Cenovus Energy Inc (USA) (NYSE:CVE) has priced $2.9 billion of senior notes.
The Canadian integrated oil company is offering the notes in three series: $1.2 billion principal amount of 4.25% senior notes due 2027; $700 million principal amount of 5.25% senior notes due 2037; and $1.0 billion principal amount of 5.40% senior notes due 2047.
The offering is part of Cenovus’ financing plan to fund the purchase of assets in Western Canada from ConocoPhillips.
The acquisition, which is expected to close in the second quarter of 2017, includes ConocoPhillips’ 50% stake in the FCCL Partnership, the companies’ jointly owned oil sands venture operated by Cenovus, as well as the majority of ConocoPhillips’ Deep Basin assets in Alberta and British Columbia.
Cenovus Energy Inc (USA) (NYSE:CVE) said it intends to use the net proceeds from the offering to finance a portion of the cash consideration payable for the acquisition.
Upon closing of the offering, the proceeds will be deposited into an escrow account together with the expected accrued interest on the notes from closing to, but not including, April 6, 2018, plus an amount sufficient to fund a special mandatory redemption of the notes, Cenovus said.
If the acquisition is not completed on or prior to March 22, 2018, or if Cenovus notifies the trustee and the escrow agent in writing or publicly announces that the company will not proceed with the acquisition for any reason, the notes will be subject to a special mandatory redemption at a price equal to 101% of the aggregate principal amount of the notes, plus accrued and unpaid interest to, but not including, the date of redemption.
The offering is expected to close on or about April 7.
The notes will be offered and sold only to qualified institutional buyers in accordance with the exemption from registration provided by Rule 144A under the United States Securities Act of 1933 and to certain non-U.S. persons outside the United States in offshore transactions in accordance with Regulation S under the Securities Act, Cenovus said.
Shares of Cenovus Energy Inc (USA) (NYSE:CVE) were trading up 2.44% in the morning session. The stock is down more than 25% year-to-date.