Pacific E&P’s Creditors Extend Debt Covenants Waiver to February

Pacific Exploration & Production Corp.’s creditors granted the Colombian driller a temporary waiver on the terms of more than $1.3 billion in loans with lenders, preventing a potential default.

The 61-day waiver applies to loans including a $1 billion revolving credit with a syndicate of lenders and Bank of America Corp. as administrative agent, as well as a $250 million credit agreement with HSBC Holdings Plc as the agent. The loan covenants require the company have a net worth, calculated by subtracting liabilities from assets, of more than $1 billion.

“It’s just kicking the can down the road,” Rupert Stebbings, managing director of equity sales at Bancolombia SA, said from Medellin. “I don’t think they can solve this themselves, they need help to solve it, whether that be a new investors or one of the current investors stepping in to do something.”

The company’s dollar bonds have lost investors 71 percent this year, as crude plunged and the contract at its biggest field wasn’t extended. Bondholder Pala Assets said this month that it’s organizing an informal committee to talk to management about how the company can withstand the slump in oil prices.

Pacific E&P’s bonds due in 2019 were almost unchanged on Monday at 20 cents per dollar. The company’s shares were down

2.1 percent at the close in Bogota, trimming an earlier loss of

3.1 percent.

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