officers in this amount. This request has been agreed to by the parties to the
Support Agreement. Further, the parties to the Support Agreement agreed that this D&O
Charge would rank third in the priority of the Charges. The benefit of the proposed D&O Charge
will only be available to the directors and officers to the extent that a liability is not covered by
the D&O Insurance (as defined below).
195
Pacific maintains directors' and officers' liability insurance (the "D&O Insurance") for the
Applicants' officers and directors. The current D&O Insurance policies provide a total of $125
million of coverage.
D.
196
Key Employee Retention Plan and Charge
The Applicants depend upon the continued employment of certain highly skilled and
experienced employees who (i) perform roles that are critical to implementing the Pacific
Group's restructuring goals, including the Recapitalization; and (ii) very likely cannot be suitably
replaced at reasonable cost.
197
The Applicants, in consultation with the Independent Committee, the Monitor and the Creditors,
have developed the KERP (as defined above) to retain these employees during the
restructuring process. It is contemplated that the amounts payable under the Key Employee
Retention Plan would also have the benefit of a court-ordered charge (the "KERP Charge") in a
quantum and having the ranking described below. For this reason, the Applicants also seek
approval of the KERP and the KERP Charge. Details regarding the KERP can be found in my
Supplementary Affidavit filed in support of the KERP.
198
The parties to the Support Agreement have approved the KERP. It is proposed that the KERP
Charge rank second, pari passu with the DIP Notes Charge. The DIP Note Purchasers and the
other parties agreed to this, although it was agreed that the KERP charge should be a 'silent,
passive' charge, and that concept is reflected in the draft Initial Order.
E.
Proposed Ranking of Court Ordered Charges
55
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199
200
To summarize, the proposed ranking of the Charges is as follows:
(a)
First, the Administration Charge;
(b)
Second, the DIP Notes Charge and the KERP Charge, pad passu, and
(c)
Third, the D&O Charge; and
(d)
Fourth, the UC Charge.
I am advised by Mr. Alex Schmitt of Norton Rose that there is only one secured creditor who
may be affected by the Charges, Xerox Canada Ltd. ("Xerox"), which has registrations against
Pacific in respect of certain leased office equipment located in its Toronto head office. Xerox
was not provided with notice of this Application; however the value of the office equipment
leased by Xerox is de minimis and, moreover, the Applicants do not intend to compromise
ordinary course suppliers such as Xerox. For this reason, the proposed Initial Order does not
contain any specific provision relating to the security held by Xerox.
F.
201
Approval of Financial Advisor Engagements
In order to assist in the implementation of this CCAA process, the Applicants seek the Court's
approval and confirmation of the retention of (a) Lazard, as financial advisor to Pacific, (b) UBS,
as financial advisor to the Independent Committee, (c) FTI, as financial advisor to the Bank
Steering Committee, and (d) Evercore, as financial advisor to the Ad Hoc Committee (Lazard,
UBS, FTI and Evercore being collectively, the "Financial Advisors"). The Applicants further
seek the approval of the terms of (a) the Lazard Engagement Letter (a copy of which, again, is
attached Confidential Exhibit "C-1"),(b) the engagement letter of UBS together with an
amendment thereto dated April go, 2016 (copies of which are together attached hereto as
Confidential Exhibit "C-7") (c) the engagement letter of FTI (a copy of which is attached
hereto as Confidential Exhibit "C-8"), and (d) the engagement letter of Evercore (a copy of
which is attached hereto as Confidential Exhibit "C-9") (collectively, the "FA Engagement
Letters").
56
202
The approval of the FA Engagement Letters of the Financial Advisors is appropriate in the
circumstances as they have each worked extensively with the Applicants, the Noteholders and
the Banks in connection with the Pacific Group's pre-filing restructuring efforts and as indicated
above, each played a key role in identifying and negotiating the best transaction available for
the benefit of all stakeholders. As provided for in the Support Agreement, the parties thereto
have agreed to the approval of the FA Engagement Letters and the payments of the amounts
set out therein, including success fees.
203
The Applicants will be seeking an Order sealing the Confidential Exhibits to this Affidavit which
contain the FA Engagement Letters. The FA Engagement Letters are commercially sensitive as
they contain the commercial terms of the engagement of each of the Financial Advisors. The
public disclosure of these commercial terms would have a detrimental impact on the Financial
Advisors' ability to negotiate compensation on future engagements.
G.
204
Postponement of Annual General Meeting
The annual general meeting of the shareholders of Pacific must currently be held by no later
than August 28, pursuant to the Business Corporations Act (British Colombia).
205
In view of the fundamental changes that will be sought in the Plan, as indicated by the terms of
the Recapitalization, and in view of the limited financial resources of the Applicants, Pacific
respectfully requests that this annual general meeting be postponed until after the Plan, if
approved, is implemented.
206
Pacific has been diligent in issuing news releases, and will continue to be diligent in this respect.
Its news releases since January 1, 2016 relating to its restructuring efforts are collectively
attached as Exhibit "P", and demonstrate the significant information that is available publicly,
and particularly with respect to its restructuring.
207
In addition, it is my understanding that information with respect to these proceedings will be
available on the Monitor's website, as the draft Order contemplates.
57
75
H.
208
Proposed Monitor
The draft Initial Order also seeks the appointment of PricewaterhouseCoopers Inc. as the
Monitor in the CCAA proceedings. PricewaterhouseCoopers Inc. has consented to act as the
Court-appointed Monitor of Pacific, if so ordered.
209
PricewaterhouseCoopers Inc. is a trustee within the meaning of section 2 of the Bankruptcy and
Insolvency Act, R.S.C. 1985, c. B-3, as amended, and has advised that it is not subject to any of
the restrictions that are set out in section 11.7(2) of the CCAA.
1.
210
Coordinated Proceedings
As noted above, both the U.S. Proceedings and Colombia Proceedings will be initiated for
protective reasons. The Applicants do not anticipate at this time that there will be a need for this
Court to communicate with either of the presiding Colombian or U.S. courts nor will there be any
need for coordination with the Colombian Proceedings or the U.S. Proceedings. Accordingly,
the Applicants are not proposing that any specific protocols between the Canadian and the
Colombian or U.S. courts be approved at this time, but may return for approval of such a
protocol or protocols if this appears necessary during the course of the CCAA proceedings.
XIII.
211
CASH FLOW FORECAST
As set out in the cash flow forecast (the "Cash Flow Forecast") attached to the pre-filing report
of the proposed Monitor dated April 0, 2016, the Applicants' principal uses of cash during the
next thirteen (13) weeks will consist of:
(a)
ongoing exploration and development expenditures required for both the production and
development properties; partially offset by the net revenues from the production, transportation
and sale of oil and gas to customers;
(b)
payments to suppliers of the Pacific Group to normalize outstanding trade obligations, as
contemplated in connection with the DIP Notes;
58
7b
(c)
tax remittances to government authorities for income, equity, withholding and value added
taxes;
(d)
costs associated with the Coordinated Proceedings and the restructuring process, this
includes the costs of the legal and financial advisors set out above, as well as financing costs
of the DIP Notes and the LIC Facility; and
(e)
212
the KERP.
As of April 25, 2016, Pacific had approximately $121 million available cash on hand. The
Applicants' Cash Flow Forecast projects that subject to obtaining the relief sought on this
Application, including the DIP Notes, the Applicants will have sufficient cash to fund their
projected operating costs until the end of the stay period.
XIV.
213
CONCLUSION
The Pacific Group has been severely impacted by the recent decline in international oil and
natural gas prices. It has taken a number of cost reduction and other steps to enhance its
economic outlook, but ultimately requires significant new capital in order to survive. It also
needs to restructure and compromise the very substantial debt owed to the Noteholders and the
Banks, since the Pacific Group cannot service that debt at current oil and natural gas prices.
214
I believe that the most viable chance for a timely and effective restructuring of the Pacific
Group's business is pursuant to CCAA proceedings, coupled with protection under the U.S.
Proceedings and Colombian Proceedings as described above, and by effecting the
Recapitalization thereunder through a Plan that will be presented in the CCAA proceedings.
215
If the Coordinated Proceedings are not commenced and the relief sought under the proposed
Initial Order is not obtained, the Pacific Group's strong relationships with its customers,
suppliers and key state oil companies and agencies will be at risk and its operational interests in
its oil and gas properties will deteriorate significantly and dramatically, and all stakeholders will
be significantly prejudiced as a result.
59
77
216
The Recapitalization has been negotiated with the active involvement of the Ad Hoc Committee
and advisors to the Banks, and a majority of all Creditors have already expressed their support
for the Recapitalization.
SWORN BEFORE ME at the City of Toronto, in the
Province of Ontario, this 27th day of April, 2016.
Peter Volk
A Commissioner for taking Affidavits (or as may be)
60
IN THE MATTER OF THE COMPANIES' CREDITORS ARRANGEMENT ACT, R.S.C. 1985, c. C-36, AS
AMENDED
Court File No.: CV-16-11363-00CL
AND IN THE MATTER OF A PLAN OF COMPROMISE OR ARRANGEMENT OF PACIFIC EXPLORATION &
PRODUCTION CORPORATION, PACIFIC E&P HOLDINGS CORP., META PETROLEUM CORP., PACIFIC
STRATUS INTERNATIONAL ENERGY LTD., PACIFIC STRATUS ENERGY COLOMBIA CORP., PACIFIC
STRATUS ENERGY S.A., PACIFIC OFF SHORE PERU S.R.L., PACIFIC RUBIALES GUATEMALA S.A.,
PACIFIC GUATEMALA ENERGY CORP., PRE-PSIE COOPERATIEF U.A., PETROMINERALES COLOMBIA
CORP. AND GRUPO C&C ENERGIA (BARBADOS) LTD.
Applicants
ONTARIO
SUPERIOR COURT OF JUSTICE
COMMERCIAL LIST
Proceeding commenced at Toronto
AFFIDAVIT OF PETER VOLK
(Sworn April 27, 2016)
NORTON ROSE FULBRIGHT CANADA LLP
Royal Bank Plaza, South Tower, Suite 3800
200 Bay Street, P.O. Box 84
Toronto, Ontario M5J 2Z4 CANADA
Tony Reyes LSUC #28218V
Tel: 416.216.4825
[email protected]
Orestes Pasparakis LSUC #36851T
Tel: 416.216.4815
orestes.pasparakisnortonrosefulbright.com
Virginie Gauthier LSUC #41097D
Tel: 416.216.4853
viroinie.oauthiernortonrosefulbright.com
Lawyers for the Applicants
1
TAB 3
79
Court File No.: CV-16-11363-00CL
ONTARIO
SUPERIOR COURT OF JUSTICE
COMMERCIAL LIST
IN THE MATTER OF THE COMPANIES' CREDITORS ARRANGEMENT ACT,
R.S.C. 1985, c. C-36, AS AMENDED
AND IN THE MATTER OF A PLAN OF COMPROMISE OR ARRANGEMENT OF
PACIFIC EXPLORATION & PRODUCTION CORPORATION, PACIFIC E&P
HOLDINGS CORP., META PETROLEUM CORP., PACIFIC STRATUS
INTERNATIONAL ENERGY LTD., PACIFIC STRATUS ENERGY COLOMBIA
CORP., PACIFIC STRATUS ENERGY S.A., PACIFIC OFF SHORE PERU
S.R.L., PACIFIC RUBIALES GUATEMALA S.A., PACIFIC GUATEMALA
ENERGY CORP., PRE-PSIE COOPERATIEF U.A., PETROMINERALES
COLOMBIA CORP. AND GRUPO C&C ENERGIA (BARBADOS) LTD.
Applicants
SUPPLEMENTARY AFFIDAVIT OF PETER VOLK
(Sworn April 27, 2016)
I, Peter Volk, of the City of Toronto, in the Province of Ontario, MAKE OATH AND SAY:
1
I am the General Counsel of Pacific Exploration & Production Corporation
(formerly known as Pacific Rubiales Energy Corp.) ("Pacific" or the "Company"). I
have held that position since February, 2008. As such, I have personal knowledge
of the matters to which I hereinafter depose, except where otherwise stated, and
where so stated I believe that information to be true.
2
All capitalized terms not defined herein shall have the meanings ascribed to such terms
in my Affidavit sworn April 27, 2016 in support of the Applicants' application (the "CCAA
1
20
Application") for protection under the Companies' Creditors Arrangement Act (Canada)
(the "CCAA") (the "Initial Affidavit").
3
All references in this Affidavit to dollars or $ are, unless otherwise indicated, references
to United States dollars.
4
This Affidavit is sworn in support of an application brought by the Applicants seeking
orders, among other things:
(a)
approving the key employee retention plan (the "KERP") approved by the
independent committee of the board of directors of the Company (the
"Independent Committee"), for those employees of the Applicants and certain
of their subsidiaries that the Independent Committee, in consultation with
Catalyst, the Ad Hoc Committee and the Banks, has deemed to be critical to the
operations and/or the restructuring of the Pacific Group (as defined below). A
copy of the KERP, which includes as its Schedule "A" the list of KERP
participants and their respective retention bonus amounts (the "KERP
Participant List") is attached as Confidential Exhibit "C-1" hereto;
(b)
granting a charge on the current and future assets, undertakings and properties
of the Applicants in favour of the beneficiaries of the KERP to secure the
Company's obligations under the KERP (the "KERP Charge"); and
(c)
sealing the KERP, including the KERP Participant List.
I.
BACKGROUND
5
Information regarding the Applicants and their respective subsidiaries and branches
(collectively, the "Pacific Group"), the current circumstances and financial challenges of
the Pacific Group, and the CCAA Application, can be found in my Initial Affidavit.
2
6
As described in my Initial Affidavit, the Pacific Group has experienced significant
challenges since early 2015. Low oil and natural gas prices, together with operating
costs and substantial debt service obligations, compelled the Pacific Group to begin to
explore various restructuring options since late 2015.
7
Since that time, the management and many employees of the Pacific Group have
worked diligently under demanding time constraints and in difficult circumstances to
ensure stability and continuation in the operations of the Pacific Group, and to advance
various restructuring options for the Pacific Group, which culminated in the
Recapitalization.
8
Notably, the Pacific Group's employees and management have:
(a)
worked with numerous advisors in multiple jurisdictions to explore and consider
various restructuring alternatives;
(b)
worked and met with, and responded to the demands of, various creditor groups
and their legal and financial advisors in multiple jurisdictions, with a view to
achieving a coordinated restructuring of the Pacific Group;
(c)
worked and met with, been available for and responded to demands of the
various parties who made or contemplated making offers in the context of the
Company's sale and investment solicitation process described in more detail in
my Initial Affidavit (the "Offerors");
(d)
negotiated the Restructuring Support Agreement and the other documents
necessary to implement the Recapitalization;
3
(e)
ensured that regulatory authorities in Colombia and elsewhere were kept
apprised of developments in respect of the Pacific Group, including meeting with
such authorities and providing them with information they required;
(f)
responded to multiple requests for information, financial or otherwise, emanating
from the Pacific Group's creditors, the Offerors, and the various advisor groups in
all jurisdictions. Those requests included the preparation of business plans for
the Pacific Group, various cash flow and projection models and documents
regarding the various assets of the Pacific Group in all of its jurisdictions;
(g)
continued to advance potential divestitures of non-core assets;
(h)
continued to focus on cost-cutting and other operational issues facing the
Company;
(i)
worked with all offices of the Company to reassure employees through this
process and to keep them fully informed;
(j)
managed large teams on various complex tasks to ensure that all required
information was collected and all tasks completed on schedule;
(k)
continued to keep the Company operating on a "normalized" basis, but in
recognition of the financial situation the Company is in; and
(I)
dealt with the heightened regulatory, media and stakeholder focus on the
Company arising as a result of the Company's financial situation, particularly in
Colombia.
II.
THE EMPLOYEES' SITUATION
9
The Pacific Group employs approximately 2318 employees.
4
,Y3
10
Since late 2015, the demands on management and certain employees of the Pacific
Group have dramatically increased. Moreover, the challenges that the Pacific Group
has faced and continues to face have resulted in significant changes in compensation
and benefits. Those changes together with the Pacific Group's circumstances have
resulted in instability in the Pacific Group's work force.
