- Competing bid led by co-Chairman Iacono likely to be opposed
- Latin American oil company missed January bond payment
Mexico’s Alfa SAB and Tyrus Capital are the strongest contenders among a handful of companies vying to take over Latin American oil producer Pacific Exploration & Production Corp. through debt-for-equity swaps, four people with knowledge of the matter said.
Pacific Co-Chairman Serafino Iacono is spearheading another bid that would see management secure outside financing in exchange for 10 percent of equity, a way to keep the company operating largely the same, according to the people, who asked not to be identified because the information is private. That proposal will probably face opposition from some shareholders, according to another person.
Bogota-based Pacific failed to make bond interest payments in January. It has struggled after a series of deals in recent years ballooned debt before oil prices plunged. Alfa, a Mexican conglomerate, already has about a 19 percent stake in Pacific. It withdrew a C$6.50-a-share offer to buy the company last year after Pacific’s largest shareholder, O’Hara Administration Co., said the deal was undervalued. Pacific, which trades in Colombia and Toronto, has seen its price collapse since to 82 Canadian cents a share on Thursday, giving it a market value of C$259 million ($200 million).
Iacono and Alfa declined to comment. Tyrus didn’t immediately respond to an e-mail request for comment outside of regular business hours. Pacific said it doesn’t comment on rumors. “As we indicated in January, we are currently working with all stakeholders and advisers to make the company’s capital structure more suitable to current market conditions,” Tom Becker, a spokesman for Pacific, said in a statement.
The Wall Street Journal reported yesterday the company was considering buyout offers. Earlier this year, EIG Global Energy Partners offered to buy Pacific’s $4.1 billion in bonds but only secured about 6 percent of the notes in response. It subsequently altered the terms of the tender, proposing less money.
Pacific bonds due in 2019 with a face value of $1.3 billion are currently trading at 16.8 cents on the dollar. The company’s grace period for the missing January payment expires on March 31, according to data compiled by Bloomberg.