Amber Kanwar

Anchor, Reporter

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A group of Pacific Exploration and Production Corp. shareholders are preparing to revolt against a privatization deal they say would see the equity value of the company wiped out.

The group, led by top shareholder O’Hara Administration, has filed a complaint to block the recapitalization plan with the Superintendency of Industry and Commerce in the country of Colombia, BNN has learned. This plan, and the efforts to stop it, comes after the company missed its debt payments twice this year. The law firm leading the charge says they represent holders of about 35% of the company’s shares, including O’Hara Administration. Jaime Granados is a well-known Colombian lawyer representing the group and is the lawyer of former President Uribe.

The chief complaint of the group is that the process run by the independent committee of the company’s board of directors was not truly independent. The group says other bidders who offered more-favourable terms to shareholders were turned away. There are two potential bidders that are said to be still interested in pursuing a transaction, according to a source familiar with the matter. Gran Tierra Energy Inc. is said to be one of them. Gran Tierra was seeking information from Pacific in order to make their bid, but was rebuffed as Pacific viewed them as a competitor.

Instead, Pacific is said to be entering an agreement with Newton Glassman’s Catalyst Capital Group Inc. to provide $500M in funding in exchange for majority equity ownership. The remainder of the equity will go largely to the bond holders with management said to be receiving 10%.

GranTierra has stated publicly that it is in the acquisition phase of its current business cycle. The company went through a major transformation after top shareholder Greg Boland of West Face ousted previous management in an activist campaign and installed Gary Guidry as CEO. Gran Tierra has the bulk of its assets in Colombia and just raised $100M at the end of March.

Guidry said he had “no comment,” when reached.

Pacific Exploration was subject of a takeover offer by top shareholder Alfa SAB last year for $6.50/share. O’Hara Administration was vocal against the deal calling it opportunistic and it was voted down. The shares are down 85% from that offer price.

Pacific Exploration did not return request for comment. O’Hara administration said they had no comment on the matter. An e-mail to Newton Glassman went unreturned.