11
The KERP Participants have not received any salary increase since 2014. In addition,
year-end bonuses were significantly curtailed compared to prior years and paid in
installments rather than as a lump sum in December as is the norm in the industry for
companies who operate in Colombia.
12
KERP Participants have had to renounce many of their benefits related to travel
expenses, health or other club memberships, and medical assessments. Significantly,
the options granted to executives and management have lost all their value. Similarly,
the Company's deferred stock unit plan is also now valueless.
13
Since management has prepared the initial list of key employees who should be entitled
to participate in the KERP, 2 employees who had been identified as key employees have
left.
14
In the circumstances, the Pacific Group, has determined to put in place a global
employee retention plan. The initial list prepared by the Company's management
included a smaller group of people. However, following consultation with Catalyst, the
Ad Hoc Committee and the Banks, the number of participants was increased to 40 and a
requirement was added that all KERP Participants who were entitled to receive change
of control payments or contractual severance in excess of 1.5x base salary, would
contractually agree to renounce these payments. These entitlements were substantial
5
and the renunciation by the KERP Participants of these payments is a major contribution
by the employees to the estate and its creditors.
KERP AND KERP CHARGE
15
The objective of the KERP is to provide critical employees with an incentive to continue
their sustained efforts to negotiate and implement the Recapitalization while ensuring
that the business and operations of the group continue in the normal course with a view
to preserving value for stakeholders.
16
The KERP payment schedule has been designed to incentivize the employees to remain
with the Pacific Group throughout the Coordinated Proceedings.
17
The KERP Participant List identifies 40 critical employees of the Pacific Group (each a
"KERP Participant").
I believe that the number of KERP Participants identified is
reasonable in the circumstances having regard to the total number of employees, the
complexity of the Pacific Group's business and structure, the roles performed by the
group's employees in the context of the Pacific Group's business as a whole, and the
various jurisdictions in which the Pacific Group operates, details of which are in my Initial
Affidavit. The number of employees entitled to participate in the KERP was increased to
40 following consultation with the Company's major creditor groups and its plan sponsor.
18
The criteria that were considered by the Company in arriving at the KERP Participant
List were, amongst others:
(i)
the operational importance of an employee;
(ii)
the transactional importance of an employee;
6
(iii)
the fact that an employee plays a critical role in dealing with restructuring
matters affecting the Pacific Group;
(iv)
the risk that a particular employee resigns prior to receiving a KERP
payment, and the impact that such resignation would have on the Pacific
Group and its business, including its restructuring efforts; and
(v)
in the event of resignation of such employee, the difficulty for the Pacific
Group to replace that employee, with a person of similar skills and
knowledge.
19
Pursuant to the KERP, the KERP Participants are divided in 5 tiers based on their
operational, transactional and/or restructuring importance and the impact that their
departure would have on the Pacific Group's operations and restructuring. Depending
on the tier, a key employee will be entitled to receive an aggregate KERP amount of
25%, 50%, 66%, 75% or 100% of his or her base salary (the "KERP Entitlement").
20
The KERP contemplates that 25% of the KERP Entitlement is payable within the first 2
pay cycles following the issuance of the Initial Order (the "Initial Payment").
21
Payment of the remaining 75% of the KERP Entitlement arises in connection with any of
the following events:
(a)
the termination of the participant's employment with the Company during the term
of the KERP:
(i)
by reason of the participant's death or disability,
(ii)
by reason of a partial sale of the Pacific Group's business,
7
gb
(iii)
without cause,
in each case, pro rating the amount of KERP Entitlement for the duration of time
between the effective date of the KERP and the termination;
(b)
the implementation of a plan of arrangement or compromise for the Pacific
Group; or
(c)
22
the closing of a sale of substantially all assets of the Pacific Group.
To the extent that a KERP participant resigns (i) within 1 year following the receipt of the
Initial Payment, or (ii) prior to plan implementation or closing of a sale, whichever comes
first, or is terminated with cause, the KERP contains a claw-back mechanism that
provides that the employee has to repay the Initial Payment and is no longer entitled to
any remaining KERP Entitlement.
23
The KERP also contemplates that the Company shall reserve an amount of
US$1,000,000 (the "Reserve Amount"), should the Chief Restructuring Officer, with
approval of the Monitor, deem it appropriate to designate additional KERP Participants
having regard to the criteria listed above.
24
In consideration for receiving their respective KERP Entitlement, each KERP Participant
must:
(a)
sign his or her Notice of Participation, the form of which is attached as
Schedule "B" to the KERP, and return it to the Company; and
(b)
for those 32 KERP Participants who were entitled to change of control
payments or contractual severance in excess of 1.5x base salary, agree to
enter into a new employment agreement pursuant to which such employee
8
renounces his or her right: (i) to any entitlements to receive any previously
agreed to change of control payments, (ii) to any entitlements pursuant to
the Company's stock option plan and deferred share unit plan, and (iii) to
any contractual severance and termination in excess of 1.5x base salary.
25
The KERP contemplates that the Independent Committee, initially, and the Chief
Restructuring Officer upon his appointment will have the authority to administer the
KERP, subject to the oversight of the Monitor.
26
The KERP contemplates that the Company's obligations thereunder are to be
secured pursuant to a Court-ordered charge. Given that the aggregate KERP
Entitlements including the Reserve Amount, total $14,115,780, the Company is
seeking a KERP Charge in the maximum amount of $14,120,000.
27
The parties to the Restructuring Support Agreement have approved the KERP. It
is proposed that the KERP Charge rank second, pari passe with the DIP Financing
Charge.
28
The KERP, the KERP Participant List and the KERP Entitlement were initially formulated
by management with the assistance of legal advisors and with reference to a report
prepared by a third party human resources firm and precedent KERPs that were
available or made available to the Company and its advisors.
29
I believe and am advised by other members of management that several KERP
Participants are considering or are likely to consider alternative employment if the KERP
is not approved by the Court. Previously identified KERP Participants have already left.
30
The Pacific Group has a complex structure and its operations are conducted in
geographical areas that have their own business and operational sensitivities. The
9
KERP Participants are familiar with all the intricacies of the group's structure and
operations, and their institutional knowledge allows the Pacific Group's business to run
efficiently, including having regards to the demands and challenges of conducting
business in South America.
31
If a KERP Participant left, it would be difficult for the Pacific Group in its current
circumstances to replace such employee, and even if it could hire a new employee, that
new employee would need significant time to acquire institutional knowledge sufficient in
order to be an effective replacement for a KERP Participant. In short, in my view, the
loss of KERP Participants will adversely impact the operations and/or the restructuring of
the Pacific Group, including its ability to effectively implement the Recapitalization.
32
I believe that the Pacific Group is at risk of losing KERP Participants as many of them
have options currently available to them, and all of them have been experiencing
additional stress and pressure due to the Company's financial condition and
circumstances.
33
I believe that the number of KERP Participants and their respective entitlement is
reasonable having regards to:
(a)
the functions and responsibilities of the KERP Participants in the operations and
business of the Applicants and the Pacific Group as a whole;
(b)
the fact that the KERP Participants have agreed to renounce previously agreed
to compensation entitlements, which renunciation benefits the Company and its
creditors;
(c)
the fact that the number of KERP Participants is less than 2% of the total
workforce;
10
(d)
the Pacific Group's operations and structure which are complex and multijurisdictional; and
(e)
the fact that a number of the KERP Participants are located or are having to
travel to remote and less stable regions of South America.
34
In elaborating the KERP, the KERP Participant List and the KERP Entitlement, the
Company also solicited and received the views of the Independent Committee, the
Monitor, Catalyst, the Ad Hoc Committee, the Banks and their respective advisors.
35
The KERP, including the KERP Participant List and KERP Entitlement were approved by
the Independent Committee on April 18, 2016.
36
I am advised by the Monitor that it supports the approval of the KERP and the granting
of the KERP Charge.
37
I am advised by counsel to Catalyst, the Banks and the Ad Hoc Committee that they
support the approval of the KERP and the granting of the KERP Charge.
IV.
38
SEALING
The KERP Participant List is attached as Schedule "A" to the KERP and contains
individually identifiable personal information about the KERP Participants including their
base salary, certain benefits and the reasons why they were identified as KERP
Participants. In order to protect KERP Participants, the Applicants are seeking an order
sealing the Confidential Exhibit to this Affidavit.
11
90
V.
CONCLUSION
39
The Pacific Group has been severely impacted by the current international oil price
environment. It needs to restructure and compromise its very substantial debt and it is
seeking protection pursuant to the CCAA in order to do so.
40
The KERP Participants are working under challenging conditions both because of the
Pacific Group's financial situation and the demands emanating from the Pacific Group's
restructuring.
41
The Company identified KERP Participants who are critical to the group's operations
and/or restructuring. If a KERP Participant leaves, it will be difficult if not impossible for
the Company to replace that employee. The resignation of a KERP Participant would
negatively impact the group's operations and/or ability to implement a restructuring for
the benefit of all stakeholders.
42
I believe that the KERP and the KERP Charge will provide an incentive for the KERP
Participants to remain within the employ of the Company and continue to perform their
duties diligently with a view to stabilizing the operations of the Pacific Group and
effectively implement the Recapitalization.
SWORN BEFORE ME in the City of Toronto,
in the Province of Ontario, this 27th day of
April, 2016.
Peter Volk
A Commissioner for taking Affidavits (or as may be)
12
IN THE MATTER OF THE COMPANIES' CREDITORS ARRANGEMENT ACT, R.S.C. 1985,
c. C-36, AS AMENDED
Court File No.: CV-16-11363-00CL
AND IN THE MATTER OF A PLAN OF COMPROMISE OR ARRANGEMENT OF PACIFIC
EXPLORATION & PRODUCTION CORPORATION, PACIFIC E&P HOLDINGS CORP., META
PETROLEUM CORP., PACIFIC STRATUS INTERNATIONAL ENERGY LTD., PACIFIC STRATUS
ENERGY COLOMBIA CORP., PACIFIC STRATUS ENERGY S.A., PACIFIC OFF SHORE PERU
S.R.L., PACIFIC RUBIALES GUATEMALA S.A., PACIFIC GUATEMALA ENERGY CORP.,
PRE-PSIE COOPERATIEF U.A., PETROMINERALES COLOMBIA CORP. AND GRUPO C&C
Applicants
ENERGIA (BARBADOS) LTD.
ONTARIO
SUPERIOR COURT OF JUSTICE
COMMERCIAL LIST
Proceeding commenced at Toronto
SUPPLEMENTARY AFFIDAVIT OF PETER VOLK
(sworn April 27, 2016)
NORTON ROSE FULBRIGHT CANADA LLP
Royal Bank Plaza, South Tower, Suite 3800
200 Bay Street, P.O. Box 84
Toronto, Ontario M5J 2Z4 CANADA
Tony Reyes LSUC #28218V
Tel: 416.216.4825
tony.reyes(@nortonrosefulbright.com
Orestes Pasparakis LSUC #36851T
Tel: 416.216.4815
orestes.pasparakis(@nortonrosefulbright.com
Virginie Gauthier LSUC #41097D
Tel: 416.216.4853
virginie.gauthier(nortonrosefulbright.corn
Lawyers for the Applicants
CAN_DMS: \101940901 \12
TAB 4
Court File No. CV-16-11363-00CL
ONTARIO
SUPERIOR COURT OF JUSTICE
COMMERCIAL LIST
THE HONOURABLE
WEDNESDAY, THE 27TH
MR. JUSTICE NEWBOULD
DAY OF APRIL, 2016
IN THE MATTER OF THE COMPANIES' CREDITORS
ARRANGEMENT ACT, R.S.C. 1985, c. C-36, AS AMENDED
AND IN THE MATTER OF A PLAN OF COMPROMISE OR
ARRANGEMENT OF PACIFIC EXPLORATION & PRODUCTION
CORPORATION, PACIFIC E&P HOLDINGS CORP., META
PETROLEUM CORP., PACIFIC STRATUS INTERNATIONAL ENERGY
LTD., PACIFIC STRATUS ENERGY COLOMBIA CORP., PACIFIC
STRATUS ENERGY S.A., PACIFIC OFF SHORE PERU S.R.L., PACIFIC
RUBIALES GUATEMALA S.A., PACIFIC GUATEMALA ENERGY
CORP., PRE-PSIE COOPERATIEF U.A., PETROMINERALES
COLOMBIA CORP. AND GRUPO C&C ENERGIA (BARBADOS) LTD.
Applicants
INITIAL ORDER
THIS APPLICATION, made by Pacific Exploration & Production Corporation ("Pacific"),
Pacific E&P Holdings Corp., Meta Petroleum Corp., Pacific Stratus International Energy Ltd.,
Pacific Stratus Energy Colombia Corp., Pacific Stratus Energy S.A., Pacific Off Shore Peru
S.R.L., Pacific Rubiales Guatemala S.A., Pacific Guatemala Energy Corp., PRE-PSIE
Cooperatief U.A., Petrominerales Colombia Corp. and Grupo C&C Energia (Barbados) Ltd.
(collectively, the "Applicants"), pursuant to the Companies' Creditors Arrangement Act, R.S.C.
1985, c. C-36, as amended (the "CCAA") was heard this day at 330 University Avenue, Toronto,
Ontario.
ON READING the affidavit of Peter Volk sworn April 27, 2016 and the Exhibits thereto
(the "Volk Affidavit"), the supplementary affidavit of Peter Volk sworn April 27, 2016 (the
"Supplementary Volk Affidavit") and the pre-filing report of the proposed Monitor dated April
❑, 2016 (the "Proposed Monitor's Report"), and on hearing the submissions of counsel for the
CAN_DMS: \102302437\7
(33
Applicants, PricewaterhouseCoopers Inc. (as the proposed Monitor), the ad hoc committee
acting for certain holders of Note Claims (the "Ad Hoc Noteholder Committee"), Bank of
America N.A. and HSBC Bank USA, N.A. as administrative agents with respect to certain Bank
Claims (the "Agents"), The Catalyst Capital Group Inc. (the "Plan Sponsor"), and the UC
Providers (as those terms are defined herein), the independent committee of the board of
directors of Pacific, and those other parties present, no one else appearing although duly served
as appears from the affidavit of service of ❑ , filed, and on reading the consent of
PricewaterhouseCoopers Inc. to act as the Monitor,
AND ON BEING ADVISED that the Applicants intend to commence recognition
proceedings under Law 1116 of 2006 of the Republic of Colombia (the "Colombian
Proceedings") and proceedings under chapter 15 of title 11 of the United States Code in the
Southern District of New York (the "U.S. Proceedings", and collectively with the Colombian
Proceedings, the "Foreign Proceedings"),
SERVICE
1.
THIS COURT ORDERS that the time for service of the Notice of Application and the
Application Record is hereby abridged and validated so that this Application is properly
returnable today and hereby dispenses with further service thereof.
APPLICATION
2.
THIS COURT ORDERS AND DECLARES that each of the Applicants is a company to
which the CCAA applies.
REFERENCES TO DOLLARS
3.
Unless otherwise stated, all references to dollars or $ herein are to dollars of the United
States of America.
PLAN OF ARRANGEMENT
4.
THIS COURT ORDERS that the Applicants shall have the authority to file and may,
subject to further order of this Court, file with this Court a plan of compromise or arrangement
(hereinafter referred to as the "Plan").
CAN DMS: \ 102302437 \ 7
POSSESSION OF PROPERTY AND OPERATIONS
5.
THIS COURT ORDERS that the Applicants shall remain in possession and control of
their current and future assets, undertakings and properties of every nature and kind
whatsoever, and wherever situate including all proceeds thereof (the "Property"). Subject to
further Order of this Court, the Applicants shall continue to carry on business in a manner
consistent with the preservation of their business (the "Business") and Property. The
Applicants are authorized and empowered to continue to retain, employ or compensate the
employees, consultants, agents, experts, accountants, counsel and such other persons
(collectively "Assistants", including without limitation those Assistants named in Schedule A to
this Order) currently retained, employed or compensated by any of them (and whether such
Assistants are providing advice to the Applicants, or to other stakeholders), with liberty to retain
such further Assistants as they deem reasonably necessary or desirable in the ordinary course
of business or for the carrying out of the terms of this Order.
6.
