Whether it was the summer – or the swoon of equity markets in August – this quarter marked a challenging time for deal making. Only one public deal (and two private deals) worth more than $100 million were announced in the period. The buyers that managed to transact were all blessed with a low cost of capital, while the sellers were mostly looking to solve cost of capital problems.
Warburg, CPPIB and KERN all participated in deals, along with a number of international sponsors that committed funding to small cap publics with depressed stock prices. It is also not clear that the full flush of credit pressure has been felt yet, as only one major debt restructuring occurred this quarter, but there was plenty of covenant relief going on.
In terms of asset allocation on the finance side, large mid-streamers were most active, vastly outpacing activity by a handful of conventional and oil sands focused issuers and sporadic activity by international small caps. In general terms, the capital famine continued for Canada's energy sector.
But it was warm, so not all was lost. Notable transactions over the summer included:
- CPPIB's $1 billion commitment to Wolf Infrastructure to
pursue midstream development in Canada
- Suncor's $310 million acquisition of an additional 10%
interest in the Fort Hills project from Total
- Lightstream's exchange of $585 million in unsecured notes
for $500 second lien notes
- Long Run's agreement to complete a $200 million PIPE with MIE Holdings (which was subsequently reduced to $100 million)
To obtain a copy of the complete overview of Canadian Oil and Gas Acquisition and Finance Transactions – Third Quarter, please click here.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
