TORONTO, Jan. 14, 2016 /PRNewswire/ - Pacific Exploration & Production Corp. (TSX: PRE) (BVC: PREC) announced today that it has elected to utilize the 30 day grace period (the "Grace Period") pursuant to the indentures governing its 5.625% notes due January 19, 2025 (the "5.625% Notes") and its 5.375% notes due January 26, 2019 (the "5.375 Notes", and together with the 5.625% Notes, the "Notes") rather than make the interest payments due on January 19, 2016 andJanuary 26, 2016, respectively, in connection with these Notes.
Specifically, the following interest payments will not be paid on the scheduled payment dates: (i) U.S.$31.3 million in the aggregate in respect of the 5.625% Notes scheduled to be paid on January 19, 2016; and (ii) U.S.$34.9 million in the aggregate in respect of the 5.375% Notes scheduled to be paid on January 26, 2016 (collectively, the "January Interest Payments"). The Company has elected to use the Grace Period to assess strategic alternatives with respect to its capital structure.
The Company's current liquidity position is being impacted by the significantly depressed international oil prices. The Company will use the Grace Period to engage with its creditors (including its lenders and holders of each series of the Company's notes) with a view to making its capital structure more suitable to current market conditions. The Company remains and intends to remain current with its suppliers, trade partners and contractors. Normal operations continue inColombia and the other jurisdictions within which the Company operates.
The failure to make the January Interest Payments on the scheduled dates does not constitute an Event of Default under the indentures that govern the Notes. In each case, the Company has a 30 day period from the scheduled payment dates to cure the failure to make such payments and the Company reserves the right to make the January Interest Payments prior to the expiry of each Grace Period.
As previously announced on December 28, 2015, the Company obtained certain waivers (the "Waivers") in respect of the: (i) U.S.$1 billion revolving credit and guaranty agreement with a syndicate of lenders and Bank of America, N.A, as administrative agent; (ii) U.S.$250 million credit and guaranty agreement with HSBC Bank USA, N.A., as agent; (iii) U.S.$109 million credit and guaranty agreement with Bank of America, N.A., as lender; and (iv) U.S.$75 million master credit agreement with Banco Latino Americano de Comercio Exterior, S.A., as lender.
The Waivers obtained by the Company provide relief in respect of the covenant that requires its consolidated net worth to be above U.S.$1 billion and in respect of the Company's consolidated leverage ratio of 4:50:1:00, which reflects the permitted gross debt-to-trailing twelve month adjusted EBITDA. The Waivers are set to expire on February 26, 2016 (the "Waiver Period") 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 January 14, 2016 (the "Liquidity Deadline") with respect to a covenant providing for the minimum amount of unrestricted cash to be retained by the Company throughout the Waiver Period.
The Company announced today that the Company and its lenders have agreed to extend the Liquidity Deadline to January 21, 2016, or such later date as the Company and its lenders shall agree.
The Company is being advised by Lazard Frres & Co. LLC.