Pacific Exploration Corp explores 6 buyout offers

March 19
12:13 AM 2016

With an objective of avoiding bankruptcy, Pacific Exploration & Production Corp is considering six buyout offers that include management takeover as well. The Board of Directors may take its final decision by this weekend. 

Pacific Exploration & Production Corp is a Canadian public company that is considered as the largest independent oil producer in Latin America. One buyout offers the company $500 million in loans. Sources close to the development reveal that Pacific Exploration's board is expected to take a final decision by this weekend.

The Wall Street Journal (WSJ) reports that Tom Becker, spokesperson at Pacific Exploration & Production Corp, declined to comment on this. However, Becker did say that Pacific Exploration & Production Corp is currently working with all stakeholders and advisers to make the company's capital structure more suitable to market conditions.

Lazard, company's financial advisor, is compiling the buyout offers. Later, these will be analyzed by an independent committee appointed by the board. They will make recommendation to the directors. However, a spokesperson at Lazard didn't respond for a comment on the latest development.

Pacific Exploration Corp is expecting an advanced offer that would convert debt into equity and give a majority stake to bondholders. This will reduce the payment load. Pacific Exploration & Production Corp is also expected to raise $500 million funds from banks and private equity (PE). It'll also retain 10 percent of company's shares, according to Seeking Alpha

Colombia's economic transformation during the past decade has a greater effect on Pacific Exploration Corp. Three Venezuelan and Italian oil and mining executives established Pacific Exploration & Production Corp in 2003. Pacific focuses on the country's mineral-rich eastern Savanna. This area is opening up for exploration, while Colombian army is pushing insurgents from the region. 

The Street further adds that Pacific Exploration & Production Corp has diversified portfolio of assets in over 70 exploration and production blocks across several countries. It has presence in Colombia, Peru, Guatemala, Brazil, Guyana and Belize. Pacific Exploration Corp is keen on sustainable growth in production, reserves and cash generation. 

Pacific Exploration & Production Corp produced an average of 156,000 barrels per day in 2015. Share prices of the energy companies are reeling under pressure as lower oil revenues exposed poorly-timed asset purchases.  The market capitalization of Pacific Exploration Corp fell to $200 million from over $7 billion in early 2012. 

The company in January 2016 announced that it would forego $66 million interest payments. It's hoping on restructuring of $5.4 billion debt in the wake of declining oil prices. Pacific Exploration & Production Corp has made only one offer public in January. An energy investment firm EIG offered Pacific shareholders 16 cents on the dollar. EIG's offer is one among the six buyout options under active consideration now.

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