CORRECTED-Pacific Rubiales bonds slump as acquisition pulled

Thu Jul 9, 2015 11:12am EDT
 
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(Corrects rating in paragraph 5)

By Davide Scigliuzzo

NEW YORK, July 9 (IFR) - Bonds of Colombia-focused oil producer Pacific Rubiales Energy slumped on Thursday, after blue-chip Mexican conglomerate Alfa and investment firm Harbour Energy dropped plans to take over the company.

The two companies offered to pay C$6.50 a share for Pacific Rubiales in May, but the deal faced strong opposition from Venezuelan investment firm O'Hara Administration Co, which launched a heated proxy battle to block the deal.

Pacific Rubiales announced late on Wednesday the deal had been terminated with immediate effect at the request of the two potential buyers.

Pacific Rubiales's 2019 and 2021 notes dropped by 11 points to trade at cash prices of 71 and 72 respectively on Thursday morning, while 2023s and 2025s were spotted trading at around 65 mid-market, or eight points lower on the day, according to a corporate bond trader in New York.

"They no longer have an investment-grade buyer. So you are left with a double-B independent oil and gas company in Colombia," said the trader.

Pacific Rubiales's shares were down nearly 41% at C$3.13 as of 10:13 EST, according to Thomson Reuters data. Alfa shares were up 4.3% at Ps31.4.

The market reaction on Alfa's own bond curve was modest, as the company was not planning to consolidate Pacific Rubiales into its balance sheet, said the trader. Alfa notes traded up by roughly a point early on Thursday. (Reporting by Davide Scigliuzzo; Editing by Shankar Ramakrishnan)