THIS COURT ORDERS that the Applicants shall be entitled to continue to utilize the
cash management system currently in place as described in the Volk Affidavit or, with the
approval of the DIP Note Purchasers (as defined herein), replace it with another substantially
similar central cash management system including such modifications as may be required in
order to comply with the terms of the DIP Financing Documents (as defined herein) (the "Cash
Management System") and that any present or future bank providing the Cash Management
System shall not be under any obligation whatsoever to inquire into the propriety, validity or
legality of any transfer, payment, collection or other action taken under the Cash Management
System, or as to the use or application by the Applicants of funds transferred, paid, collected or
otherwise dealt with in the Cash Management System, shall be entitled to provide the Cash
Management System without any liability in respect thereof to any Person (as hereinafter
defined) other than the Applicants, pursuant to the terms of the documentation applicable to the
Cash Management System, and shall be, in its capacity as provider of the Cash Management
System or any part thereof, an unaffected creditor under the Plan with regard to any claims or
expenses it may suffer or incur in connection with the provision of the Cash Management
System.
7.
THIS COURT ORDERS that, subject to the terms and conditions of the Restructuring
Support Agreement among the Applicants, the Plan Sponsor, certain holders of Note Claims
and certain holders of Bank Claims (each as defined in Schedule B hereto) dated April 20,
CANDMS: \ 102302437 \7
15
2016 (the "RSA") and the DIP Financing Documents, including the Cash Flow Projections (as
defined in the DIP Financing Documents), the Applicants shall be entitled but not required to
pay the following expenses whether incurred prior to or after this Order:
(a)
all outstanding and future wages, salaries, employee and pension benefits, vacation
pay and expenses payable on or after the date of this Order, in each case incurred in
the ordinary course of business and consistent with existing compensation policies
and arrangements;
(b)
the fees and disbursements of any Assistants retained, employed or compensated
by an Applicant in respect of these proceedings or any similar or ancillary
proceedings in other jurisdictions or in respect of related corporate matters at their
standard rates and charges;
(c)
amounts owing for goods and services actually supplied by trade creditors to the
Applicants in the ordinary course of business; and
(d)
any other costs and expenses, with the consent of the Monitor if any single payment
exceeds $200,000.
8.
THIS COURT ORDERS that, subject to the terms of the RSA and the DIP Financing
Documents, including the Cash Flow Projections, and except as otherwise provided to the
contrary herein, the Applicants shall be entitled but not required to pay all reasonable expenses
incurred by the Applicants in carrying on the Business in the ordinary course after this Order,
and in carrying out the provisions of this Order, which expenses shall include, without limitation:
(a)
all expenses and capital expenditures reasonably necessary for the preservation of
the Property or the Business including, without limitation, payments on account of
insurance (including directors and officers insurance), maintenance and security
services; and
(b)
payment for goods or services actually supplied to the Applicants or to the Business
following the date of this Order.
9.
THIS COURT ORDERS that the Applicants shall remit, in accordance with legal
requirements, or pay:
CANDMS: \102302437\7
(a)
any statutory deemed trust amounts in favour of the Crown in right of Canada or of
any Province thereof or any other Canadian taxation authority which are required to
be deducted from employees' wages, including, without limitation, amounts in
respect of (i) employment insurance, (ii) Canada Pension Plan, (iii) Quebec Pension
Plan, and (iv) income taxes;
(b)
all goods and services or other applicable sales taxes in Canada (collectively, "Sales
Taxes") required to be remitted by the Applicants or any of them in connection with
the sale of goods and services by the Applicants or any of them, but only where such
Sales Taxes are accrued or collected after the date of this Order, or where such
Sales Taxes were accrued or collected prior to the date of this Order but not required
to be remitted until on or after the date of this Order, and
(c)
any amount payable to the Crown in right of Canada or of any Province thereof or
any political subdivision thereof or any other Canadian taxation authority in respect of
municipal realty, municipal business or other taxes, assessments or levies of any
nature or kind which are entitled at law to be paid in priority to claims of secured
creditors and which are attributable to or in respect of the carrying on of the Business
by the Applicants or any of them.
10.
THIS COURT ORDERS that until a real property lease is disclaimed in accordance with
the CCAA, the Applicants shall pay all amounts constituting rent or payable as rent under real
property leases (including, for greater certainty, common area maintenance charges, utilities
and realty taxes and any other amounts payable to the landlord under the lease) or as otherwise
may be negotiated between the Applicants and the landlord from time to time ("Rent"), for the
period commencing from and including the date of this Order, twice-monthly in equal payments
on the first and fifteenth day of each month, in advance (but not in arrears). On the date of the
first of such payments, any Rent relating to the period commencing from and including the date
of this Order shall also be paid.
11.
THIS COURT ORDERS that, except as specifically permitted herein and subject to the
terms of the DIP Financing Documents, the Applicants are hereby directed, until further Order of
this Court: (a) to make no payments of principal, interest thereon or otherwise on account of
amounts owing by any of the Applicants to any of their creditors as of this date; (b) to grant no
security interests, trust, liens, charges or encumbrances upon or in respect of any of its
respective Property; and (c) to not grant credit or incur liabilities except in the ordinary course of
CAN DMS: \102302437\7
7
the Business, provided however that the Applicants shall be entitled to make payments with
respect to the provision of goods and services to the Applicants, or any of them, and any other
liabilities arising in the ordinary course of business and not contested by the Applicants, whether
such liabilities arise prior to or after the date of this Order, including without limitation payments
with respect to the liabilities identified on Schedule C to this Order.
RESTRUCTURING
12.
THIS COURT ORDERS that, subject to such requirements as are imposed by the CCAA
and the terms and conditions of the RSA and the DIP Financing Documents, and unless
otherwise specified in this Order, Pacific shall have the right to:
(a)
permanently or temporarily cease, downsize or shut down any of its Business or
operations in Canada;
(b)
retain a solicitation agent (the "Solicitation Agent") and permit it to obtain proxies
and/or voting information from creditors in respect of the Plan and any amendments
thereto; and
(c)
terminate the employment of such of its employees or temporarily lay off such of its
employees as it deems appropriate,
all of the foregoing to permit the Applicants to proceed with the Restructuring (as defined in the
RSA).
13.
THIS COURT ORDERS that an Applicant shall provide each of the relevant landlords
with notice of that Applicant's intention to remove any fixtures from any leased premises at least
seven (7) days prior to the date of the intended removal. The relevant landlord shall be entitled
to have a representative present in the leased premises to observe such removal and, if the
landlord disputes the applicable Applicant's entitlement to remove any such fixture under the
provisions of the lease, such fixture shall remain on the premises and shall be dealt with as
agreed between any applicable secured creditors, such landlord and the applicable Applicant, or
by further Order of this Court upon application by the Applicants on at least two (2) days' notice
to such landlord and any such secured creditors. If an Applicant disclaims the lease governing
such leased premises in accordance with Section 32 of the CCAA, it shall not be required to pay
Rent under such lease pending resolution of any such dispute (other than Rent payable for the
CAN DMS: \102302437\7
notice period provided for in Section 32(5) of the CCAA), and the disclaimer of the lease shall
be without prejudice to that Applicant's claim to the fixtures in dispute.
14.
THIS COURT ORDERS that if a notice of disclaimer is delivered pursuant to Section 32
of the CCAA, then (a) during the notice period prior to the effective time of the disclaimer, the
landlord may show the affected leased premises to prospective tenants during normal business
hours, on giving the Applicants and the Monitor 24 hours' prior written notice, and (b) at the
effective time of the disclaimer, the relevant landlord shall be entitled to take possession of any
such leased premises without waiver of or prejudice to any claims or rights such landlord may
have against an Applicant in respect of such lease or leased premises, provided that nothing
herein shall relieve such landlord of its obligation to mitigate any damages claimed in
connection therewith.
15.
THIS COURT ORDERS that each of the Applicants is authorized and empowered to
take all steps and actions in respect of, and to comply with all of its obligations pursuant to, the
RSA, and that nothing in this Order shall be construed as waiving or modifying any of the rights,
commitments or obligations of any of the Applicants under the RSA.
16.
THIS COURT ORDERS that Pacific is authorized and empowered to take all steps and
actions in respect of (i) the commitment letter between Pacific and the Plan Sponsor (the "Plan
Sponsor Commitment Letter"), (ii) the commitment letter between Pacific and the Ad Hoc DIP
Lenders (as defined herein) (the "Ad Hoc Commitment Letter"), and (iii) the commitment letter
between Pacific and the L/C Providers (as defined herein") (the "L/C Commitment Letter", and
together with the Ad Hoc Commitment Letter and the Plan Sponsor DIP Commitment Letter, the
"Commitment Letters"), each dated as of April 20, 2016 and attached to the Volk Affidavit.
NO PROCEEDINGS AGAINST THE APPLICANTS OR THE PROPERTY
17.
THIS COURT ORDERS that until and including May 27, 2016, or such later date as this
Court may order (the "Stay Period"), no proceeding or enforcement process in any court or
tribunal (each, a "Proceeding") shall be commenced or continued against or in respect of the
Applicants (or any of them) or any of their branches, or the Monitor, or affecting the Business or
the Property, except with the written consent of the Applicants and the Monitor, or with leave of
this Court, and any and all Proceedings currently under way against or in respect of any of the
Applicants or affecting the Business or the Property are hereby stayed and suspended pending
further Order of this Court, provided however that nothing in this paragraph shall prevent any
CAN_DMS: \102302437\7
Proceedings duly authorized in the Colombian Proceedings with respect to Property not owned
directly by any of the Applicants or any part of the Business not operated directly by the
Applicants.
NO EXERCISE OF RIGHTS OR REMEDIES
18.
THIS COURT ORDERS that during the Stay Period, all rights and remedies of any
individual, firm, corporation, governmental body or agency, or any other entities (all of the
foregoing, collectively being "Persons" and each being a "Person") against or in respect of any
of the Applicants (or any of them) or any of their branches, or the Monitor, or affecting the
Business or the Property, are hereby stayed and suspended except with the written consent of
the Applicants and the Monitor, or leave of this Court, provided that nothing in this Order shall (i)
stay or suspend any rights or remedies duly authorized in the Colombian Proceedings with
respect to Property not owned directly by any of the Applicants or any part of the Business not
operated directly by the Applicants, (ii) empower the Applicants to carry on any business which
the Applicants are not lawfully entitled to carry on, (iii) affect such investigations, actions, suits
or proceedings by a regulatory body as are permitted by Section 11.1 of the CCAA, (iv) prevent
the filing of any registration to preserve or perfect a security interest, or (v) prevent the
registration of a claim for lien.
NO INTERFERENCE WITH RIGHTS
19.
THIS COURT ORDERS that during the Stay Period, no Person shall discontinue, fail to
honour, alter, interfere with, repudiate, terminate or cease to perform any right, renewal right,
contract, agreement, licence or permit in favour of or held by any of the Applicants, or any of
their branches, except (i) for those parties to the RSA in accordance with the terms thereof, (ii)
with the written consent of the Applicants and the Monitor, or (iii) with leave of this Court.
CONTINUATION OF SERVICES
20.
THIS COURT ORDERS that during the Stay Period, all Persons having oral or written
agreements with any of the Applicants or statutory or regulatory mandates for the supply of
goods and/or services, including without limitation all computer software, communication and
other data services, centralized banking services, payroll services, insurance, transportation
services, utility or other services to the Business or any of the Applicants, or any of their
branches, are hereby restrained until further Order of this Court from discontinuing, altering,
CAN_DMS: \102302437\7
100
interfering with or terminating the supply of such goods or services as may be required by any of
the Applicants, and that the Applicants shall be entitled to the continued use of their current
premises, telephone numbers, facsimile numbers, internet addresses and domain names,
provided in each case that the normal prices or charges for all such goods or services received
after the date of this Order are paid by the applicable Applicant in accordance with normal
payment practices of that Applicant or such other practices as may be agreed upon by the
supplier or service provider and each of the Applicants and the Monitor, or as may be ordered
by this Court.
NON-DEROGATION OF RIGHTS
21.
THIS COURT ORDERS that, notwithstanding anything else in this Order, no Person
shall be prohibited from requiring immediate payment for goods, services, use of lease or
licensed property or other valuable consideration provided on or after the date of this Order, nor
shall any Person be under any obligation on or after the date of this Order to advance or readvance any monies or otherwise extend any credit to any of the Applicants. Nothing in this
Order shall derogate from the rights conferred and obligations imposed by the CCAA.
PROCEEDINGS AGAINST DIRECTORS AND OFFICERS
22.
THIS COURT ORDERS that during the Stay Period, and except as permitted by
subsection 11.03(2) of the CCAA, no Proceeding may be commenced or continued against any
of the former, current or future directors or officers of any of the Applicants with respect to any
claim against the directors or officers that arose before the date hereof and that relates to any
obligations of any of the Applicants whereby the directors or officers are alleged under any law
to be liable in their capacity as directors or officers for the payment or performance of such
obligations, until a compromise or arrangement in respect of the Applicants, if one is filed, is
sanctioned by this Court or is refused by the creditors of the Applicants or this Court.
DIRECTORS' AND OFFICERS' INDEMNIFICATION AND CHARGE
23.
THIS COURT ORDERS that each Applicant shall indemnify its directors and officers
against obligations and liabilities that they may incur as directors or officers of that Applicant (i)
after the commencement of the within proceedings, or (ii) in respect of actions taken as
directors and officers of that Applicant relating to the within proceedings, the Foreign
Proceedings, the Restructuring and the development and implementation of the Plan, except in
CAN DMS: \102302437\7
I01
each case to the extent that, with respect to any officer or director, the obligation or liability was
incurred as a result of the director's or officer's gross negligence or wilful misconduct.
24.
THIS COURT ORDERS that the directors and officers of the Applicants shall be entitled
to the benefit of and are hereby granted a charge (the "D&O Charge") on the Property, which
charge shall not exceed an aggregate amount of $11,000,000, as security for the indemnity
provided in paragraph 23 of this Order. The D&O Charge shall have the priority set out in
paragraphs 53 and 55 herein.
25.
THIS COURT ORDERS that, notwithstanding any language in any applicable insurance
policy to the contrary, (a) no insurer shall be entitled to be subrogated to or claim the benefit of
the D&O Charge, and (b) an Applicant's directors and officers shall only be entitled to the
benefit of the D&O Charge to the extent that they do not have coverage under any directors'
and officers' insurance policy, or to the extent that such coverage is insufficient to pay amounts
indemnified in accordance with paragraph 23 of this Order.
APPOINTMENT OF MONITOR
THIS COURT ORDERS that PricewaterhouseCoopers Inc. is hereby appointed pursuant
26.
to the CCAA as the Monitor, an officer of this Court, to monitor the business and financial affairs
of the Applicants with the powers and obligations set out in the CCAA or set forth herein and
that the Applicants and their shareholders (or members, as applicable), officers, directors, and
Assistants shall advise the Monitor of all material steps taken by the Applicants pursuant to this
Order, and shall co-operate fully with the Monitor in the exercise of its powers and discharge of
its obligations and provide the Monitor with the assistance that is necessary to enable the
Monitor to adequately carry out the Monitor's functions.
THIS COURT ORDERS that the Monitor, in addition to its prescribed rights and
27.
obligations under the CCAA, is hereby directed and empowered to:
(a)
monitor receipts and disbursements of the Pacific Group (as defined in the Volk
Affidavit) and make such inquiries as it deems appropriate with respect to the Cash
Management System and the movement of cash within the Business;
(b)
report to this Court at such times and intervals as the Monitor may deem appropriate
with respect to matters relating to the Property, the Business, the Foreign
Proceedings, and such other matters as may be relevant to the proceedings herein;
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1 0 2.
