Pacific Exploration & Production Corp. (TSX: PRE) (BVC: PREC) announced today that the Toronto based petroleum company’s lenders have agreed to extend the liquidity deadline to 11:59 pm EST on February 26, 2016, which is the end of the existing waiver period. The waivers obtained by the company provide relief from the covenant that requires Pacific Exploration & Production’s consolidated net worth to be above $1 billion USD and the company to maintain a consolidated leverage ratio of 4:50:1:00, reflecting the permitted gross debt-to-trailing twelve month adjusted EBITDA.
The company is currently within a 30 day grace period, after missing roughly $65 million in interest payments that were due January 19. Control of the company is being pursued by Harbour Energy, a company that tried to buy Pacific Exploration & Production, then known as Pacific Rubiales, in early 2015.
Pacific Exploration & Production Corp. is a Canadian public company involved in exploration and production of natural gas and crude oil, with operations focused in Latin America. The company has a portfolio of assets with interests in more than 85 exploration and production blocks in seven countries including Colombia, Peru, Guatemala, Brasil, Guyana, Papua New Guinea, Mexico and Belize.
The new waivers are set to expire on February 26, 2016, and are subject to the satisfaction of certain terms and conditions, including a condition that the company and the requisite threshold of the company’s lenders reaching an agreement on or before 11:59 pm on February 26, 2016 with respect to a covenant providing for the minimum amount of unrestricted cash to be retained by the company throughout the waiver period. The liquidity deadline was previously extended on January 21, 2016 through to February 4, 2016.
On December 28 of last year, the company announced that it had obtained waivers impacting the $1 billion USD revolving credit and guaranty agreement with a syndicate of lenders and Bank of America as the administrative agent, a $250 million credit and guaranty agreement with HSBC Bank as agent, a.$109 million credit and guaranty agreement with Bank of America as lender, and a $75 million master credit agreement with Banco Latino Americano de Comercio Exterior (Bladex), as lender.
Pacific Exploration & Production is being advised by Lazard Frères & Co., Norton Rose Fulbright Canada, Proskauer Rose, Zolfo Cooper, and Garrigues. The independent creditor’s committee is being advised by Osler, Hoskin & Harcourt. An Ad Hoc committee representing bondholders has retained Canadian law firm Goodmans LLP to represent them regarding the missed bond payment, and also consider Harbour/EIG’s tender offer, says Goodman in a statement. The Ad Hoc Committee holds in the aggregate approximately 40% of the approximately US$4.1 billion principal outstanding amount of the notes.