26 de junio de 2015 / 17:13 / en 2 años

Pacific Rubiales bonds drift lower as Alfa stands firm on bid

NEW YORK, June 26 (IFR) - Bonds issued by Pacific Rubiales were drifting lower on Friday as Mexico’s Alfa stood firm in its bid for the oil and gas company amid a heated proxy battle over the acquisition.

The latest shot across the bows in Venezuelan investment firm O‘Hara Administration Co’s efforts to block the sale came last night when conglomerate Alfa said its offer of C$6.50 per share was “fair and final”.

“Alfa is calling O‘Hara’s bluff, saying if they don’t like the deal they will explore opportunities elsewhere and that is the last thing O‘Hara wants,” said a New York-based trader.

O‘Hara has yet to give ground, however. In a statement released Friday, it noted that proxy voting firm Glass Lewis will also encourage shareholders to nix the deal at a vote scheduled for July 7.

This follows a similar move earlier this week by proxy advisory firm Institutional Shareholder Services, which also rejected the approximately US$1.6bn bid for Pacific Rubiales.

O‘Hara, which holds close to 20% of the company, began its proxy fight to prevent a takeover by Alfa and Harbor Energy on June 18, claiming the C$6.50 price undervalues the company.

Alfa is offering an 81% premium versus the 30-day volume weighted average price prior to the deal’s announcement in May, and said that O‘Hara has failed to counter its price.

“As a shareholder Alfa is seriously concerned there is no credible alternative to this transaction and will be forced to seek alternative JV partners for Mexico if the transaction is not completed,” Alfa said in a statement.

While Alfa’s offer is substantially lower than the C$21 it paid in August when it raised its stake in Pacific Rubiales to 17.07%, the buyers say the new price reflects the substantial drop in crude prices since then.

Holders of some US$4bn in Pacific Rubiales bonds have already expressed support for the merger after more than 90% of noteholders agreed to amendments allowing the transaction to move forward.

Pacific Rubiales bonds have been drifting lower over the past few days to account for headline and execution risks.

The 2023s and 2025s were about a quarter point lower this morning at 76.00-77 and 76.60-77.50, respectively. Meanwhile, the shorter-dated 2019s were at 86.50-88.00, down from 87.25-88.00 Thursday.

“Right now it is like flipping a coin,” said Klaus Spielkamp, head of fixed-income sales at Bulltick. “On the 8th of July the bonds will either trade up to par or down to 70. Since we are closer to 70, I still like the trade.”

Many believe that O‘Hara will ultimately be forced to stand down and accept Alfa’s offer given the unpleasant options left on the table.

“It can either get someone with deep pockets to increase its stake (above 20%) and offer a bid to exceed Alfa‘s,” said a trader. “Or it gets enough investors to block the deal and the stock drops and as a shareholder they don’t want that.” (Reporting By Paul Kilby; editing by Shankar Ramakrishnan)

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