(c)
provide updates, from time to time, to the Superintendencia de Sociedades of
Colombia on the status of these proceedings;
(d)
assist the Applicants, to the extent required by the Applicants, in their dissemination,
to the DIP Lenders and/or their counsel or financial advisors of financial and other
information as agreed to between the Applicants and the DIP Lenders including
reporting on a basis to be agreed with the DIP Lenders;
(e)
advise the Applicants in their preparation of the Applicants' cash flow statements and
reporting required by the DIP Lenders and/or their counsel or financial advisors,
which information shall be reviewed with the Monitor and delivered to the DIP
Lenders and/or their counsel or financial advisors in accordance with the DIP
Financing Documents;
(f)
advise the Applicants in their development of the Plan and any amendments to the
Plan;
(g)
assist the Applicants, to the extent required by the Applicants, with the holding and
administering of creditors' meetings for voting on the Plan;
(h)
assist the Applicants, to the extent required by the Applicants, with their restructuring
activities;
Assist the Applicants, to the extent required by the Applicants, with any matters
relating to the Foreign Proceedings and any other foreign proceedings commenced
in relation to the Applicants;
(j)
have full and complete access to the Property, including the premises, books,
records, data, including data in electronic form, and other financial documents of the
Applicants, to the extent that is necessary to adequately assess the Applicants'
business and financial affairs or to perform its duties arising under this Order;
(k)
be at liberty to engage independent legal counsel or such other persons as the
Monitor deems necessary or advisable respecting the exercise of its powers and
performance of its obligations under this Order; and
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(I)
perform such other duties as are required by this Order or by this Court from time to
time.
28.
THIS COURT ORDERS that without limiting paragraph 27 above, in carrying out its
rights and obligations in connection with this Order, the Monitor shall be entitled to take such
reasonable steps and use such services as it deems necessary in discharging its powers and
obligations, including, without limitation, utilizing the services of any other
PricewaterhouseCoopers network firms.
29.
THIS COURT ORDERS that the Monitor shall not take possession of the Property and
shall take no part whatsoever in the management or supervision of the management of the
Business and shall not, by fulfilling its obligations hereunder, be deemed to have taken or
maintained possession or control of the Business or Property, or any part thereof.
30.
THIS COURT ORDERS that nothing herein contained shall require the Monitor to
occupy or to take control, care, charge, possession or management (separately and/or
collectively, "Possession") of any of the Property that might be environmentally contaminated,
might be a pollutant or a contaminant, or might cause or contribute to a spill, discharge, release
or deposit of a substance contrary to any federal, provincial or other law respecting the
protection, conservation, enhancement, remediation or rehabilitation of the environment or
relating to the disposal of waste or other contamination including, without limitation, the
Canadian Environmental Protection Act, the Ontario Environmental Protection Act, the Ontario
Water Resources Act, or the Ontario Occupational Health and Safety Act and regulations
thereunder (the "Environmental Legislation"), provided however that nothing herein shall
exempt the Monitor from any duty to report or make disclosure imposed by applicable
Environmental Legislation. The Monitor shall not, as a result of this Order or anything done in
pursuance of the Monitor's duties and powers under this Order, be deemed to be in Possession
of any of the Property within the meaning of any Environmental Legislation, unless it is actually
in possession.
31.
THIS COURT ORDERS that the Monitor shall provide any creditor of an Applicant and
the DIP Lenders and/or their respective counsel or financial advisors with information provided
by that Applicant in response to reasonable requests for information made in writing by such
creditor addressed to the Monitor. The Monitor shall not have any responsibility or liability with
respect to the information disseminated by it pursuant to this paragraph. In the case of
information that the Monitor has been advised by any of the Applicants is confidential, the
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Monitor shall not provide such information to creditors unless otherwise directed by this Court or
on such terms as the Monitor and the Applicants may agree.
32.
THIS COURT ORDERS that, in addition to the rights and protections afforded the
Monitor under the CCAA or as an officer of this Court, the Monitor shall incur no liability or
obligation as a result of its appointment or the carrying out of the provisions of this Order, save
and except for any gross negligence or wilful misconduct on its part. Nothing in this Order shall
derogate from the protections afforded the Monitor by the CCAA or any applicable legislation.
33.
THIS COURT ORDERS that the Monitor, counsel to the Monitor, and each of the
Assistants shall be paid their reasonable fees and disbursements, in each case at their standard
rates and charges, by the Applicants as part of the costs of these proceedings; for greater
certainty, the Financial Advisors (as defined in Schedule B) shall be paid their fees and
disbursements in accordance with the terms of their respective engagement or commitment
letters, in each case including such success fees as and when due under such engagement or
commitment letters. The Applicants are hereby authorized and directed to pay the accounts of
the Monitor, counsel to the Monitor, and the Assistants on a twice-monthly basis and, in
addition, the Monitor, counsel to the Monitor, and the Assistants may retain such retainers as
they hold as of the date of this Order, to be held by them as security for payment of their
respective fees and disbursements outstanding from time to time.
34.
THIS COURT ORDERS that the Monitor and its legal counsel shall pass their accounts
from time to time, and for this purpose the accounts of the Monitor and its legal counsel are
hereby referred to a judge of the Commercial List of the Ontario Superior Court of Justice.
35.
THIS COURT ORDERS that the Monitor, counsel to the Monitor, and the Assistants
shall be entitled to the benefit of and are hereby granted a charge (the "Administration
Charge") on the Property, which charge shall not exceed an aggregate amount of $45,000,000
(inclusive of success fees payable to Financial Advisors), as security for their professional fees
and disbursements incurred (i) at the standard rates and charges of the Monitor, counsel to the
Monitor, and each such Assistant, both before and after the making of this Order in respect of
these proceedings; or (ii) as prescribed in the Financial Advisors' respective engagement or
commitment letters. The fees and disbursements of the trustee or trustees under the DIP Notes
and the warrant indenture related thereto, as well as any collateral agent, common depositary,
transfer agent, paying agent, settlement agent, listing agent, security registrar and any other
similar service provider in respect thereof of in connection therewith, shall also be secured by
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the Administration Charge, at their standard rates and charges. The Administration Charge shall
have the priority set out in paragraphs 53 and 55 hereof.
APPROVAL OF KERP / AMENDMENTS TO EMPLOYMENT TERMS
36.
THIS COURT ORDERS that the Key Employee Retention Program (the "KERP")
described in the Supplemental Volk Affidavit, the details of which are included as Exhibit C-0 to
the Supplementary Volk Affidavit, is hereby approved and that the Applicants are authorized
and directed to make payments in accordance with the terms thereof to the maximum aggregate
amount of $14,120,000.
37.
THIS COURT ORDERS that the KERP Participants (as such term is defined in the
Supplementary Volk Affidavit) shall be entitled to the benefit of and are hereby granted a charge
(the "KERP Charge") on the Property, to secure the amounts payable to the KERP Participants
pursuant to paragraph 36 of this Order. The KERP Charge shall be in the amount and shall
have the priority set out in paragraphs 53 and 55 hereof
38.
THIS COURT ORDERS that the KERP Charge shall be a silent, passive charge, and
that the KERP Participants shall not be entitled to enforce the KERP Charge without the prior
leave of this Court on notice to the DIP Note Purchasers and the Monitor.
APPROVAL OF FINANCIAL ADVISORS' ENGAGEMENTS
39.
THIS COURT ORDERS that the Applicants are authorized to continue the engagement
of the Company's Financial Advisor (as defined in Schedule B) on the terms and conditions set
out in the Company's Financial Advisor engagement letter dated December 17, 2015, as
amended by a letter dated April 18, 2016.
40.
THIS COURT ORDERS that the Applicants are authorized to continue the engagement
of the IC Financial Advisor (as defined in Schedule B) on the terms and conditions set out in
the IC Financial Advisor engagement letter dated March 10, 2016.
41.
THIS COURT ORDERS that the Applicants are authorized to continue the engagement
of the Noteholders' Financial Advisor (as defined in Schedule B) on the terms and conditions
set out in the Noteholders' Financial Advisor engagement letter dated February 16, 2016.
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42.
THIS COURT ORDERS that the Applicants are authorized to continue the engagement
of the Agents' Financial Advisor (as defined in Schedule B) on the terms and conditions set out
in the Agents' Financial Advisor engagement letter dated December 7, 2015.
43.
THIS COURT ORDERS that each of the Financial Advisor engagement letters (attached
as confidential Exhibits C-1, C-2, C-3 and C-4 to the Volk Affidavit) is hereby ratified and
confirmed and the Applicants are authorized to perform their obligations thereunder, and that
the claims of the Financial Advisors shall be treated as unaffected in any Plan.
DIP FINANCING AND LETTER OF CREDIT FACILITY
44.
THIS COURT ORDERS that the Applicants are hereby authorized and empowered to
issue senior secured notes (the "DIP Notes") to be purchased by the Plan Sponsor and certain
members of the Ad Hoc Noteholders Committee (the "Ad Hoc DIP Lenders", together with the
Plan Sponsor, the "DIP Note Purchasers", and any subsequent transferee of the DIP Notes
shall be considered a DIP Note Purchaser for the purposes of this Order) pursuant to the
Commitment Documents (defined below) in order to finance the Applicants' working capital
requirements and other general corporate purposes and capital expenditures, provided that the
aggregate principal amount of the DIP Notes shall not exceed $500,000,000 unless permitted
by further Order of this Court.
45.
THIS COURT ORDERS that the DIP Notes shall be on the terms and subject to the
conditions set forth in the Commitment Letters and the DIP/Exit Term Sheet attached thereto.
46.
THIS COURT ORDERS that the Applicants are hereby authorized and empowered to
request the issuance, renewal or extension of letters of credit under a letter of credit facility (the
"L/C Facility") from Banco Davivienda, Banco Corpbanca Colombia S.A., Citibank Colombia
S.A., Banco Latinoamericano de Comercio Exterior, S.A. and Bank of America N.A.
(collectively, the "L/C Providers") in order to finance the Applicants' letter of credit
requirements, provided that borrowings under such L/C Facility shall not exceed $134,000,000
unless permitted by further Order of this Court. The DIP Note Purchasers, together with the L/C
Providers, are herein collectively referred to as the "DIP Lenders").
47.
THIS COURT ORDERS that the L/C Facility shall be on the terms and subject to the
conditions set forth in the L/C Commitment Letter. The Commitment Letters and the DIP/Exit
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107
Term Sheet attached thereto, and the L/C Commitment Letter and the DIP LC Facility Term
Sheet attached thereto, are collectively herein referred to as the "Commitment Documents").
48.
THIS COURT ORDERS that the Applicants are hereby authorized and empowered to
execute and deliver such note purchase agreements, indentures, collateral trust agreements,
intercreditor agreements, credit agreements, mortgages, charges, hypothecs, debentures,
pledges, cash collateral agreements, bank account control agreements, security account control
agreements, and other security documents, guarantees and other definitive documents
(collectively, the "Definitive Documents"), as are contemplated by the Commitment Documents
(the Commitment Documents, together with the Definitive Documents, the "DIP Financing
Documents") or as may be reasonably required by the DIP Note Purchasers or the UC
Providers, as the case may be, pursuant to the terms thereof, and the Applicants are hereby
authorized and directed to pay and perform all of their indebtedness, guarantees, interest, fees,
liabilities and obligations to the DIP Lenders under and pursuant to the DIP Financing
Documents as and when the same become due and are to be performed, notwithstanding any
other provision of this Order.
49.
THIS COURT ORDERS that the DIP Note Purchasers shall be entitled to the benefit of
and are hereby granted a charge (the "DIP Note Charge") on the Property, as security for
amounts owing to them from time to time under the DIP Financing Documents, including the
payment of the Break Fee (as defined in the DIP/Exit Term Sheet), which DIP Note Charge shall
not secure an obligation that exists before this Order is made. The DIP Note Charge shall have
the priority set out in paragraphs 53 and 55 hereof.
50.
THIS COURT ORDERS that the UC Providers shall be entitled to the benefit of and are
hereby granted a charge (the "L/C Providers' Charge" and, together with the DIP Note Charge,
the "DIP Lenders' Charge") on the Property, as security for amounts owing from time to time to
them under the DIP Financing Documents, which UC Providers' Charge shall secure any
reimbursement obligations that arises or matures after the date hereof in respect of any existing
or outstanding letters of credit issued by the VC Providers or any of them prior to the date of
this Order, but shall not secure any reimbursement obligation that exists before this Order is
made. The L/C Providers' Charge shall have the priority set out in paragraphs 53 and 55
hereof.
51.
THIS COURT ORDERS that, notwithstanding any other provision of this Order:
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(a)
each of the DIP Lenders may take such steps from time to time as it may deem
necessary or appropriate to file, register, record or perfect the DIP Note Charge or
the L/C Providers' Charge, as the case may be, and their respective DIP Financing
Documents;
(b)
upon the occurrence of an event of default under the DIP Financing Documents, the
DIP Note Charge, or the L/C Providers' Charge, in each case as applicable, then the
DIP Note Purchasers or the L/C Providers, as the case may be and if so entitled
under their own DIP Financing Documents, upon five (5) days' notice to the
Applicants and the Monitor, may exercise any and all of its rights and remedies
against the Applicants or the Property under or pursuant to the applicable DIP
Financing Documents and the applicable DIP Lender's Charge, including without
limitation, to cease making advances or providing letters of credit to the Applicants
and set off and/or consolidate any amounts owing by such DIP Lender to the
Applicants against the obligations of the Applicants to such DIP Lender under the the
applicable DIP Financing Documents or the applicable DIP Lender's Charge, to
make demand, accelerate payment and give other notices, or to apply to this Court
for the appointment of a receiver, receiver and manager or interim receiver, or for a
bankruptcy order against the Applicants and for the appointment of a trustee in
bankruptcy of the Applicants; and
(c)
the foregoing rights and remedies of the DIP Note Purchasers and the L/C Providers
shall be enforceable against any trustee in bankruptcy, interim receiver, receiver or
receiver and manager of the Applicants or the Property.
52.
THIS COURT ORDERS AND DECLARES that, except as provided in the DIP Financing
Documents, each of the DIP Lenders shall be treated as unaffected in any Plan, or any
proposal filed by any of the Applicants under the Bankruptcy and Insolvency Act of Canada (the
"BIA"), with respect to any advances made under the DIP Financing Documents.
VALIDITY AND PRIORITY OF CHARGES CREATED BY THIS ORDER
53.
THIS COURT ORDERS that the priorities of the Administration Charge, the DIP Note
Charge, the KERP Charge, the D&O Charge, and the L/C Providers' Charge, as among them,
shall be as follows:
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First — Administration Charge (to the maximum amount of $45,000,000);
Second — DIP Note Charge and KERP Charge (with respect to the KERP
Charge, to the maximum amount of $14,120,000), ranking pari passu;
Third — D&O Charge (to the maximum amount of $11,000,000); and
Fourth — UC Providers' Charge.
54.
THIS COURT ORDERS that the filing, registration or perfection of the Administration
Charge, the DIP Note Charge, the KERP Charge, the D&O Charge, and the UC Providers'
Charge (collectively, the "Charges") shall not be required, and that the Charges shall be valid
and enforceable for all purposes, including as against any right, title or interest filed, registered,
recorded or perfected subsequent to the Charges coming into existence, notwithstanding any
such failure to file, register, record or perfect.
55.
THIS COURT ORDERS that each of the Charges shall constitute a charge on the
Property and such Charges shall rank in priority to all other security interests, trusts, liens,
charges and encumbrances, claims of secured creditors, statutory or otherwise (collectively,
"Encumbrances") in favour of any Person.
56.
THIS COURT ORDERS that except as otherwise expressly provided for herein, or as
may be approved by this Court, the Applicants shall not grant any Encumbrances over any
Property that ranks in priority to, or pall passu with, any of the Charges, unless the Applicants
also obtain the prior written consent of the Monitor, the beneficiaries of each of the Charges, or
further Order of this Court.
57.
