Pala Seeks to Organize Pacific E&P Bondholders Amid Price Slump

  • Pacific's 2019 bonds have dropped to 20 cents on the dollar
  • Pala says it's seeking talks with Pacific on strategy

Pala Assets, a money manager specializing in corporate debt, said it’s seeking to organize an informal committee of Pacific Exploration and Production bondholders to talk to management about how it the company can weather the oil price slump.

Pacific’s $1.3 billion of 2019 bonds have dropped 13 cents on the dollar this month to 20 cents, their lowest price on record, as crude slumped to a six-year low.

“Pala Assets as a significant bondholder is currently bringing together an informal committee of bondholders for discussions with the company on how it intends to address the current challenges,’’ money manager Alain Carl Nydegger said in an e-mail. “While there is already a group of large bondholders in contact with each other, we think that it is also important to proactively engage with the company directly from our side.”

A Pacific press official declined to comment.

Pacific reported a third-quarter net loss of $617 million compared with a $3.5 million profit a year earlier. The company’s contract to operate its biggest field expires
next year.

Oil is trading close to levels last seen in the aftermath of the global financial crisis after the Organization of Petroleum Exporting Countries effectively abandoned output limits in an effort to defend market share.

“Bondholders who we have been in contact with are mainly concerned about the lack of sufficient information coming out from Pacific and, in particular, details around how it intends to address the current challenges,” the e-mail says. “In this current low oil price environment, we would expect a greater flow of information and dialogue.”

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