EIG renews bid to Pacific creditors

Thu Jan 21, 2016 9:42am EST
 
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By Paul Kilby

NEW YORK, Jan 21 (IFR) - Investment firm EIG delivered a dire assessment of the financial state of Pacific Exploration & Production as it renewed its bid late Wednesday to buy its debt and take over the troubled LatAm oil company's debt.

The move comes as markets and rating agencies brace for a likely default scenario for a company whose fortunes have been battered by the dramatic decline in crude prices.

A series of announcements from Harbour Energy, a subsidiary of EIG, and Pacific E&P itself last week have only served to confuse the market and send the company's bond price into the single digits last week.

Harbour Energy offered last week to buy some US$4.1bn of Pacific E&P's debt, only to see the company announce it would miss January payments on its 2019s and 2025s.

Rating agencies reacted this week, with Moody's cutting the company to C from Caa3 on Tuesday and S&P dropping its rating to D from CC on Wednesday after warning that it expects the company to enter a "general default."

"Pacific E&P's liquidity will remain pressured for a longer period given much lower cash flows due to stressed oil prices, which, will remain so in the foreseeable future," said Moody's earlier this week.

Against that backdrop, EIG appealed to investors late Wednesday to participate in a tender for its outstanding 2019s, 2021s, 2023s and 2025s at an early bird tender price of 17.5.

"...We believe the situation will spiral downward now that the cloak of denial has been lifted and in the face of a rapidly deteriorating market environment," R. Blair Thomas, CEO of EIG said in a statement late Wednesday.   Continued...