EIG Pulls Out of Pacific Exploration Deal

By Stephanie Gleason

EIG Global Energy Partners has pulled its buyout offer for Pacific Exploration & Production Corp., one of a few possible deals that the Canadian-Colombian oil company was hoping would stave off the need to file for bankruptcy.

EIG Pacific Holdings, the entity formed by the Washington, D.C.-based energy-investment firm to acquire Pacific, announced Friday that it had ended its offer for $4.1 billion worth of Pacific's senior bonds. The tender offer expired Thursday, and EIG said that all tendered bonds have been returned. EIG had offered the bondholders 16 cents on the dollar and had promised an overhaul of Pacific's management and to sell off assets.

As Pacific worked to complete the deal with EIG in February, 40% of the bondholders agreed to take no action against the company, despite a missed interest payment, until March 31. Bondholders could agree to an extension of that timeline, giving Pacific more time to put together another deal. But as it currently stands, Pacific is down to only a few days before bondholders can demand immediate payment or force the company to file for bankruptcy.

Earlier this month, The Wall Street Journal reported that the EIG deal was one of six options the company was considering. The other deals, which included one from Pacific's management and a debt-for-equity swap that would include $500 million in fresh financing, were due Wednesday.

A company spokesman didn't immediately respond to request for comment on EIG's withdrawal.

Pacific Exploration, which is listed on the Toronto Stock Exchange but which has most of its assets in Colombia, has been hit hard by falling oil prices and a lack of new discoveries.

Founded by three Venezuelan and Italian oil and mining executives in 2003, Pacific focused on the country's mineral-rich eastern savanna, opening up its virgin deposits for exploration as the Colombian army pushed insurgents from the region. The company grew to be Colombia's second largest by revenue. Last year, it pumped an average of 156,000 barrels of oil equivalent a day, more than any other private firm in Latin America.

But the company's market capitalization has since shrunk to about $200 million from more than $7 billion in early 2012. In January, the firm said it would skip $66 million in interest payments in hopes it could restructure $5.4 billion in debt amid collapsing oil prices.

EIG and its subsidiary Harbour Energy first approached the company's noteholders in January, offering 17.5 cents on the dollar. EIG later lowered the offer, citing low oil prices and Pacific Exploration's deteriorating financial condition.

---Anatoly Kurmanaev and Sara Schaefer Muñoz contributed to this article.

Write to Stephanie Gleason at stephanie.gleason@wsj.com

(END) Dow Jones Newswires

March 25, 2016 15:29 ET (19:29 GMT)

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