NEW YORK, Feb 19 (IFR) - Pacific Exploration & Production is gathering investor consents to enter forbearance agreements on outstanding debt as it seeks to restructure its balance sheet and avoid acceleration on its debt.
The Latin America-focused E&P company said on Friday that it had reached an agreement with certain holders of its 5.375% 2019s and 5.625% 2025s to forbear from declaring the principal amounts on the notes until March 31.
The grace period on those securities ends this month after the company missed interest payments on those notes due on January 26 and January 19, respectively.
“As long as they show progress with creditors, they will avoid an acceleration of the debt,” said Omar Zeolla, an analyst at Oppenheimer & Co.
The company said that it is also carrying out similar negotiations with bank lenders including HSBC and Bank of America over approximately US$1.43bn in debt.
In a bid to take over Pacific, investment firm EIG has offered to buy some US$4.1bn of Pacific’s outstanding bonds.
But an ad hoc committee of creditors holding about 40% of that amount earlier expressed concerns about the tender, leaving analysts doubtful that the two parties will reach an agreement.
“(It doesn’t look like) that offer is going to be successful, so management and bondholders will be looking for alternatives to that,” Zeolla said.
With oil prices falling further in February, EIG last week dropped its tender offer to 16 cents from 17.5, while providing certain limited liquidity rights. It also extended the deadline to March 24.
But creditors say that the EIG offer actually ranges between eight and 16 cents, excluding accrued interest.
Pacific Exploration, formerly known as Pacific Rubiales, has suffered a series of rating cuts while struggling to keep its business afloat following crude’s precipitous decline over the last year or so.
Last month, Moody’s cut Pacific to C from Caa3, while S&P dropped its rating to D from CC after warning that it expected the company to enter a “general default”.
“They have done everything possible, cutting costs and making the company smaller, but oil prices have to be higher for them to remain solvent,” said a trader, who said the bonds were trading in the 13 to 14 range.
Crude prices were taking back earlier gains on Friday, with US crude hitting US$29.40, down from US$30.77 on Thursday. (Reporting by Paul Kilby; Editing by Marc Carnegie)