THIS COURT ORDERS that Charges shall not be rendered invalid or unenforceable and
the rights and remedies of the chargees entitled to the benefit of the Charges (collectively, the
"Chargees") and/or the DIP Lenders thereunder shall not otherwise be limited or impaired in
any way by (a) the pendency of these proceedings and the declarations of insolvency made
herein; (b) any application(s) for bankruptcy order(s) issued pursuant to the BIA, or any
bankruptcy order made pursuant to such applications; (c) the filing of any assignments for the
general benefit of creditors made pursuant to the BIA; (d) the provisions of any federal or
provincial statutes; or (e) any negative covenants, prohibitions or other similar provisions with
respect to borrowings, incurring debt or the creation of Encumbrances, contained in any existing
loan documents, lease, sublease, offer to lease or other agreement (collectively, an
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"Agreement") which binds any of the Applicants, and notwithstanding any provision to the
contrary in any Agreement:
(a)
neither the creation of the Charges nor the execution, delivery, perfection,
registration or performance of the DIP Financing Documents shall create or be
deemed to constitute a breach by an Applicant of any Agreement to which it is a
party;
(b)
none of the Chargees shall have any liability to any Person whatsoever as a result of
any breach of any Agreement caused by or resulting from an Applicant entering into
the Commitment Documents, the creation of the Charges, or the execution, delivery
or performance of the other DIP Financing Documents; and
(c)
the payments made by any of the Applicants pursuant to this Order or the DIP
Financing Documents, and the granting of the Charges, do not and will not constitute
preferences, fraudulent conveyances, transfers at undervalue, oppressive conduct,
or other challengeable or voidable transactions under any applicable law.
58.
THIS COURT ORDERS that any Charge created by this Order over leases of real
property in Canada shall only be a Charge in an Applicant's interest in such real property
leases.
POSTPONEMENT OF ANNUAL GENERAL MEETING
59.
THIS COURT ORDERS that Pacific be and is hereby relieved of any obligation to call
and hold an annual meeting of its shareholders until further Order of this Court.
SERVICE AND NOTICE
60.
THIS COURT ORDERS that the Monitor shall (i) without delay, publish in the Globe &
Mall (National Edition) and the Wall Street Journal (International Edition), a notice containing the
information prescribed under the CCAA, (ii) within five days after the date of this Order, (A)
make this Order publicly available in the manner prescribed under the CCAA, (B) send, in the
prescribed manner, a notice to every known creditor of Pacific who has a claim against Pacific
of more than CDN $1000, and (C) prepare a list showing the names and addresses of those
creditors and the estimated amounts of those claims, and make it publicly available in the
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prescribed manner, all in accordance with Section 23(1)(a) of the CCAA and the regulations
made thereunder.
61.
THIS COURT ORDERS that the Monitor is hereby discharged from the requirement to
send notices as prescribed in paragraph 23(1)(a)(ii)(B) of the CCAA to the creditors of the
Applicants, save and except for the creditors of Pacific as described in paragraph 60 hereof.
62.
THIS COURT ORDERS that the E-Service Protocol of the Commercial List (the
"Protocol") is approved and adopted by reference herein and, in these proceedings, the service
of documents made in accordance with the Protocol (which can be found on the Commercial
List website at http://www.ontariocourts.ca/sci/practice/practice-directions/torontoieservicecommercial!) shall be valid and effective service. Subject to Rule 17.05 this Order shall
constitute an order for substituted service pursuant to Rule 16.04 of the Rules of Civil
Procedure. Subject to Rule 3.01(d) of the Rules of Civil Procedure and paragraph 21 of the
Protocol, service of documents in accordance with the Protocol will be effective on transmission.
This Court further orders that a Case Website shall be established in accordance with the
Protocol with the following URL `www.pwc.comica/pacific'.
63.
THIS COURT ORDERS that if the service or distribution of documents in accordance
with the Protocol is not practicable, the Applicants and the Monitor are at liberty to serve or
distribute this Order, any other materials and orders in these proceedings, any notices or other
correspondence, by forwarding true copies thereof by prepaid ordinary mail, courier, personal
delivery or electronic transmission to the Applicants' creditors or other interested parties at their
respective addresses as last shown on the records of the Applicants and that any such service
or distribution by courier, personal delivery or electronic transmission shall be deemed to be
received on the next business day following the date of forwarding thereof, or if sent by ordinary
mail, on the third business day after mailing.
SEALING
64.
THIS COURT ORDERS that the volume of Confidential Exhibits to the Volk Affidavit and
Supplementary Volk Affidavit be and are hereby sealed pending further Order of the Court and
shall not form part of the public record.
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GENERAL
65.
THIS COURT ORDERS that the Applicants or the Monitor may from time to time apply
to this Court for advice and directions in the discharge of their powers and duties hereunder.
66.
THIS COURT ORDERS that nothing in this Order shall prevent the Monitor from acting
as an interim receiver, a receiver, a receiver and manager, or a trustee in bankruptcy of any
Applicant, the Business or the Property.
67.
THIS COURT HEREBY REQUESTS the aid and recognition of any court, tribunal,
regulatory or administrative body having jurisdiction in Canada, in the United States, in the
Republic of Colombia, or elsewhere, to give effect to this Order and to assist the Applicants, the
Monitor and their respective agents in carrying out the terms of this Order. All courts, tribunals,
regulatory and administrative bodies are hereby respectfully requested to make such orders and
to provide such assistance to the Applicants and to the Monitor, as an officer of this Court, as
may be necessary or desirable to give effect to this Order, to grant representative status to the
Monitor, as the case may be, in any foreign proceeding, or to assist the Applicants and the
Monitor and their respective agents in carrying out the terms of this Order.
68.
THIS COURT ORDERS that each of the Applicants and the Monitor be at liberty and is
hereby authorized and empowered to apply to any court, tribunal, regulatory or administrative
body, wherever located, for the recognition of this Order and for assistance in carrying out the
terms of this Order, and that the Monitor is authorized and empowered to act as a foreign
representative in respect of the within proceedings for the purpose of having these proceedings
recognized in a jurisdiction outside Canada, including without limitation in the United States with
respect to the U.S. Proceedings, and in Colombia with respect to the Colombian Proceedings.
69.
THIS COURT ORDERS that any interested party (including the Applicants and the
Monitor) may apply to this Court to vary or amend this Order on not less than seven (7) days'
notice to any other party or parties likely to be affected by the order sought or upon such other
notice, if any, as this Court may order; provided, however, that the DIP Lenders shall be entitled
to rely on this Order for all advances, loans made and note purchases completed, the payment
of the Break Fee and other amounts paid under the DIP Notes, the UC Facility and DIP
Financing Documents up to and including the date that this Order may be varied or amended.
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113
70.
THIS COURT ORDERS that a comeback hearing in this matter shall be held on 0, May
*, 2016 at 10:00 a.m. All materials with respect to such comeback hearing shall be filed with
the Court and served on the Service List herein by no later than e, May *, 2016.
71.
THIS COURT ORDERS that this Order and all of its provisions are effective as of
12:01 a.m. Eastern Standard/Daylight Time on the date of this Order.
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Schedule A
List of Assistants retained as of the date of this Order
(a) the legal and financial advisors to the Company, including without limitation (i) Norton Rose
Fulbright Canada LLP, (ii) Proskauer Rose LLP, (iii) J&A Garrigues S.L.P., (iv) Lazard Freres &
Co. LLC (the "Company's Financial Advisor"), (v) Zolfo Cooper Management LLC, (vi) Osier
Hoskin & Harcourt LLP (for the Independent Committee), and (vii) UBS Securities Canada Inc.
(for the Independent Committee, the "IC Financial Advisor");
(b) the legal and financial advisors to the Ad Hoc Noteholder Committee, including, without
limitation, (i) Goodmans LLP, (ii) Paul, Weiss, Rifkind, Wharton & Garrison LLP, (iii) Cardenas &
Cardenas Abogados, and (iv) Evercore Group L.L.C. and Evercore Partners LLP (the
"Noteholders' Financial Advisor");
(c) the legal and financial advisors to each administrative agent under the bank credit facilities,
including, without limitation, (i) Torys LLP, (ii) Davis Polk & Wardwell LLP, (iii) GOmez-Pinzon
Zuleta Abogados, (iv) Seward & Kissel LLP, and (v) FTI Consulting Inc. (the "Agents' Financial
Advisor"); and
(d) the legal and financial advisors to the Plan Sponsor, including, without limitation, (i) Brown
Rudnick LLP, (ii) McMillan LLP, and (iii) GMP Securities L.P.
The term "Financial Advisors" shall mean, collectively, the Company's Financial Advisor, the
IC Financial Advisor, the Noteholders' Financial Advisor, and the Agents' Financial Advisor.
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115
Schedule B
Definitions of Note Claims and Bank Debt Claims
"Note Claims" means all claims by holders under (i) the 5.375% senior unsecured notes due
January 26, 2019 issued by the Company (the "2019 Notes"); (ii) the 7.25% senior unsecured
notes due December 12, 2021 issued by the Company (the "2021 Notes"); (iii) the 5.125%
senior unsecured notes due March 28, 2023 issued by the Company (the "2023 Notes"); and/or
(iv) the 5.625% senior unsecured notes due January 19, 2025 (the "2025 Notes", and together
with the 2019 Notes, 2021 Notes and 2023 Notes, the "Notes," and the claims and other
obligations arising thereunder, and/or under the indentures and supplemental indentures
governing the Notes.
"Bank Debt Claims" means all claims of lenders under each of (i) the $75,000,000 Master
Credit Agreement dated as of April 4, 2014 among the Company, as borrower, the guarantors
party thereto, and Banco Latinoamericano de Comercio Exterior, S.A. as lender (as amended,
modified, restated or supplemented from time to time, the "Bladex Facility"); (ii) the
$109,000,000 Credit and Guaranty Agreement dated as of May 2, 2013 among the Company,
as borrower, the guarantors party thereto, and Bank of America, N.A. as lender (as amended,
modified, restated or supplemented from time to time, the "BofA Facility"); (iii) the
$250,000,000 Credit and Guaranty Agreement dated as of April 8, 2014 among the Company,
as borrower, the guarantors party thereto, the lenders party thereto and HSBC Bank USA, N.A.,
as administrative agent (as amended, modified, restated or supplemented from time to time, the
"HSBC Facility"); and/or (iv) the $1,000,000,000 Revolving Credit and Guaranty Agreement
dated as of April 30, 2014 among the Company, as borrower, the guarantors party thereto, Bank
of America, N.A. as administrative agent and the lenders party thereto (as amended, modified,
restated or supplemented from time to time, the "Revolving Facility," and together with the
Bladex Facility, the BofA Facility and the HSBC Facility, the "Credit Facilities" and the loans,
commitments, and other obligations held by the applicable lenders pursuant to the Credit
Facilities.
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t,
1
Schedule C
Unaffected Claims
The claims of the following Persons providing good or services to or in respect of any parts of
the Business in Colombia or Peru:
Employees, tax authorities, counterparties in joint operating agreements and overriding royalty
agreements, field service providers, utility providers of any kind, administrative service providers
of any kind, the Agencia National de Hidrocarburos, other governmental agencies or entities
including Ecopetrol, S.A. , social agencies (including Colombian social security, health and
retirement/pension institutions and/or agencies) and providers of social programs to which the
Applicants or their affiliates contribute.
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TAB 5
117
NRF Draf - APRIL 25, 2016
Court File No.
CV-16-11363-00CL
ONTARIO
SUPERIOR COURT OF JUSTICE
COMMERCIAL LIST
THE HONOURABLE
MR. JUSTICE
WEEKDAYWEDNEDAY, THE #2,72
1-1
NEWBOULD
DAY OF WION-THAERIL, 20Y-Pc1
IN THE MATTER OF THE COMPANIES' CREDITORS
ARRANGEMENT ACT, R.S.C. 1985, c. C-36, AS AMENDED
AND IN THE MATTER OF A PLAN OF COMPROMISE OR
ARRANGEMENT OF [APPLICANT'S NAME] (the "Applicant")PACIFIC
EXPLORATION & PRODUCTION CORPORATION PACIFIC E&P
HOLDINGS CORP , META, PETROLEUM CORP , PACIFIC STRATUS
NTERNATIONAL ENERGY LTD.. PACIFIC STRATUS ENERGY
COLOMBIA CORP PACIFIC STRATUS ENERGY S.A., "ACIFIC OFF
SHORE EERU S.R.L., PACIFIC RUBIALES GUATEMALA S.A., PACIFIC
GUATEMALA ENERGY CORP., PRE-PSIE COOPERATIEF U.A.,
A_
(BARBADOS) LTD.
Applicants
INITIAL ORDER
THIS APPLICATION, made by the ApplicantPacific Exploration & Production
re Peru S R L Pacific Rubiales Guatemala S A Pacific Guatemala Enerav
Pacific Of, f Sho
Corp PRE-PSIE Cooperatief U A , Petrominerales Colombia Corp. and Grupo C&C Energia
(Barbacisa) Ltd collectively the
Applicantsa pursuant to the Companies' Creditors
Arrangement Act, R.S.C. 1985, c. C-36, as amended (the L'ICCAAL:) was heard this day at 330
University Avenue, Toronto, Ontario.
ON READING the affidavit of [NAME]Peter Volk sworn [DATE}April 27, 2016 and the
Exhibits thereto, and on being advised-that-the secured creditors who are likely to be affected by
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of Peter Volk sworn April 27, 2016 (the "Supplementary Volk Affidavit") and the pre-filing
re ort of therooposed
r
Monitor dated Annl
2016 (
"Proposed Monitor's Recor , and on
hearing the submissions of counsel for [NAMES], no one appearing for [NAME]-qhe
Applicants.
.12L
AQA the ad hoc committees
acting for certain holders of Note Claims (the "Ad Hoc Noteholder Committee") Bank of
America N.A and HSBC Bank USA N.A. as ad inistrative agents with respect to certain Bank
ital Group Inc. (the "Plan Sponso " , an. the L/C
Providers (as those terms are defined herein) the independent committee of the board of
directors of Pacific, and those other parties present, no one else appeari g although duly
served as appears from the affidavit of service of [NAME] sworn [DATE]1 , filed, and on
reading the consent of {MONITOR'S NAME]P icewaterhouseCoopers Inc to act as the
Monitor,
AND ONBEING ADVISED that the Applicants intend to commence reco ition
proceedings under Law 1116 of 2006 of the Republic of Colombia (the "Colombian
Proceedin s" and proceedings under chapter 15 of title 11 of the United States Code in the
SPuth.ernDistrictoLNeyvYark_(tlae_LLL
limtsL_and_c.olle&tively6atb/IaeQolorabian
Proceedings the "Foreign Proceedings")
SERVICE
1.
THIS COURT ORDERS that the time for service of the Notice of Application and the
Application Record is hereby abridged and validate& so that this Application is properly
returnable today and hereby dispenses with further service thereof.
APPLICATION
2.
THIS COURT ORDERS AND DECLARES that each of the Applicants is a company to
which the CCAA applies.
REFERENCES TO DOLLARS
Include names of secured creditors or other persons who must be served before certain relief in this model Order
may be granted. Seems-- or-example, CCAA Sec-dens 11.2(1), 11.3(1), 11.4(1), 11.51(1), 11.52(1), 32(1), 32(3), 33(2
)-and- 6(2).
2 If service is effected-ima manner-other-than as authorized-by-the Ontario Rules of Civil Proccdure-an-er-dervalidating irregular service is required pursuant to Rule 16.08 of the Ruies-efGivil-Preee6hire-anel-may-be-granteelM-appropFiate-eireumstan
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3
Unless otherwise stated, all references to dollars or $ herein are to dollars of the United
States of America.
PLAN OF ARRANGEMENT
4_
4—THIS COURT ORDERS that the Applicants shall have the authority to file and may,
subject to further order of this Court, file with this Court a plan of compromise or arrangement
(hereinafter referred to as the LY la
POSSESSION OF PROPERTY AND OPERATIONS
4-.-THIS COURT ORDERS that the Applicants shall remain in possession and control of
itstheir current and future assets, undertakings and properties of every nature and kind
whatsoever, and wherever situate including all proceeds thereof (the "P ro pe rtr ). Subject to
further Order of this Court, the Applicants shall continue to carry on business in a manner
consistent with the preservation of itstheir business (the
B us i ness1 ) and Property. The
Applicants is are authorized and empowered to continue to retain-and, employ or compensate
the employees, consultants, agents, experts, accountants, counsel and such other persons
(collectively .2."Assistants11", includi ,g without limitation those Assistants named in Schedule
to this Order) currently retained or employed by it, employed or compensated by any of them
(and whether such Assistants are providing advice to the Applicants, or to other stakeholders),
with liberty to retain such further Assistants as ithey deems reasonably necessary or desirable
in the ordinary course of business or for the carrying out of the terms of this Order.
