Terrace Announces Approvals of Convertible Note Exchange

VANCOUVER, May 11, 2016 /CNW/ - Terrace Energy Corp. (the "Company" or "Terrace") (TSXV: TZR, OTCQX: TCRRF; Germany: 2TR) is pleased to announce that the Supreme Court of British Columbia has granted a final order approving the Company's previously announced plan of arrangement (the "Arrangement"). Pursuant to the Arrangement, all of the Company's outstanding 8% convertible unsecured notes due April 2, 2018 (the "Existing Notes") will be exchanged for new convertible secured notes due April 2, 2021 (the "New Notes"). Among other things, the New Notes will be:

• convertible into common shares of the Company at a conversion price of $0.50 per share, compared to $2.00 per share under the Existing Notes;
  
  
• secured by a general security agreement against all of the Company's assets; and
  
  
• interest free but subject to a maturity bonus equal to 5% of the aggregate total outstanding principal amount of the New Notes payable on their maturity date, in cash or common shares at the option of the Company. In the event that the Company redeems the New Notes within 180 days prior to the maturity date, the redemption price will be 1.025% of par value of the New Notes.

The court approval was conditioned on the approval of the holders of Existing Notes, which was obtained at a meeting held on May 9, 2016, at which:

• 91.7% in number of the holders of Existing Notes voted in favour of the Arrangement; and
  
  
• holders of Existing Notes, representing 87.6% of the aggregate principal amount of the outstanding Old Notes, voted in favour of the Arrangement.

The Company anticipates completing the Arrangement on or about May 13, 2016, with the New Notes listed for trading on the TSX Venture Exchange on May 17, 2016 under the ticker symbol "TZR.DB".

Completion of the Arrangement remains subject to customary closing conditions, including, among other things, the receipt of applicable regulatory approvals.

Readers should refer to the Company's management information circular dated April 8, 2016 (the "Circular"), a copy of which is available under the Company's profile on SEDAR at www.sedar.com, which more fully sets forth the terms of the New Notes and the Arrangement.

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; and the listing of the New Notes. 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 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 Circular and 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 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 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.

please contact: [email protected], www.terraceenergy.net; Canadian Address, P.O. Box 21546, 1424 Commercial Drive, Vancouver B.C., V5L 5G2, Ph: 604 282-7897, Fax: [phone]; US Address: Suite 407-202 Travis Street, Houston, Texas, 77002, Ph: 713 227 0010