Terrace announces intended arrangement to exchange convertible notes for similar new notes; Intends to seek listing of New Notes on TSX Venture Exchange

VANCOUVER, Aug. 6, 2014 /CNW/ - Terrace Energy Corp. (the "Company" or "Terrace") (TSXV: TZR, OTCQX: TCRRF; Germany: 2TR) today announced that it intends to call a special meeting (the "Meeting") of the holders (the "Noteholders") of its outstanding 8% convertible unsecured notes of the Company due April 2, 2018 (the "Notes") to seek approval for an arrangement (the "Arrangement") under the Business Corporations Act (British Columbia) (the "Act") pursuant to which all of the issued and outstanding Notes will be exchanged for new 8% convertible unsecured notes of the Company due April 2, 2018 to be governed by a trust indenture (the "New Notes") and then apply to list the New Notes for trading on the TSX Venture Exchange ("TSX-V"). 

The New Notes shall have substantially similar economic terms as the Notes, including the same interest rate, maturity date and conversion price.  Each Noteholder will receive an equal principal amount of New Notes under the Arrangement as it presently holds Notes.

The purpose of the Arrangement is to effectively consolidate all of the presently outstanding Notes under one trust indenture in order to make the listing application to the TSX-V, to provide that the New Notes, unlike the existing Notes, will be transferable (subject to compliance with applicable securities laws), to provide for a trustee to act collectively on behalf of Noteholders and to simplify the procedure for administration and reduce administrative costs. 

Dave Gibbs, the Company's President and CEO commented: "The proposed exchange of the convertible notes will benefit both Terrace and the Noteholders by providing potential liquidity to Noteholders and a streamlined and more efficient process to administer the convertible notes."

The Arrangement will be carried out by way of a plan of arrangement and is subject to court approval and approval by both a majority in number of Noteholders and Noteholders representing 75% in value of the Notes present, in person or by proxy, at the Meeting. The Meeting is expected to be held in September 2014.  The Arrangement is also subject to customary conditions, including, among other things, the receipt of applicable regulatory approvals, including approval of the TSX-V, and the satisfaction of other customary closing conditions. 

Details regarding these and other terms of the Arrangement are set out in the plan of arrangement, which will be available on SEDAR at www.sedar.com. Additional information respecting the Arrangement and the New Notes will be included in the management information circular to be filed and mailed to Noteholders in connection with approval of the Arrangement at the Meeting.

About Terrace Energy

Terrace Energy is an oil & gas development stage company that is focused on unconventional oil extraction in onshore areas of the United States with a particular focus on South Texas.

ON BEHALF OF THE BOARD OF DIRECTORS

"Dave Gibbs"

Dave Gibbs, President and Chief Executive Officer

NEITHER THE TSX VENTURE EXCHANGE NOR ITS REGULATION SERVICES PROVIDER (AS THAT TERM IS DEFINED IN THE POLICIES OF THE TSX VENTURE EXCHANGE) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.

 Cautionary Statement and Forward-Looking Information

This press release includes forward-looking information and forward-looking statements (together, "forward-looking information") within the meaning of applicable Canadian and United States securities laws. Forward-looking information includes statements: regarding the Company's beliefs and expectations regarding the completion and/or timing of the transactions contemplated under the Arrangement; the terms and conditions of the New Notes; the expected benefits of the exchange of the outstanding Notes for the New Notes; and the listing of the New Notes on the TSX-V. Users of forward-looking information are cautioned that actual results may vary from the forward-looking information disclosed in this press release. The material risk factors that could cause actual results to differ materially from the forward-looking information contained in this press release include: the risk that the Company will be unable to obtain all necessary court, Noteholder, regulatory or other approvals for the Arrangement; no market may develop for trading the New Notes or such market may lack liquidity; the trustee under the indenture to govern the New Notes may fail to efficiently administer the New Notes or effectively act on behalf of the holders thereof; and other risks and uncertainties described under the heading "Risk Factors" and elsewhere in the Company's most recent Annual Information Form and other documents filed with Canadian securities regulators at www.sedar.com.

Readers are cautioned that the assumptions used in the preparation of forward-looking information, although considered reasonable at the time of preparation, may prove to be imprecise and, as such, undue reliance should not be placed on forward-looking information. The material assumptions used to develop the forward-looking information include: that the Company will obtain all necessary consents and approvals, including any necessary court, Noteholder and/or regulatory approval, including the TSX-V for the Arrangement; the trustee under the indenture to govern the New Notes will fulfill its duties and responsibilities thereunder; that the Company will obtain TSX-V approval for the listing of the New Notes; and that other conditions under the plan of arrangement will be fulfilled or waived. 

The Company does not assume the obligation to update any forward-looking information, except as required by applicable law.

SOURCE Terrace Energy Corp.