EIG Drops Bid To Buy Oil Firm Pacific
March 26 2016 - 3:02AM
Dow Jones News
(FROM THE WALL STREET JOURNAL 3/26/16)
By Stephanie Gleason
Investment firm EIG Global Energy Partners has pulled its buyout
offer for Pacific Exploration & Production Corp., one of a few
possible deals that the Canadian-Colombian oil company was hoping
would stave off a bankruptcy filing.
Pacific Exploration, which is listed on the Toronto Stock
Exchange but has most of its assets in Colombia, has been hit hard
by falling oil prices and a lack of new discoveries.
EIG Pacific Holdings, the entity formed by Washington,
D.C.-based EIG Global to acquire Pacific, said Friday it had ended
its offer for $4.1 billion worth of Pacific's senior bonds. The
tender offer expired Thursday, and EIG said all tendered bonds have
been returned. EIG had offered the bondholders 16 cents on the
dollar and had promised an overhaul of Pacific's management and the
sale of assets.
As Pacific worked to complete the deal with EIG in February, 40%
of the bondholders agreed to take no action against the company
before March 31, despite a missed interest payment.
Bondholders could agree to give Pacific more time to arrange a
deal. But as it stands, Pacific is down to only a few days before
bondholders can demand immediate payment or force the company to
file for bankruptcy protection.
Earlier this month, The Wall Street Journal reported that the
EIG deal was one of six options the company was considering. The
other deals, which included one from Pacific's management and a
debt-for-equity swap that would include $500 million in fresh
financing, were due Wednesday.
A company spokesman declined to comment on EIG's withdrawal or
any pending offers.
Founded by a trio of Venezuelan and Italian oil and mining
executives in 2003, Pacific focused on the Colombia's mineral-rich
eastern savanna as the Colombian army pushed insurgents from the
region. The company grew to be the country's second largest by
revenue. Last year, it pumped an average of 156,000 barrels of oil
equivalent a day.
But the company's market capitalization has since shrunk to
about $200 million, from more than $7 billion dollars in early
2012. In January, the firm said it would skip $66 million in
interest payments in the hope it could restructure its $5.4 billion
in debt amid collapsing oil prices.
EIG and its subsidiary Harbour Energy first approached the
company's noteholders in January, offering 17.5 cents on the
dollar. EIG later lowered the offer, citing low oil prices and
Pacific Exploration's deteriorating financial condition.
The investment firm, which has about $14 billion in assets under
management, has invested in other energy companies, including
Breitburn Energy Partners LP and Chesapeake Energy Corp.
---
Anatoly Kurmanaev and Sara Schaefer Munoz contributed to this
article.
(END) Dow Jones Newswires
March 26, 2016 02:47 ET (06:47 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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