Mexican conglomerate Alfa now considers its investment in Pacific Exploration & Production a total loss after the Canadian hydrocarbons producer reached a restructuring deal with a private fund, a senior Alfa executive said on Thursday.
Pacific in April reached a deal with some of its debtholders, including the investment fund Catalyst Capital Group, to convert almost all of its debt to equity as it looks to fight a prolonged slump in oil prices. The deal excluded Alfa, its biggest shareholder.
The chief executive of Alfa, Álvaro Fernández, told reporters the deal turns Pacific's creditors into the effective owners of the company, diluting to "zero" the participation of shareholders.
"We in our results are now taking it as if it were worth zero, this investment," he said.
The book value of Alfa's investment in Pacific fell to US$38 million at the end of the first quarter due to the drop in oil prices, versus some US$1 billion it had invested in the firm to reach a 19-percent ownership stake.