A group of Pacific Rubiales Energy Corp. (PRE) executives hired Banco Itau BBA SA and Citigroup Inc. to arrange a loan and seek partners for a possible management buyout, according to people with direct knowledge of the matter.
The plan is a defensive move after Alfa SAB (ALFAA), the Mexican auto parts and petrochemical company, raised its Pacific Rubiales shareholding more than 20 times in just over two months, the two people said asking not to be named because talks are private. They declined to specify the size of the loan, which is being arranged with other banks, or how many additional shares the executives would buy. The stock price surged today.
Itau, Citigroup and Alfa declined to comment. Pacific Rubiales Chief Executive Officer Ronald Pantin didn’t respond to an e-mailed request for comment or answer telephone calls.
“The company hasn’t hired Itau and Citi for this transaction,” Pacific Rubiales Vice-President for Corporate Affairs Federico Restrepo said yesterday. “Personally, I haven’t signed any contract with Itau and Citi regarding a decision to buy shares. I don’t know if any other vice president has, but we are not grouped together for this.”
Alfa’s holding in Pacific Rubiales, Colombia’s biggest oil producer after Ecopetrol SA, rose to 14 percent from about 10 percent when it disclosed the stake on May 20, according to Canada’s System of Electronic Disclosure by Insiders or SEDI. While Alfa describes the share purchases as a “financial investment,” the San Pedro Garza Garcia, Mexico-based company’s actions boost the chances of a takeover, according to Monex Casa de Bolsa. Pacific trades in Toronto and Bogota.
Alfa is already the largest shareholder in Pacific Rubiales after Lazard Ltd. (LAZ), which has 19 percent, according to data compiled by Bloomberg. Capital Group Companies Inc. is the third largest with 11 percent, the data show.
Pacific Rubiales, which has a $6 billion market value, is looking at opportunities in Mexico and hired Bank of America Corp. to review options for its midstream assets. The company, Latin America’s largest non-state oil producer, hasn’t been approached by a potential buyer, CEO Pantin said on May 13 during an investor event in New York.
Mexico broke its 75-year state monopoly on crude production last year with constitutional amendments that grant companies the right to drill with government-owned Petroleos Mexicanos or on their own. Alfa executives said July 15 that after they study the ensuing regulations they will “assemble the right structure to pursue those opportunities. Pacific Rubiales investment could be part of that structure.”
Alfa’s purchase of Pacific Rubiales stock is a financial investment that may go up or down depending on markets, the performance of Pacific Rubiales or the economy, spokesman Enrique Flores said May 21.
Pacific Rubiales gained 5.7 percent to C$22.03 at the close in Toronto today. The shares have advanced 30 percent in the past six months compared with an average gain among 15 peers tracked by Bloomberg of 9.6 percent.
The company is run by ex-Petroleos de Venezuela SA executive Pantin who left in 2000 as then-President Hugo Chavez stepped up control of the state company. Pantin was head of the services unit at PDVSA, where he worked with Rubiales President Jose Francisco Arata. Pantin and Arata co-founded the company in 2008 along with Miguel De la Campa and Serafino Iacono.
Pacific Rubiales directors own 5.8 million shares, or about a 2 percent stake, according to data compiled by SEDI.
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