ARC Financial backed Topaz Energy files for $285M IPO and secondary offering

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By Ted Liu

Topaz Energy Corp., a portfolio company of ARC Financial Corporation, has filed a preliminary prospectus in connection with a proposed initial public offering and secondary offering.

Topaz Energy plans to raise $252.5 million through a $217.5 million treasury offering and a concurrent $35 million secondary offering by Tourmaline Oil Corp. (TSX: TOU). If the over-allot option granted to the underwriters were fully exercised, Topaz Energy would raise $285 million, consisting of a $250 million treasury offering and the $35 million secondary offering by Tourmaline Oil.

Topaz Energy has applied to list its common shares on the Toronto Stock Exchange (TSX) under the symbol “TPZ”.

The underwriting syndicate is being led by Peters & Co. Limited and Scotia Capital Inc. and including BMO Nesbitt Burns Inc., National Bank Financial Inc., RBC Dominion Securities Inc., CIBC World Markets Inc., TD Securities Inc., Desjardins Securities Inc., Stifel Nicolaus Canada Inc., ATB Capital Markets Inc., Canaccord Genuity Corp., Industrial Alliance Securities Inc., Raymond James Ltd., and Tudor, Pickering, Holt & Co. Securities – Canada, ULC.

Burnet, Duckworth & Palmer LLP acts as legal counsel to Topaz and Tourmaline Oil while Torys LLP acts for the underwriters.

Topaz Energy, formerly Exshaw Oil Corp. (a wholly-owned subsidiary of Tourmaline Oil), is a unique royalty and energy infrastructure company focused on generating free cash flow growth and paying reliable and sustainable dividends to its shareholders, through its strategic relationship with Tourmaline Oil Corp. and acquisitions from other high-quality energy companies.

Topaz Energy acquired its initial royalty interest on Tourmaline Oil lands, a non-operated interest in two of Tourmaline’s existing 19 natural gas processing plants, and a contracted interest in a portion of Tourmaline’s current third-party revenue for total cash and share consideration of $775 million in November 2019.

Topaz Energy has since acquired a 12.5% ownership interest in the Glacier Gas Plant from Advantage Oil & Gas Ltd. on July 2, 2020 for $100 million, a 25% ownership interest in the Banshee Gas Plant from Tourmaline on September 1, 2020 for $52.5 million, a 4% gross overriding royalty interest in approximately 76,800 gross acres of undeveloped land in the Clearwater area of Alberta on September 1, 2020.

Topaz Energy has previously closed two rounds of equity financings, raising $208.5 million in 2019 and $145.3 million in 2020. ARC Financial through ARC Energy Fund 9 funds led the 2020 financing.

Topaz Energy’s diverse group of shareholders include investors from BC, Alberta, Saskatchewan, Ontario, New Brunswick, Nova Scotia, and USA.

Topaz Energy is majority-owned by Tourmaline Oil which has a 63.5% ownership prior to the completion of the offering. Cambridge Global Asset Management, a division of CI Investments, and ARC Financial, currently control 11.8% and 5% of the outstanding common shares respectively.

photo credit: Tourmaline Oil