Calgary (pcJ News Brief) – Cenovus Energy Inc. (TSX/NYSE: CVE) has entered into a bought deal financing agreement to sell 187.5 million common shares at a price of $16.00 per share fo gross proceeds of $3 billion.
The offering will be made through a syndicate of underwriters led by RBC Capital Markets and J.P. Morgan. The offering is expected to close on or about April 6, 2017.
Cenovus has granted the underwriters an over-allotment option to purchase up to an additional 28.125 million common shares at the offering price, exercisable for a period of 30 days after closing. If the over-allotment option is exercised in full, the aggregate gross proceeds from the offering will be approximately $3.45 billion.
Cenovus intends to use the net proceeds to finance a portion of the cash consideration payable by it for the purchase of assets in Western Canada from ConocoPhillips, including ConocoPhillips’ 50% interest in the FCCL Partnership, the jointly owned oil sands venture operated by Cenovus, as well as the majority of ConocoPhillips’ Deep Basin assets in Alberta and British Columbia. Total consideration for the purchase is $17.7 billion, including $14.1 billion in cash and 208 million Cenovus common shares. The cash component is fully financed with a portion of cash on hand, existing credit facility capacity and committed bridge loans.
The closing of the offering is not conditional upon the acquisition being completed.
In the event that the acquisition is not completed, Cenovus may use the net proceeds to, among other things, reduce its outstanding indebtedness, finance future growth opportunities including acquisitions and investments, finance its capital expenditures, repurchase outstanding common shares or for other general corporate purposes.
photo credit: Cenovus