6_
5. [THIS COURT ORDERS that the Applicants shall be entitled to continue to utilize the
central cash management system' currently in place as described in the Volk Affidavit of
[NAME] sworn [DATE] or~r with thee approval of the DIP Note Purchasers (as defined herein).
replace it with another substantially similar central cash management system (-the"including_
such modifications as may be required in •rde to comply with the terms of th- DIP Financing
Documents (as defined herein) (the "Cash Management SystemM and that any present or
future bank providing the Cash Management System shall not be under any obligation
whatsoever to inquire into the propriety, validity or legality of any transfer, payment, collection or
3 This provision-shoe4d-einiy-be-udlized-where-FreeessaF
anagel-TteFft--s-Yst-e-m&ofteri-opemte-iri-a-munner that consolidates-the cash of appheant--eompanies. Specific attention-should be paid to
cross border and inter company transfers of cash.
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other action taken under the Cash Management System, or as to the use or application by the
Applicants of funds transferred, paid, collected or otherwise dealt with in the Cash Management
System, shall be entitled to provide the Cash Management System without any liability in
respect thereof to any Person (as hereinafter defined) other than the Applicants, pursuant to the
terms of the documentation applicable to the Cash Management System, and shall be, in its
capacity as provider of the Cash Management System or any part
f, an unaffected
creditor under the Plan with regard to any claims or expenses it may suffer or incur in
connection with the provision of the Cash Management System.}
7_
67-THIS COURT ORDERS that the Applicant, subject to the terms and conditions of the
Restructuring Support Agreement among the Applicants the Plan Sponsor certain holders f_
Note Claims and certain holders of Bank Claims (each as, defined i Schedule B hereto) dated
April 20. 2016 (the "RSA"1 and tie DIP Financing Documents. including the Cash Flow
Projections (as defined in the DIP Financin.a Documentsi the Applicants shall be entitled but
not required to pay the following expenses whether incurred prior to or after this Order:
(a)
all outstanding and future wages, salaries, employee and pension benefits, vacation
pay and expenses payable on or after the date of this Order, in each case incurred
in the ordinary course of business and consistent with existing compensation policies
and arrangements; and
(b)
the fees and disbursements of any Assistants retained or, employed or
ompensated by thean Applicant in respect of these proceedings; oLany similar or
ancillary -proceedings in other jurisdictions or
related corporate matters
at their standard rates and charges..-;
amoixatsowin,g_for goods n
ticea_,_actualtyaup_p_liesUay_tracieszeditorstotiae
Applicants in the ordinary course of business: and
W),
any other costs and expenses, with the consent of the Monitor if any single payment
exceeds $200,_()00._
8_
77-THIS COURT ORDERS that, subject to the terms of the RSA and the DIP Financing
Documents, including the Cash Flow Projections, and except as otherwise provided to the
contrary herein, the Applicants shall be entitled but not required to pay all reasonable expenses
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incurred by the Applicants in carrying on the Business in the ordinary course after this Order,
and in carrying out the provisions of this Order, which expenses shall include, without limitation:
(a)
all expenses and capital expenditures reasonably necessary for the preservation of
the Property or the Business including, without limitation, payments on account of
insurance (including directors and officers insurance), maintenance and security
services; and
(b)
payment for goods or services actually supplied to the ApplicantApplicants or to the
Business following the date of this Order.
a,
8. THIS COURT ORDERS that the Applicants shall remit, in accordance with legal
requirements, or pay:
(a)
any statutory deemed trust amounts in favour of the Crown in right of Canada or of
any Province thereof or any other Canadian taxation authority which are required to
be deducted from employees' wages, including, without limitation, amounts in
respect of (i) employment insurance, (ii) Canada Pension Plan, (iii) Quebec Pension
Plan, and (iv) income taxes;
(b)
all goods and services or other applicable sales taxes in Canada (collectively,
1'_'Sales
TaxesL") required to be remitted by the ^~FIi ntAj plicants or any of them
in connection with the sale of goods and services by the ApplicantApplicants or any
of them, but only where such Sales Taxes are accrued or collected after the date of
this Order, or where such Sales Taxes were accrued or collected prior to the date of
this Order but not required to be remitted until on or after the date of this Order, and
(c)
any amount payable to the Crown in right of Canada or of any Province thereof or
any political subdivision thereof or any other Canadian taxation authority in respect
of municipal realty, municipal business or other taxes, assessments or levies of any
nature or kind which are entitled at law to be paid in priority to claims of secured
creditors and which are attributable to or in respect of the carrying on of the
Business by the
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10
9. THIS COURT ORDERS that until a real property lease is disclaimed far-resiliatedr
in accordance with the CCAA, the Applicants. shall pay all amounts constituting rent or payable
as rent under real property leases (including, for greater certainty, common area maintenance
charges, utilities and realty taxes and any other amounts payable to the landlord under the
lease) or as otherwise may be negotiated between the Applicants and the landlord from time to
time r'RentL"), for the period commencing from and including the date of this Order,
twice-monthly in equal payments on the first and fifteenth day of each month, in advance (but
not in arrears). On the date of the first of such payments, any Rent relating to the period
commencing from and including the date of this Order shall also be paid.
11
-1-0,THIS COURT ORDERS that, except as specifically permitted herein, the Applicant is=
andsubjectioAtiete
ndiag_DsicumentaineApacantssare hereby directed,
until further Order of this Court: (a) to make no payments of principal, interest thereon or
otherwise on account of amounts owing by any of the Applicants to any of itsteir creditors as
of this date; (b) to grant no security interests, trust, liens, charges or encumbrances upon or in
respect of any of its respective Property; and (c) to not grant credit or incur liabilities except in
the ordinary course of the Business provided however that the
ntsshallkeentitlethlo
make payments with respect to the provision Q_f~s~ods and services to the Applicants or any of
them and any other liabilities arising in the ordinary curse of busi ness nd not contested by
the Applicants whether such liabilities arise Drior to or after the date of this Order including_
without limitation payments with respect tathe liabilitie identified on Schedule C to this Order.
RESTRUCTURING
12.
11. THIS COURT ORDERS that the Applicant shall, subject to such requirements as
are imposed by the CCAA and such covenants as may be contained in the Definitive Documents
(as hereinafter defined)the terms and conditions of the RSA and the DIP Financing Documents,_
and unless otherwise specified in this Order, Pacific shall have the right to:
term "resiliate" should-remain-if-there are leased-premises in the Province of Quebec, but can otherwise be
removed,
4 The
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(a)
permanently or temporarily cease, downsize or shut down any of its business or
operationsktn-d4e-dispese-ef-redun4aftt-e-r-n-e-n-m-a-teria1-ass-ets-nfkt-exeeeding-8-•in-any-an-e-trailsaetien-or-S*-in--the-aggregater in Canada;
(k)
retamaaokitattQrLage
xies_
ardor voting_information from creditors in resp t of the Plan and any amendments
thereto; and
(c)
(b}-(terminate the employment of such of its employees or temporarily lay off such of
its employees as it deems appropriate]; and(c) pufsue-all-avenues-of-r-efinaneift-ef
its Business or Property, in whole or part, subject to prior approval of this Court being
obtained before any material refinancing,
all of the foregoing to permit the Applicants to proceed with an orderly restructuring of the
Busine-ss-Ethe-qh_e_Restructuringl (as defined in the RSA).
11
12. THIS COURT ORDERS that thew Applicant shall provide each of the relevant
landlords with notice of theat Applicant's intention to remove any fixtures from any leased
premises at least seven (7) days prior to the date of the intended removal. The relevant
landlord shall be entitled to have a representative present in the leased premises to observe
such removal and, if the landlord disputes the applicable Applicant's entitlement to remove any
such fixture under the provisions of the lease, such fixture shall remain on the premises and
shall be dealt with as agreed between any applicable secured creditors, such landlord and the
applicable Applicant, or by further Order of this Court upon application by the Applicants on at
least two (2) days'_ notice to such landlord and any such secured creditors. If thean Applicant
disclaims-feresi the lease governing such leased premises in accordance with Section
32 of the CCAA, it shall not be required to pay Rent under such lease pending resolution of any
such dispute (other than Rent payable for the notice period provided for in Section 32(5) of the
CCAA), and the disclaimer+f-resiliatien1 of the lease shall be without prejudice to theat
Applicant's claim to the fixtures in dispute.
5-Seetion-36-e-C-the amended CCAA does not seem to contemplate a pre appreved-pewei,-te-sell-Esee-subseeti-en36(3)) and moreover requires notice (subsectien-36(2)) and evidence (subsection 36(7)) that may not have
occurred or be available--at the initial CCAA hearing.
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14
13. THIS COURT ORDERS that if a notice of disclaimer [or-resiliatiatti-is delivered
pursuant to Section 32 of the CCAA, then (a) during the notice period prior to the effective time
of the disclaimer-{e:—resiliatiant the landlord may show the affected leased premises to
prospective tenants during normal business hours, on giving the Applicants and the Monitor 24
hours' prior written notice, and (b) at the effective time of the disclaimer-For-resiliationi-, the
relevant landlord shall be entitled to take possession of any such leased premises without
waiver of or prejudice to any claims or rights such landlord may have against glean Applicant in
respect of such lease or leased premises, provided that nothing herein shall relieve such
landlord of its obligation to mitigate any damages claimed in connection therewith.
15_
THIS. COURT ORDERS that each of the Applicants is authori ed and empowered to
take3-11-atePa-and-acton-sinLeal
RSA,_aricLthatmibingintlaisOiciershalliaco
o-m-P-IVAZIth-ali of .
las-Qualantta-the--
aLving_PmadifyincLanys/Lthe-dght.5-
cPmmitmentsDrobligaticna of any thheApplicants_undeLtiae_RSA,
16-
THIS COURT ORDERS that Pacific is authorized and embowered to take all steps and
actions in respect of (i) the commitment letter between Pacific and the Plan Sponsor (the "Plan
Sponsor Commitment Letter"), (ii) the commitment letter between Pacific and the Ad Hoc DI"
Lenders (as defined herein)Jthe °Ad Hoc Commitment Letter" and ) the commitment letter
between Pacific and the. L/C Providers (as defined herein") (the "L/C Commitment Letter", and
s") each dated a of April 20, 2016 and attached to the Volk Affidavit.
If
NO PROCEEDINGS AGAINST THE APPLICANTS OR THE PROPERTY
IT
1/1. THIS COURT ORDERS that until and including [DATE MAX. 30 DAYS]May 27,
2016, or such later date as this Court may order (the 11`1Stay Periocr"), no proceeding or
enforcement process in any court or tribunal (each, a L"Proceedingq shall be commenced or
continued against or in respect of the ApplicantApplicants (or any of them) or any of their
branches, or the Monitor, or affecting the Business or the Property, except with the written
consent of the Applicants and the Monitor, or with leave of this Court, and any and all
Proceedings currently under way against or in respect of any_o_f_the Applicants or affecting the
Business or the Property are hereby stayed and suspended pending further Order of this
Co u rt;P
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authorized in the Colombian Proceedings with respect to Prooerty not owned directlyby any of
the Applicants or any Dart of the Business not operated directly by the Applicants
NO EXERCISE OF RIGHTS OR REMEDIES
18_
15. THIS COURT ORDERS that during the Stay Period, all rights and remedies of any
individual, firm, corporation, governmental body or agency, or any other entities (all of the
foregoing, collectively being '"'Persons'-"_ and each being a -2.53 ersonLI) against or in respect of
the Applicantanyofila
y_ofthemLor_anyoftheirbranches,. or the Monitor, or
affecting the Business or the Property, are hereby stayed and suspended except with the
written consent of the Applicants and the Monitor, or leave of this Court, provided that nothing in
this Order shall (i) empower the Applicantstay or suspend any rghts or remedies duly
autlacrizesiintheCPlonabiaaPinceedings_witlife_spectACITmpertyrat owned directly by any of
tlaeApplicantaor_any_parLoLtlaeausinessnaLcaerateddirectlyWheApplica
pPwer-
the Applicants to carry on any business which the Applicants. is are not lawfully entitled to carry
on, (41) affect such investigations, actions, suits or proceedings by a regulatory body as are
permitted by Section 11.1 of the CCAA, OHM prevent the filing of any registration to preserve or
perfect a security interest, or (ivy) prevent the registration of a claim for lien.
NO INTERFERENCE WITH RIGHTS
19
-1-67-THIS COURT ORDERS that during the Stay Period, no Person shall discontinue, fail
to honour, alter, interfere with, repudiate, terminate or cease to perform any right, renewal right,
contract, agreement, licence or permit in favour of or held by the-ApplieantT-etany o the
Applicants or any off their branches except O for those parties to the RSA in accordance wit
the terms thereof, (ii) with the written consent of the Applicants and the Monitor, or (iii) with
leave of this Court.
CONTINUATION OF SERVICES
20_
17. THIS COURT ORDERS that during the Stay Period, all Persons having oral or
written agreements with any of the Applicants or statutory or regulatory mandates for the supply
of goods and/or services, including without limitation all computer software, communication and
other data services, centralized banking services, payroll services, insurance, transportation
services, utility or other services to the Business or the Applicants
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their branches, are hereby restrained until further Order of this Court from discontinuing,
altering, interfering with or terminating the supply of such goods or services as may be required
by any of the Applicants, and that the Applicants shall be entitled to the continued use of itstheir
current premises, telephone numbers, facsimile numbers, Internet addresses and domain
names, provided in each case that the normal prices or charges for all such goods or services
received after the date of this Order are paid by the aladicableApplicant in accordance with
normal payment practices of theat Applicant or such other practices as may be agreed upon by
the supplier or service provider and each of the Applicants and the Monitor, or as may be
ordered by this Court.
NON-DEROGATION OF RIGHTS
21
1-8,-THIS COURT ORDERS that, notwithstanding anything else in this Order, no Person
shall be prohibited from requiring immediate payment for goods, services, use of lease or
licensed property or other valuable consideration provided on or after the date of this Order, nor
shall any Person be under any obligation on or after the date of this Order to advance or
re-advance any monies or otherwise extend any credit to any of the Applicant. Applicants.
Nothing in this Order shall derogate from the rights conferred and obligations imposed by the
C CAA.6
PROCEEDINGS AGAINST DIRECTORS AND OFFICERS
22
-.1-9,-THIS COURT ORDERS that during the Stay Period, and except as permitted by
subsection 11.03(2) of the CCAA, no Proceeding may be commenced or continued against any
of the former, current or future directors or officers of any of the Applicants with respect to any
claim against the directors or officers that arose before the date hereof and that relates to any
obligations of any of the Applicants whereby the directors or officers are alleged under any law
to be liable in their capacity as directors or officers for the payment or performance of such
obligations, until a compromise or arrangement in respect of the Applicants, if one is filed, is
sanctioned by this Court or is refused by the creditors of the Applicants or this Court.
non deregation re- 4sien s-acquired more significance due to the recent amendments to the CCAA, since a
number ofaet-ions-esteps-eannot bestayedror-the stay is subject to certain limits and restrictions. See, for
example, CCAA Seetio
6 This
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DIRECTORS' AND OFFICERS' INDEMNIFICATION AND CHARGE
23
28,-THIS COURT ORDERS that theeach Applicant shall indemnify its directors and
officers against obligations and liabilities that they may incur as directors or officers of theat
Applicant_(i), after the commencement of the within proceedings,? except_orGijnreacactQL
actions taken as directors and officers of that Applicant relating to the within oroceedincs the
Eorei,g_nProceadiriga,_theRestructurirtg and the development and implementation of the Plan,
except in each case to the extent that, with respect to any officer or director, the obligation or
liability was incurred as a result of the director's or officer's gross negligence or wilful
misconduct.
24
21. THIS COURT ORDERS that the directors and officers of the Applicants shall be
entitled to the benefit of and are hereby granted a charge (the "Directors"JM Charge'-'=')s on
the Property, which charge shall not exceed an aggregate amount of $*11,000,000, as security
for the indemnity provided in paragraph 120-13 of this Order. The Directors'D&O Charge shall
have the priority set out in paragraphs fa38-1- and 4-44455 herein.
25_
22. THIS COURT ORDERS that, notwithstanding any language in any applicable
insurance policy to the contrary, (a) no insurer shall be entitled to be subrogated to or claim the
benefit of the Directors'D&O Charge, and (b) thean Applicants directors and officers shall only
be entitled to the benefit of the Directors'a&O Charge to the extent that they do not have
coverage under any directors' and officers' insurance policy, or to the extent that such coverage
is insufficient to pay amounts indemnified in accordance with paragraph +20-1-3 of this Order.
