FRFHF Fairfax Financial Holding Ltd (PK)

By Matt Jarzemsky 

Exco Resources Inc. is nearing a deal to stave off a potential bankruptcy that could ultimately put some of its creditors in control of the company.

The Dallas-based company plans to sell $300 million in bonds to a group of investors including Fairfax Financial Holdings Ltd., Bluescape Resources Co. and Oaktree Capital Group LLC and use the proceeds to pay down its credit line and fund operations, according to people familiar with the matter.

Providers of the new debt would also receive warrants giving them the option to acquire up to about 55% of Exco at about 90 cents a share, the people said. Exco's stock closed Tuesday at 59 cents and recently traded at around 58 cents.

Exco, like other energy producers, has struggled to regain its footing following a steep drop in oil and gas prices in late 2014. More than 100 North American oil and gas producers have filed for bankruptcy protection since the beginning of 2015, according to Texas law firm Haynes and Boone LLP, and a number of others have cut their debt via out-of-court deals with creditors.

Prices have rebounded, but not enough to restore many energy producers to profitability. Natural gas hit a two-year high on Dec. 28 but has fallen 24% since then.

Write to Matt Jarzemsky at matthew.jarzemsky@wsj.com

(END) Dow Jones Newswires

March 15, 2017 15:01 ET (19:01 GMT)

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