EIG Drops Bid To Buy Oil Firm Pacific

   (FROM THE WALL STREET JOURNAL 3/26/16) 
   By Stephanie Gleason

Investment firm 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 a bankruptcy filing.

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

EIG Pacific Holdings, the entity formed by Washington, D.C.-based EIG Global to acquire Pacific, said Friday it had ended its offer for $4.1 billion worth of Pacific's senior bonds. The tender offer expired Thursday, and EIG said 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 the sale of assets.

As Pacific worked to complete the deal with EIG in February, 40% of the bondholders agreed to take no action against the company before March 31, despite a missed interest payment.

Bondholders could agree to give Pacific more time to arrange a deal. But as it stands, Pacific is down to only a few days before bondholders can demand immediate payment or force the company to file for bankruptcy protection.

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 declined to comment on EIG's withdrawal or any pending offers.

Founded by a trio of Venezuelan and Italian oil and mining executives in 2003, Pacific focused on the Colombia's mineral-rich eastern savanna as the Colombian army pushed insurgents from the region. The company grew to be the country's second largest by revenue. Last year, it pumped an average of 156,000 barrels of oil equivalent a day.

But the company's market capitalization has since shrunk to about $200 million, from more than $7 billion dollars in early 2012. In January, the firm said it would skip $66 million in interest payments in the hope it could restructure its $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.

The investment firm, which has about $14 billion in assets under management, has invested in other energy companies, including Breitburn Energy Partners LP and Chesapeake Energy Corp.

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Anatoly Kurmanaev and Sara Schaefer Munoz contributed to this article.

(END) Dow Jones Newswires

March 26, 2016 02:47 ET (06:47 GMT)

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