APPOINTMENT OF MONITOR
26_
23. THIS COURT ORDERS that [MONITOR'S NAME]PricewaterhouseCoopers Inc. is
hereby appointed pursuant to the CCAA as the Monitor, an officer of this Court, to monitor the
business and financial affairs of the Applicants with the powers and obligations set out in the
CCAA or set forth herein and that the Applicants and itstiek shareholders (or members as
applicable), officers, directors, and Assistants shall advise the Monitor of all material steps
imported-into4his-paragraph:—Thebroad-indemnity-language from-Seetieri-1-1-,-5-1-ef-the
granting of the indemnity (whether or-not-secured by a Directors' Charge), and the scope of the indemaity7-arediseretionary-matters-that-shottlel-be-addressed-with4lte-Gourt,
g-Seetion 11.51(3) provides-that-the-C-ourt-may-not-make-this security/charging order if in the Court's opinion theNaptieaitt-eould-obtain adequate-indemnifieation-insurance for-the-director or officer at a reasonable-east,
7 The
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taken by the Applicants pursuant to this Order, and shall co-operate fully with the Monitor in the
exercise of its powers and discharge of its obligations and provide the Monitor with the
assistance that is necessary to enable the Monitor to adequately carry out the Monitor's
functions.
24-THIS COURT ORDERS that the Monitor, in addition to its prescribed rights and
obligations under the CCAA, is hereby directed and empowered to:
(a)
monitor the Applicant's receipts and disbursements of the Pac'fic Group (as defined
in the Volk Affidavit) and make such inquiries as it deems appropriate with respect to
Cash Mana gement System and the movement of cash within the Business;
(b)
report to this Court at such times and intervals as the Monitor may deem appropriate
with respect to matters relating to the Property, the Business, the Foreign
Proceedinga_and such other matters as may be relevant to the proceedings herein;
(c)
provide updates. from time to time. to the Suoerintendencia de Sociedades of
Colombia on the status of these proceed' gs;
(d)
(c) assist the Applicants, to the extent required by the Applicants., in itstheir
dissemination, to the DIP Lenders and its/or their counsel on a [TIME INTERVAL]
basisor financial advisors of financial and other information as agreed to between the
Applicants and the DIP Lender which may be used in these proceedingsLenders
including reporting on a basis to be agreed with the DIP Lender;Lenders;
(:)
EEO-advise the Applicants in itstheir preparation of the Applicant'sAppiicants' cash
flow statements and reporting required by the DIP LendcrLende s and/or their
_ a el or financial advisors, which information shall be reviewed with the Monitor
and delivered to the DIP Lenders. and its/or their counsel on a periodic basis, but not
less than [TIME INTERVAL], or as otherwise agreed-to-by--the-141P-Lender-;or
financial_ advisors in accordance with the DIP Financing Documents
(0
(0-advise the Applicants in itstheir development of the Plan and any amendments to
the Plan;
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(g)
{-f)-assist the Applicants, to the extent required by the Applicants, with the holding
and administering of creditors' or shareholders' meetings for voting on the Plan;
(b)
assist the Ap licants to the extent rewired bar the ppliGanta,iwitiitheirieatructuring_
activities;
Assist the App11_Cants o the_ extent required_by the Apglicants with any matters
relating to the Fooreign Proceedings and any other foreign oroce~ ings commenced
inselatian_taibLeApplicantsi
(g)-have full and complete access to the Property, including the premises, books,
records, data, including data in electronic form, and other financial documents of the
Applicants, to the extent that is necessary to adequately assess the
A-pplieafitIsApplicants' business and financial affairs or to perform its duties arising
under this Order;
(h) be at liberty to engage independent legal counsel or such other persons as the
Monitor deems necessary or advisable respecting the exercise of its powers and
performance of its obligations under this Order; and
(1)
(i) perform such other duties as are required by this Order or by this Court from time
to time.
23,
THIS COURT ORDERS that without limiting paragraph 27 above in carrying out its
rights and obligations in connection with this Order the Monitor shall be entitled to take such
reasonable steps and use such services as it deems necessary in discharging its powers and
obligatkms.incluctin,
29
wit out
limitation,
utilizi g
the
services
of any
other
25. THIS COURT ORDERS that the Monitor shall not take possession of the Property
and shall take no part whatsoever in the management or supervision of the management of the
Business and shall not, by fulfilling its obligations hereunder, be deemed to have taken or
maintained possession or control of the Business or Property, or any part thereof.
30,
26,-THIS COURT ORDERS that nothing herein contained shall require the Monitor to
occupy or to take control, care, charge, possession or management (separately and/or
DOGSTORCAN DMS. \102834247683N2
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collectively,"_'Possession"_') of any of the Property that might be environmentally
contaminated, might be a pollutant or a contaminant, or might cause or contribute to a spill,
discharge, release or deposit of a substance contrary to any federal, provincial or other law
respecting the protection, conservation, enhancement, remediation or rehabilitation of the
environment or relating to the disposal of waste or other contamination including, without
limitation, the Canadian Environmental Protection Act, the Ontario Environmental Protection
Act, the Ontario Water Resources Act, or the Ontario Occupational Health and Safety Act and
regulations thereunder (the .'"`Environmental Legislation-q, provided however that nothing
herein shall exempt the Monitor from any duty to report or make disclosure imposed by
applicable Environmental Legislation. The Monitor shall not, as a result of this Order or
anything done in pursuance of the Monitor's duties and powers under this Order, be deemed to
be in Possession of any of the Property within the meaning of any Environmental Legislation,
unless it is actually in possession.
31._
27. THIS COURT ORDERS that that the Monitor shall provide any creditor of thean
Applicant and the DIP LenderLenders and/or their respective counsel or financial advisors with
information provided by theat Applicant in response to reasonable requests for information
made in writing by such creditor addressed to the Monitor. The Monitor shall not have any
responsibility or liability with respect to the information disseminated by it pursuant to this
paragraph. In the case of information that the Monitor has been advised by any of the
Applicants is confidential, the Monitor shall not provide such information to creditors unless
otherwise directed by this Court or on such terms as the Monitor and the Applicants may agree.
32
2-8,THIS COURT ORDERS that, in addition to the rights and protections afforded the
Monitor under the CCAA or as an officer of this Court, the Monitor shall incur no liability or
obligation as a result of its appointment or the carrying out of the provisions of this Order, save
and except for any gross negligence or wilful misconduct on its part. Nothing in this Order shall
derogate from the protections afforded the Monitor by the CCAA or any applicable legislation.
33,
29,--THIS COURT ORDERS that the Monitor, counsel to the Monitor, and counsel toeach
of the Appissie5lants shall be paid their reasonable fees and disbursements, in each case at
their standard rates and charges, by the Applicants as part of the costs of these proceedings'
for greater certainty the Financial AdvisorJas defined in Schedule Rl shall be paid their fees
DOGS-TORCAN DMS: .U2830247-6832\31
131
NRF Draft 4 - APRIL 25, 2016
commitment letters in -ach case includi g such success fees as an. when due under such
anztagement or commitment
. The Applicants is are hereby authorized and directed to
pay the accounts of the Monitor, counsel fort° the Monitor* and counsel for the Applssies_tants
on a [TIME INTERVAL]twice-monthly basis and, in addition, the—Applic-ant-4s—hereby-authorized to pay to the Monitor, counsel to the Monitor, and counsel to the Applicant,Assistants
may retain such retainers in the amount[s] of S. [, respectively,}as they hold as of the date of
this Order, to be held by them as security for payment of their respective fees and
disbursements outstanding from time to time__
34.
3O—THIS COURT ORDERS that the Monitor and its legal counsel shall pass their
accounts from time to time, and for this purpose the accounts of the Monitor and its legal
counsel are hereby referred to a judge of the Commercial List of the Ontario Superior Court of
Justice.
35
31. THIS COURT ORDERS that the Monitor, counsel to the Monitor, if any, and the
Applicant's counselAssistants shall be entitled to the benefit of and are hereby granted a
charge (the L"Administration Charge.") on the Property, which charge shall not exceed an
aggregate amount of $ 3-45 000,000 (inclusive of success fees payable to inancial Advisors),
as security for their professional fees and disbursements incurred f,iLat the standard rates and
charges of the Monitor, counsel to the Monitor, and each such counselAssistant, both before
and after the making of this Order in respect of these proceedings,-; or (ii) as prescribed in the
Financial Advisors' respective e gagement or commitment letters. The fees and disbursements
of the trustee or trustees under the DIP Notes and the warrant indenture related thereto as well
as any collateral agent^common depositary transfer ag e t paying agent ettlement agent
connection therewith shall also be secured by the Administration Charge at their standard
rates and charge. The Administration Charge shall have the priority set out in paragraphs
{081 and 140155 hereof.
AeeRQVALDEKERRLANE
TTERNIS
36THIS
COURT ORDERS that the Kev Emplovee Retention Program the "KERP")
described m thei~pplemental Volk Affidavit the details of which are included as Exhibit
-• to
the Supplemegfary Volk Affidavit is heresy Ppro_veLLsincLtliatilie-APplioalatsareautharizesl_
DOCSTORCAN DMS•111124102474832\31
I3
NRF Draft 4 — APRIL 25, 2016
and directed to make ,payments in accordance with the terms thereof to the maximum
aggragateannuntQuAlaasm
37
THIS COURT ORDERS that the KERP Participants (as such ter is defined in the
Supplementary Volk Affidavit) shall be entitled to the benefit of and are hereby granted a
chargiaAtheIKERPCharg
able to the KERP
RadLcipantspursuanLiopar
f this Order The KERP Charge shall be in the amount
and shall have the priority set out in paragraphs 53 and 55 hereof
Chargeslaalltea5ilent—Passimesliarge_and_
38_
that the KERP Participants shall not be entitled to enforce the KERP Charge wit out the prior
leave of this Court on notice to the DIP Note Purchasers and the Monitor.
APPROVA OF FINANCI , LADVISORS2_,ENGAGEMENTS
39_
THIS COURT ORDERS that the Applicants
amended by a letter dated April 18, 2016.
40_
Financi
the IC Financial Advisor engagement letter dated March 10 2016
41
THIS COURT ORDERS that the Apnligants are authorized to continue the engag- -2
set out in the Noteholders' Financial Advisor engagementletterdatestEebruaryla,m16_
43_
THIS COURT ORDERS that each of the r-mancia~Havisor engagement
lepers ~;~uacncu
as confidential Exhibits C-1 C-2 C_3 _andC:410_11aeVolls—Afficlavilljslaelatifiedaaci_
confirmed and the A licants are authorized to perform their obligations thereunder and that
DOCSTORCAN DMS• 11,42832476831\32
33
RF Draft 4 — APRIL 25 2016
DIP FINANCING AND LETTER OF CREDIT FACILITY
44_
32. THIS COURT ORDERS that the Applicants is are hereby authorized and
empowered to
"DIP Lender"issue senior secured notes (the "DIP Notes") to be purchased by the Plan
certairwtiersALtie
aers of the AdHoc Noteholders Committee (the "Ad Hoc DIP
enders". toaether with the Plan SDonSor the °DIP Note Purchasers" and an su
~ _ bseauent
transferee of the DIP Notes shall be considered a DIP Note Purchaser for the purposes of this
ar_der)PursaartLiotheCommitmenLDo_etritant_s_jciefinadbelow) in order to finance the
Applicant'sApplicants' working capital requirements and other general corporate purposes and
capital expenditures, provided that borrowitigs-uudet--sttell-eredit-faeilit
500.,_0_0_0MOunleas_PermittecLbyludberQrslerof
this Court
45_
THIS COURT ORDERS that the DIP Notes shall be on the terms and subject to the
conditions set forth in the Commitmen Letter and the DIP/Exi Term Sheet attached the eto
46THIS
COURT ORDERS that the Aoplicants are hereby authorized and empowered to
-
r~quest_the issuance. renewal or extension of letters of credit under a letter of credit facility (the
) from Banco Davivienda. Banco CorDbanca Colombia S.A.. Citibank Colombia
Banco Latinoamericano de Comercio Exterior. S.A. and Bank of America N.A
collectively, the "L/C Providers") in order to finance the Applicants' letter of credit
re_quirementapr_ovide
wingsua
shall not exceed
$.134,000,000 unless permitted by further Order of this Court. The DIP Note Purchasers,
together with the L/C Provid~rs._ar
47__
referred to as the "DIP Lenders" ).
33. THIS COURT ORDERS THAT such credit facilitythat the L/C Facility shall be on the
terms and subject to the conditions set forth in the commitment letter between the Applicant and
the DIP Lender dated as of [DATE] ( /C Commitment Letter. The Commitment Letters and the
DIP/Exit Term Sheet attached thereto, and the L/C Commitment Letter and the DIP LC Facility
Term Sheet attached thereto are collectively herein referred to as the --'"Commitment Letter"),
ftledDocuments").
48_
34--THIS COURT ORDERS that the Applicants is are hereby authorized and
empowered to execute and deliver such
DQC-S-T-GRCAN DMS. \1112830247-68313Z
34
NRF Draft 4 — APRIL 25,
agroernonts, intercreditor
zate
nts, credit agreements, mortgages, charges, hypothecs-an4
debentures__pledges
account control agreements
b_ant_acminLcontrotagre2nienta,—,security_.
security documents, guarantees and other definitive
documents (collectively, the 11"Definitive DocumentsL"), as are contemplated by the
Commitment LetterDocuments (the Commitment Documents, together with the Definitive
Docunaen,f
meras'Ll or as may be reasonably required by the DIP
LenderNote Purchasers or the LIC Providers, as the case may be, pursuant to the terms
thereof, and the Applicants is are hereby authorized and directed to pay and perform all of
itstheir indebtedness, quarantees_interest, fees, liabilities and obligations to the DIP Lenders.
under and pursuant to the Comm4nleht-L-etter-and-the-DefinitiveDIP Financing. Documents as
and when the same become due and are to be performed, notwithstanding any other provision
of this Order.
49_
35. THIS COURT ORDERS that the DIP LenderNote Purchasers shall be entitled to the
benefit of and isare hereby granted a charge (the _`DIP Lender'sNote. Charge") on the
Property, which DIP Lender's" on he Prosy as security ffor amounts owing to them from
defined in the DIP/Exit Term Sheetl which DIP Note Charge shall not secure an obligation that
exists before this Order is made. The DIP Lender's,No_te Charge shall have the priority set out
in paragraphs {538} and 40155 hereof.
5_0_THIS COURT ORDERS that the LIC Providers sha►I be entitled to the benefit of and are
aliarga,_theADIP Lenders' chard." •1 I- '1 ..el as s cu
• a •us s owl.
existing oLoutstanding letters of credit issued by the LIC Providers or any of them prior to the
date of this Order, but shall not secure any reimbursement obligation that exists before thi
_Q_Lder jsinade_TheL/CPLovielerstchargasliallJaavethe_priority_s_et_autinpar_a_graolas_53ancl_
55 hereof.
51_
36,--THIS COURT ORDERS that, notwithstanding any other provision of this Order:
DOGS-TORCAN DMS. M283_Q2476-83214.2
135
NRF Draft 4 - APRIL 25, 2016
(a)
each of the DIP Lenders may take such steps from time to time as it may deem
necessary or appropriate to file, register, record or perfect the DIP Lender'sN_otg
Charge or any of the Definitiveth- L/C Providers' Charge, as the case may b- and
theirrespectiveDIPEinanicinci Documents;
(b)
upon the occurrence of an event of default under the DefinitiveDIP Financing
Documents, the DIP Note Charge, or the DIP Lender'sL/C Providers' Charge, theDIP Lender, upon oineache,aaeaa_aP_PIicabfathen_taeDIPNatePLtrdaaaara_ortlae
LLaErovicie_rs, as the case may be and if so entitled under their own DIP Financing
Documents,upo_n_fiveJ5). days: notice to the Applicants and the Monitor, may
exercise any and all of its rights and remedies against the Applicants or the Property
under or pursuant to the Commitment-Letter-3--Deftnitiveapplicable DIP Financing_
Documents and the applicable DIP Lender's Charge, including without limitation, to
cease making advances or providi c letters of credit to the Applicants and set off
and/or consolidate any amounts owing by thesuch. DIP Lender to the Applicants
against the obligations of the Applicants to thesuch DIP Lender under the
Commitment Letter, the Definitivethe_applical
Documents or the=
applicable DIP Lender's Charge, to make demand, accelerate payment and give
other notices, or to apply to this Court for the appointment of a receiver, receiver and
manager or interim receiver, or for a bankruptcy order against the Applicants and for
the appointment of a trustee in bankruptcy of the Applicants; and
(c)
the foregoing rights and remedies of the DIP LenderNote Purchasers and the L/C
Providers shall be enforceable against any trustee in bankruptcy, interim receiver,
receiver or receiver and manager of the Applicants or the Property.
