- Bid led by Pacific co-chairmen may have been picked as winner
- Offer backed by about $500 million from Catalyst Capital
Pacific Exploration & Production Corp. co-chairmen Serafino Iacono and Miguel de la Campa are close to clinching a deal to take over the Latin American oil producer after outbidding rivals including Mexican conglomerate Alfa SAB, according to people with knowledge of the matter.
A bid by the co-chairmen is backed by Canadian private equity firm Catalyst Capital Group Inc., which is expected to provide about $500 million in funds secured against the company’s assets, the people said, asking not to be identified because the deliberations are private. Pacific failed to make bond interest payments in January and March and has struggled after a series of deals in recent years that ballooned its debt before oil prices plunged.
While negotiations could still fall apart, an agreement could be reached and announced as early as the coming days, they said. Pacific’s board is expected to vote on the matter Sunday. The offer from Pacific management would wipe out shareholder equity, the people said.
“Debt holders are running the process right now," said David Popowich, a analyst with the Canadian Imperial Bank of Commerce. “I just can’t see how there would be enough equity value to support any kind of premium to the current share price."
Pacific climbed as much as 12 percent in intraday trading and was up 7.8 percent to 2,360 pesos at 10:25 a.m. in Bogota. The company’s $1 billion of 5.125 percent senior unsecured notes due 2023 last traded at 20 cents on the dollar on Tuesday, according to Trace the bond-price reporting system of the Financial Industry Regulatory Authority. The debt was trading as high as 87.25 cents last May.
The sale and restructuring of Pacific is being led by financial advisory firm Lazard Ltd. Beyond Alfa, bidders included EIG Global Energy Partners, people familiar with the matter have said.
Representatives for Pacific, Catalyst, Alfa, and EIG declined to comment.
Under the management offer, the co-chairmen as well as about 20 other key employees may receive about 10 percent in the equity of the Bogota-based company as part of a three-year incentive plan based on their performance, the people said.