Pacific Completes Restructuring Transaction.
ENPNewswire-November 4, 2016--Pacific Completes Restructuring Transaction
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Release date- 03112016 - TORONTO - Pacific Exploration & Production Corporation is pleased to announce that it has successfully implemented its plan of compromise and arrangement effective today pursuant to the Companies' Creditors Arrangement Act in connection with the comprehensive restructuring transaction announced on April 19, 2016.
Pursuant to the Creditor/Catalyst Restructuring Transaction, the Company's common shares have been conditionally approved for listing on the Toronto Stock Exchange under the symbol 'PEN' with trading expected to begin on November 3, 2016. As a result of the Plan, there are currently 50,002,537 common shares issued and outstanding.
'Through the restructuring process and the tireless efforts of everyone involved, Pacific is now emerging from its recapitalization with a renewed strategic focus, positive cash flow, a strong balance sheet, significantly reduced payables and a Board of Directors with the unique skills and experience needed to guide management and drive value creation for all stakeholders,' said Gabriel de Alba, Chairman of Pacific.
Mr. de Alba added, 'Going forward, Pacific will implement a strategy to narrow its geographic focus and reduce organizational scale, complexity and cost while maximizing operating and cost efficiencies to ensure the Company has sustainable production and growth.
This company will be disciplined and margin-focused, not simply production-driven. As part of the strategy we will be reviewing the broad set of upstream and midstream assets within the Company's portfolio with an emphasis on value-maximizing initiatives.
In addition, while annualized SG&A (excluding severance and restructuring payments) has been reduced year over year by 28% during the course of the restructuring process, we are taking further steps to achieve a U.S.$110 million annualized expense in 2017, excluding one-time costs, compared to U.S.$221.5 million in 2015. It is our goal to rebuild Pacific in a way that allows it to be a truly competitive low-cost producer and a market leader over the long-term.'
In concert with today's announcement, Pacific is also announcing significant changes to the Company's corporate governance. The new Board is comprised of seven best-in-class directors with the needed industry and financial experience to guide Pacific towards reaching its full potential.
Members are Gabriel de Alba, Luis F. Alarcon, W. Ellis Armstrong, Raymond Bromark, Russell Ford, Barry Larson and Camilo Marulanda. Gabriel de Alba, Managing Director and Partner at The Catalyst Capital Group Inc., has been appointed Chairman of the Board of Directors. Messrs. Serafino Iacono, Miguel de la Campa, Ronald Pantin, Augusto Lopez, Hernan Martinez, Dennis Mills, Francisco Sole and Ms. Monica de Greiff have all resigned from the Board, effective immediately.
Ronald Pantin and Carlos Perez are retiring from their positions as CEO and CFO of Pacific (respectively) with both changes effective by November 30, 2016.
At that time, Camilo McAllister, a seasoned Colombian oil and gas executive, will become Pacific's CFO. Jim Latimer, previously the Chief Restructuring Officer at Pacific, will be appointed interim CEO while the Board, assisted by executive search firm Spencer Stuart, completes the process to select a permanent replacement. The appointments of Messrs. McAllister and Latimer are subject to regulatory approval.
Mr. de Alba said, 'The Company thanks all departing board members and executives for their years of service to Pacific.'
Information Concerning the Company Following Implementation of the Plan
The Plan substantially improved the capital structure of the Company by reducing the amount of outstanding debt by approximately U.S.$5.1 billion, from U.S.$5.4 billion as of December 31, 2015, to U.S.$250 million outstanding as of June 30, 2016 (after giving effect to the Creditor/Catalyst Restructuring Transaction on a pro forma basis), which represents the total aggregate amount outstanding under the Exit Notes. Cash upon emergence will be approximately U.S.$556 million and accounts payable have been reduced significantly from the U.S.$1.217 billion balance at December 31, 2015.
The Company's operations have been cash flow positive during the restructuring, with a focus on substantially reducing payables and investing in capex. Cash was also used to pay for one-time restructuring costs, interest on the DIP notes and DIP LC Facility, and the establishment of restricted cash accounts in order to ensure the payment of Colombian creditors.
The Plan additionally provided U.S.$480 million of additional liquidity through the DIP Financing and a committed letter of credit facility of approximately U.S.$116 million. With an improved capital structure, the Company will benefit from a reduction in its annual interest cost of...
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