52
37. THIS COURT ORDERS AND DECLARES that, except as provided in the DIP
Lender
shall be treated as unaffected in any
plau-of-affangement-er-eomprentise-fileel-by-the-iscpplioant-undet-the-C
, or any proposal
filed by any of the Applicant Applicants under the Bankruptcy and Insolvency Act of Canada
(the L:_,IBIALD, with respect to any advances made under the DefinitiveDlP Financing
Documents.
uOCSTORCAN DMS. \ 1 0283_D2476832\31
I 3 (7
NRF Draft 4 - APRIL 25, 2016
VALIDITY AND PRIORITY OF CHARGES CREATED BY THIS ORDER
53.
38. THIS COURT ORDERS that the priorities of the Directors' Charge, the
Administration Charge the DIP Nate Charae the KE P Charge the D&O Charm and the DTPLender'sL/C Providers' Charge, as among them, shall be as follows':
First - Administration Charge (to the maximum amount of $*45,000,000);
Second - DIP Lender 'sNske Charge; andISERPCl arge
ith_rasnectlae_
KERLD
D largaJoiliema)dniun amount of 1412a,0001rankintparLpasw,_
Third Directors'D&Q Charge (to the maximum amount of $(6) 1,000,000); and
Fourth - L/C Providers' Charge.
54
3-9,-THIS COURT ORDERS that the filing, registration or perfection of the Directors'
Charge, the Administration Charge or, the DIP Lender'sNo_t_eCharge_theKERPTharge,Alae_
_D_Lc_0Charge and the L/C Providers' Charge (collectively, the .T`Charges11") shall not be
required, and that the Charges shall be valid and enforceable for all purposes, including as
against any right, title or interest filed, registered, recorded or perfected subsequent to the
Charges coming into existence, notwithstanding any such failure to file, register, record or
perfect.
55_
40,-THIS COURT ORDERS that each of the Directors' Charge, the-Administr-atien-
Charge and the DIP Ledcr's Charge (all as-constituted and defined herein)Charges shall
constitute a charge on the Property and such Charges shall rank in priority to all other security
interests, trusts, liens, charges and encumbrances, claims of secured creditors, statutory or
otherwise (collectively, "_'Encumbrances''-"_) in favour of any Person.
56._
'11. THIS COURT ORDERS that except as otherwise expressly provided for herein, or
as may be approved by this Court, the Applicants shall not grant any Encumbrances over any
Property that ranks in priority to, or pall passu with, any of the Directors' Charge, the
,
ranking of these-Gharges--is-for illustration-purposes-only, ancl-is-tiot-meant-to-he determinative. This rankinemay-be-s-ubjeet-to-negotiatiord-sheold-be-tai-lored-te-the circumstances of the case befere-the-Gourt:—S-imithe-quantum and-caps-applicable to the Charges should-he considered in each case. PI ase also-note that the
CCAA now-permits Charges-in-favour-ef-eritical suppliers-and-others, which-should-also be incorporated into this
Order (and the-rankings,above), where appropriate.
9 The
DOGSTORCAN DMS:110283.0247683/\-3/.
137
F Draft 4 — APRIL 25. 2016
Administration Charge or the DIP Lender's ChargeCliarges, unless the Applicants also obtains
the prior written consent of the Monitor, the DIP Lender and the beneficiaries of the Directors'
Charge and the Administration Chargeeach of the Charges, or further Order of this Court.
42,---THIS COURT ORDERS that the Directors' Charge, the Administration Charge, the
Commitment Letter, the Definitive Documents--ami--the--41P--Lendees--C-har-geCharges shall not
be rendered invalid or unenforceable and the rights and remedies of the chargees entitled to
the benefit of the Charges (collectively, the ""Chargees!) and/or the DIP Lenders thereunder
shall not otherwise be limited or impaired in any way by (a) the pendency of these proceedings
and the declarations of insolvency made herein; (b) any application(s) for bankruptcy order(s)
issued pursuant to_tbe BIA, or any bankruptcy order made pursuant to such applications; (c) the
filing of any assignments for the general benefit of creditors made pursuant to the BIA; (d) the
provisions of any federal or provincial statutes; or (e) any negative covenants, prohibitions or
other similar provisions with respect to borrowings, incurring debt or the creation of
Encumbrances, contained in any existing loan documents, lease, sublease, offer to lease or
other agreement (collectively, an L"Agreemenr) which binds any of the Applicants, and
notwithstanding any provision to the contrary in any Agreement:
(a)
neither the creation of the Charges nor the execution, delivery, perfection,
registration or performance of the Commitment Letter or the DefinitiveDIP Financing
Documents shall create or be deemed to constitute a breach by thean Applicant of
any Agreement to which it is a party;
(b)
none of the Chargees shall have any liability to any Person whatsoever as a result of
any breach of any Agreement caused by or resulting from thean Applicant entering
into the Commitment LetterDocuments, the creation of the Charges, or the
execution, delivery or performance of the Definitive
Documents;
and
(c)
the payments made by anyo_f_the Applicants pursuant to this Order, the
Commitment Letter or the DefinitiveDlP Financi g Documents, and the granting of
the Charges, do not and will not constitute preferences, fraudulent conveyances,
transfers at undervalue, oppressive conduct, or other challengeable or voidable
transactions under any applicable law.
140e-STORCAN DMS• 111128.3_0_247-6532\a/
32
RF Draft 4 — APRIL 25. 2016
43—THIS COURT ORDERS that any Charge created by this Order over leases of real
property in Canada shall only be a Charge in thean Applicant's interest in such real property
leases.
POSTPONEMENT OF ANNUAL GENERAL MEETING
5.0
IH_1_S COURT ORDERS that Pacific be and is here v relieved of any obligation to call
nd hold an annual meeting of its shareholders until furth rr Order of this Court
SERVICE AND NOTICE
60
44,--THIS COURT ORDERS that the Monitor shall (i) without delay, publish in
[newspapers specifteE1--by--the—GettAlthe Globe & Mail (National Edition) and the Wall Street
Journal (International Edition), a notice containing the information prescribed under the CCAA,
(ii) within five days after the date of this Order, (A) make this Order publicly available in the
manner prescribed under the CCAA, (B) send, in the prescribed manner, a notice to every
known creditor of Pacific who has a claim against the AppticantPacific of more than CDN
$1000, and (C) prepare a list showing the names and addresses of those creditors and the
estimated amounts of those claims, and make it publicly available in the prescribed manner, all
in accordance with Section 23(1)(a) of the CCAA and the regulations made thereunder.
61.
THIS COURT ORDERS that the Monitor is hereby discharged from the requirementto
send notices as prescribed in paragrapJ~ 23(1)(~)(ii)(B) Qf the CC_AA to he creditors of the
save and except for the creditors of Pacific as described in paragraph 60 hereof
.Ap~icants.
I
62
45,--THIS COURT ORDERS that the E-Service Protocol of the Commercial List (the
"Protocol") is approved and adopted by reference herein and, in thiese proceedings, the
service of documents made in accordance with the Protocol (which can be found on the
Commercial
List
website
at
ht-ttmg-www,eftt-aFi,aeeur-tsTea/sej-/pmet-ieeipfac4iee--difeeti-eftskefente/e-ser-viee--pfetee-eYlattp_://mam
ontariocourts.ca/sc
ato/eservice-commercial/) shall be valid
and effective service. Subject to Rule 17.05 this Order shall constitute an order for substituted
service pursuant to Rule 16.04 of the Rules of Civil Procedure. Subject to Rule 3.01(d) of the
Rules of Civil Procedure and paragraph 21 of the Protocol, service of documents in accordance
with the Protocol will be effective on transmission. This Court further orders that a Case
DOC-STORCAN DM S • 11.4,28102476532\3/
131
NRF Draft 4 — APRIL 25. 2016
Website shall be established in accordance with the Protocol with the following URL
‘4@->wmi-INXsarnkallaara
63_
46,---THIS COURT ORDERS that if the service or distribution of documents in
accordance with the Protocol is not practicable, the Applicants and the Monitor are at liberty to
serve or distribute this Order, any other materials and orders in these proceedings, any notices
or other correspondence, by forwarding true copies thereof by prepaid ordinary mail, courier,
personal delivery or facsimileelectronic transmission to the Applicant'sApplicants' creditors or
other interested parties at their respective addresses as last shown on the records of the
Applicants and that any such service or distribution by courier, personal delivery or
facsimileelectronic transmission shall be deemed to be received on the next business day
following the date of forwarding thereof, or if sent by ordinary mail, on the third business day
after mailing.
SEALING
64-
THIS COURT ORDERS that the volume of Confidential Exhibits to the V~kAffidavit and
Supplementary Volk Affidavit be and are hereby sealed~ending further Order of the Court and
shall not form part of the public record.
GENERAL
65_
47,-THIS COURT ORDERS that the Applicants or the Monitor may from time to time
apply to this Court for advice and directions in the discharge of itsthei.t powers and duties
hereunder.
66_
/18. THIS COURT ORDERS that nothing in this Order shall prevent the Monitor from
acting as an interim receiver, a receiver, a receiver and manager, or a trustee in bankruptcy of
theany Applicant, the Business or the Property.
67
49—THIS COURT HEREBY REQUESTS the aid and recognition of any court, tribunal,
regulatory or administrative body having jurisdiction in Canada or in the United States, in the
Republic of Colombia, or elsewhere, to give effect to this Order and to assist the Applicants, the
Monitor and their respective agents in carrying out the terms of this Order. All courts, tribunals,
regulatory and administrative bodies are hereby respectfully requested to make such orders
and to provide such assistance to the Applicants and to the Monitor, as an officer of this Court,
DOC-STORCAN DMS' .1112810247-683/131
1110
NRF Draft 4 — APRIL 25, 2016
as may be necessary or desirable to give effect to this Order, to grant representative status to
the Monitor, as the case may be, in any foreign proceeding, or to assist the Applicants and the
Monitor and their respective agents in carrying out the terms of this Order.
613.,
5-07-THIS COURT ORDERS that each of the Applicants and the Monitor be at liberty and
is hereby authorized and empowered to apply to any court, tribunal, regulatory or administrative
body, wherever located, for the recognition of this Order and for assistance in carrying out the
terms of this Order, and that the Monitor is authorized and empowered to act as a foreign
representative in respect of the within proceedings for the purpose of having these proceedings
recognized in a jurisdiction outside Canada—, including without limitation in the United States
with respect to the U.S. Proceedings and in Colombia with respect to the Colombian
Proceedings_
69_
51. THIS COURT ORDERS that any interested party (including the Applicants and the
Monitor) may apply to this Court to vary or amend this Order on not less than seven (7) days:
notice to any other party or parties likely to be affected by the order sought or upon such other
notice, if any, as this Court may order;_gmided_laoweyeL_that_thaDIP_LencierastiaLbantitlec
to rely can this Order for all advances loans made and notepurchases completed the_ayment
of the Break Fee and other amounts paid under the DIP Notes the L/C Facility and DIP
BD
70_
M=40=iLagA
.
THIS COURT ORDERS that a comeback hearing in this matter shall be held on e, May
• , 2016 at 10:00 a.m. All materials with respect to such comeback hearing shall be filed with
the Court and served on the Service List herein by no later than •, May •, 2016.
71_
52. THIS COURT ORDERS that this Order and all of its provisions are effective as of
12:01 a.m. Eastern Standard/Daylight Time on the date of this Order.
DOGS-TORCAN DMS. \ 10283_02476g3/ \
110
NRF Draft 4 — APRIL 25, 2016
Schedule A
List of Assistants retained as of the date of this Order
(.a)_the legal and financial advisors to the Company including without limitation_(i) Norton Rose
J&A Garrigues S.L.P., (iv) Lazard Freres &
Eulbright Canada LLP, (ii) Proskauer Rose LLP,
(for the Independent ommittee the "IC Financial Advisor"l:
limitation, (i) Goodmans LLP, (ii) Paul, Weiss, Rifkind, Wharton & Garrison LLP, (iii) Cardenas
_
"Noteholders' Financial Advisor"):
(c)11aelegaLandfinanciaLadviaorsip_aackacinainistratha3
including_vaioutlinaitatiQia
Advisor");_anct
WIlhe_iagal and financial advisors to the Plan Sponsor, in
.4 . 11•
IC Financial Advisor the Noteholders Financial Advisor ana the H
DO€S-T-ORCAN DMA.: \10283,9247683142
without limitation, (i) Brown
NRF Draft 4 - APRIL 25, 2016
Schedule
Definitions of Note Claims and Bank Debt Claims
0
11
11
"):-CO-the__7.25%; AXinll. Psi
J_anuaLy_26_2a19jsauedbyAieCQm
y-1-9-2025-alael2025-61
11
11
covering the Notes.
11
13
demented from time to time. the Revolving
"
Facilities.
DOCSTOKCAN DMS. \10283.02476832\32
Pct_
0
I Li 3
NRF Draft 4 — APRIL 25, 2016
Schedule C
Unaffected Claims
The claims of the followi g Persons providing good or services to or in respect of any parts of
the Business in Colombia or Peru'
Enaployeea,taxauthorittea, cpunteraarties in point ooer ting agreements and overriding royalty
agreements field service providers. utility providers of an~kind. administrative service providers
of a n yis,incLAlaeAganciaNatioaaLc
aeLgosernmertaLage
including Ecool.._S.A._ .. social apencies_(including Colombian social security. health and
retirement/pension institutions and /or agencies and providers of social programs to which the
Applicants or the.ir affiliates contribute
DOGSTORCAN DMS: \ I 02g30247-6-832\3/
IN THE MATTER OF THE COMPANIES' CREDITORS ARRANGEMENT ACT, R.S.C. 1985,
c. C-36, AS AMENDED
Court File No.: CV-16-11363-00CL
AND IN THE MATTER OF A PLAN OF COMPROMISE OR ARRANGEMENT OF PACIFIC
EXPLORATION & PRODUCTION CORPORATION, PACIFIC E&P HOLDINGS CORP., META
PETROLEUM CORP., PACIFIC STRATUS INTERNATIONAL ENERGY LTD., PACIFIC
STRATUS ENERGY COLOMBIA CORP., PACIFIC STRATUS ENERGY S.A., PACIFIC OFF
SHORE PERU S.R.L., PACIFIC RUBIALES GUATEMALA S.A., PACIFIC GUATEMALA
ENERGY CORP., PRE-PSIE COOPERATIEF U.A., PETROMINERALES COLOMBIA CORP.
AND GRUPO C&C ENERGIA (BARBADOS) LTD.
Applicants
ONTARIO
SUPERIOR COURT OF JUSTICE
COMMERCIAL LIST
Proceeding commenced at Toronto
APPLICATION RECORD
(Returnable April 27, 2016)
NORTON ROSE FULBRIGHT CANADA LLP
Royal Bank Plaza, South Tower, Suite 3800
200 Bay Street, P.O. Box 84
Toronto, Ontario M5J 2Z4 CANADA
Tony Reyes LSUC #28218V
Tel: 416.216.4825
tony.reyes©nortonrosefulbright.com
Orestes Pasparakis LSUC #36851T
Tel: 416.216.4815
orestes.pasparakisa,nortonrosefulbright.com
Virginie Gauthier LSUC #41097D
Tel: 416.216.4853
virginie.cauthierP,nortonrosefulbright.com
Lawyers for the Applicants
CAN_DMS: \65396467\2