**Canacol Energy Seeks Short-Term Loan Amid Debt Restructuring Efforts**
Canacol Energy Ltd., Colombia’s leading private gas producer, is in negotiations for a short-term loan with its creditors as it aims to restructure its debt before depleting its cash reserves. The Canadian company is exploring debtor-in-possession financing options, according to sources familiar with the situation who requested anonymity due to the confidential nature of the discussions.
With production levels declining and losses increasing, Canacol is under pressure to finalize the loan quickly. However, this financing could potentially create tensions among creditors, as it may grant new lenders priority over existing ones. The company currently has $500 million in dollar bonds and a secured credit facility with Macquarie, which holds a superior position over the bonds. Additionally, Canacol has a revolving credit facility with a consortium of banks that is set to expire in 2027.
Canacol has not responded to requests for comment. Following the loss of a significant pipeline contract in 2023, the company’s production has been on a downward trend, triggering an acceleration clause in the Macquarie loan. Despite these challenges, Canacol has consistently assured investors of its ability to meet its debt obligations, dismissing the notion of needing a restructuring. Analyst Daniel Guardiola from BTG Pactual noted that despite favorable gas prices and record EBITDA generation, the company struggled to secure market financing, attributing this to a lack of credibility.
On November 19, Canacol announced it had been granted creditor protection in Canada and subsequently filed for relief under Chapter 15 of the U.S. bankruptcy code. A group of bondholders is being advised by investment bank Houlihan Lokey, while the company is receiving guidance from law firm Gowling WLG in Canada and Clifford Chance for the banks, as indicated in documents from KPMG Inc., which is overseeing the process.
After facing years of operational difficulties, unsuccessful exploration, and poor communication with investors, stakeholders now view a potential acquisition as their best chance for recovery. Ecopetrol’s CEO, Ricardo Roa, mentioned this week that Canacol is interested in a sale, although he did not provide details on the current status of negotiations. Seaport Global strategist Bevan Rosenbloom highlighted the ongoing strategic value of Canacol’s production and assets, noting that Colombia is facing a structural shortfall in natural gas, with Canacol being the second-largest producer in the country.
**FAQ**
**What is Canacol Energy currently facing in terms of financial challenges?**
Canacol Energy is negotiating a short-term loan to restructure its debt as it faces declining production and increasing losses, which have raised concerns among creditors.
