Pacific Misses Payment, Says Some Creditors Grant Extension

  • Bond group to delay calling for acceleration until March 31
  • Buyout firm EIG has presented 16-cent tender offer for bonds

Pacific Exploration & Production Corp. said holders of a minority of its bonds and enough of its bank lenders agreed to hold off on demanding immediate repayment after the driller missed interest payments due last month.

Holders of 42 percent of the 2025 bonds agreed to the extension after a 30-day grace period expired on a missed January interest payment, according to the statement published Friday. Holders of 34 percent of the 2019 bonds, the grace period on which ends next week, also agreed to the extension. Remaining investors would need the support of 25 percent of a series of notes in order to accelerate the securities, according to the prospectus.

The Bogota-based driller, which trades in Canada and Colombia, is one of the largest independent oil and gas explorers in Latin America. Founded a decade ago by veterans of Venezuela’s oil industry, the company is struggling after crude prices sank to a 12-year low and the contract at its biggest field wasn’t extended past June.

“The extension should allow the company additional time to continue working with the independent committee of the Board of Directors, the company’s financial and legal advisors as well as its lenders and the noteholders to come to a consensual and comprehensive restructuring of the company’s balance sheet,” Chief Executive Officer Ronald Pantin said, according to the statement.

A 30-day grace period after a missed January payment on the 2025 bonds expired Thursday.

A “requisite” proportion of its bank lenders also agreed to the forbearance agreements, according to a separate statement on Friday. The company’s benchmark $1.3 billion of bonds due 2019 are trading at about 12 cents on the dollar.

Buyout firm EIG Global Energy Partners is offering to buy Pacific’s distressed bonds for 16 cents on the dollar with no accrued interest. While that’s less than a previous bid in January of 17.5 cents plus interest that failed to get much support, EIG says investors would be wise to take the offer as Pacific’s finances will deteriorate further.

Standard & Poor’s lowered the company’s rating to D last month, saying it considered a default to have occurred because it didn’t see the interest being paid within the grace period. S&P said it expected Pacific “to enter into a general default and that it will fail to pay all or substantially all of its obligations as they come due.”

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