Pioneer makes change-of-control offer, consent solicitation for Evergreen Resources 5 7/8% notes

New York, Oct. 12 - Pioneer Natural Resources Co. said it has begun a change-of-control offer to purchase any or all of the 5 7/8% senior subordinated notes due 2012 originally issued by Evergreen Resources Inc., in connection with Pioneer's recent acquisition of Evergreen, completed on Sept. 28, in which Evergreen became a wholly owned subsidiary of Pioneer.

Pioneer is also seeking consent of the Evergreen noteholders to proposed indenture changes, with a consent deadline of 5 p.m. ET on Oct. 29. The change-of-control offer will expire at 5 p.m. ET on Nov. 10, with both deadlines subject to possible extension.

Under the terms of the notes' indenture, the $2.1 billion acquisition of Evergreen, a Denver-based energy company, by Dallas-based Pioneer, also an energy operator, is considered a change-of-control, and Pioneer, due to subsequent mergers involving Pioneer and certain of its subsidiaries, has become the successor to Evergreen as the sole obligor under the indenture and the notes. The Evergreen notes are now general unsecured obligations of Pioneer that are subordinated to its existing and future senior debt.

Pioneer said that under the terms of the notes' indenture, holders have the right, following such a change of control, to require the buyer - Pioneer - to repurchase any or all of that holder's notes. Pioneer is thus offering to purchase any or all notes at a cash purchase price equal to 101% of the principal amount of notes to be purchased, plus accrued and unpaid interest, if any, up to, but not including, the date it purchases the notes.

Besides the change-of-control offer, Pioneer is soliciting consents to proposed indenture amendments. One would eliminate the subordination of the right of payment on the Evergreen notes to the full payment of all existing and future Pioneer senior debt; a second would amend the Evergreen notes' restrictive covenants so that they conform to the restrictive covenants in Pioneer's senior notes that were originally issued as high-yield notes, while a third would amend the Evergreen notes' indenture provisions suspending the restrictive covenants when the notes have certain investment-grade ratings, so that those provisions are the same as the suspension and permanent-elimination provisions in the Pioneer senior notes.

Approval of the proposed amendments will require the consent of holders of a majority of the outstanding principal amount of the notes by the consent deadline.

Pioneer said the Evergreen noteholders will benefit from the elimination of the subordination provisions provided in the proposed amendments, if they are approved. Elimination of the subordination provisions will result in their ranking equally in right of payment with Pioneer's existing and future unsecured senior debt, as well as ranking senior in right of payment to all future subordinated debt of Pioneer.

The company noted that the notes currently do not have an investment-grade rating primarily because they are subordinated to Pioneer's senior debt (as of Oct. 1, Pioneer's publicly traded senior notes were rated Baa3/BBB-; if the subordination provisions of Evergreen notes are eliminated, they are expected to receive the same ratings as Pioneer's publicly traded senior notes.

Pioneer said that the change-of-control offer and the consent solicitation are not dependent on each other. Holders of the Evergreen notes may tender them in the change-of-control offer without also delivering their consents in the consent solicitation, or vice versa, or alternatively, they may both tender the notes and deliver consent, or even take neither action.

Wachovia Bank NA is the exchange agent for the change-of-control offer and tabulation agent for the consent solicitation (call 704 590-7413). Credit Suisse First Boston LLC is Pioneer's financial adviser for the solicitation (call in the U.S. at 800 820-1653). D.F. King & Co. Inc. is the information agent for the change-of-control offer and consent solicitation (call 212 269-5550).

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