Cenovus tallies early tenders, increases cap on one pool of notes

By Marisa Wong

Los Angeles, Sept. 12 – Cenovus Energy Inc. announced the early results of its tender offers to purchase for cash some of its outstanding series of notes, divided into two pools.

Cenovus launched the offers on Aug. 26, setting a maximum aggregate purchase price of $1.5 billion, excluding accrued interest, for both pools.

On Monday the company announced it has amended the offers to increase the cap on the pool 1 notes to an amount sufficient to accept for purchase all of the early tendered notes in that pool with acceptance priority levels 1 through 5. The cap for the pool 1 notes, consisting of six series, has been increased to $1.7 billion from $1 billion.

The maximum amount of the second pool, covering three series of notes, remains unchanged at $500 million.

Pool 1 tender offers

As of 5 p.m. ET on Sept. 9, the early tender date, holders had tendered the following pool 1 notes, listed in order of acceptance priority level:

• $588,945,000 of the $961,851,000 outstanding 4.25% notes due 2027 (Cusip: 15135UAM1, 15135UAL3, C23555AF9), with pricing to be based on the 3.125% U.S. Treasury due Aug. 31, 2027 and a fixed spread of 120 basis points;

• $510,402,000 of the $750 million outstanding 4.4% notes due 2029 (Cusip: 448055AP8), with pricing to be based on the 2.75% U.S. Treasury due Aug. 15, 2032 and a fixed spread of 155 bps;

• $58.26 million of the $155,264,000 outstanding 4.45% notes due 2042 (Cusip: 15135UAH2), with pricing to be based on the 3.375% U.S. Treasury due Aug. 15, 2042 and a fixed spread of 255 bps;

• $29,177,000 of the $57,726,000 outstanding 5.2% notes due 2043 (Cusip: 15135UAK5), with pricing to be based on the 3.375% U.S. Treasury due Aug. 15, 2042 and a fixed spread of 255 bps; and

• $532,292,000 of the $665,674,000 outstanding 5.375% notes due 2025 (Cusip: 15135UAS8), with pricing to be based on the 3.125% U.S. Treasury due Aug. 15, 2025 and a fixed spread of 70 bps.

Also included in the first pool were the company’s $799,872,000 outstanding 5.4% notes due 2047 (Cusip: 15135UAR0, 15135UAQ2, C23555AH5), with an acceptance priority level below those five series. However, the company said on Monday that it does not expect to accept for purchase any 2047 notes.

Additionally, because the aggregate principal amount of pool 1 notes tendered by the early tender date has an aggregate purchase price that exceeds the pool 1 cap, the company does not expect to accept for purchase any pool 1 notes tendered after the early deadline.

Pool 2 tender offers

As of the early tender date, holders had tendered $819,723,000 of the $1,390,534,000 outstanding 6.75% notes due 2039 (Cusip: 15135UAF6), with pricing to be based on the 3.375% U.S. Treasury due Aug. 15, 2042 and a fixed spread of 215 bps.

Cenovus said it expects to accept for purchase the early tendered 2039 notes on a prorated basis. The proration factor will be announced along with pricing.

The pool 2 offer also covered the company’s $386,773,000 outstanding 6.8% notes due 2037 (Cusip: 448055AD5) and $583,102,000 outstanding 5.25% notes due 2037 (Cusip: 15135UAP4), which had acceptance priority levels below the 2039 notes. Because of the oversubscription as of the early tender date though, the company does not expect to accept for purchase any notes from either 2037 series.

Details

Pricing was scheduled to be determined at 10 a.m. ET on Sept. 12.

The total consideration includes an early tender payment of $30 per $1,000 principal amount of notes tendered by the early tender date.

Holders tendering after the early tender date are not eligible to receive the early tender payment.

Holders will also receive accrued interest up to but excluding the settlement date.

The tender offers will expire at midnight ET at the end of Sept. 23. However, Cenovus does not expect to accept for purchase any notes tendered after the early deadline under either pool.

Cenovus plans to settle early tendered notes that are accepted for purchase on Sept. 13.

Cenovus said it reserves the right, but is under no obligation, to further increase or decrease either of the maximum amounts.

Tenders may no longer be withdrawn.

The tender offers are not conditioned on any minimum principal amount of notes being tendered but are subject to some other conditions.

Cenovus said it intends to fund the purchase of notes tendered and accepted under the offers with cash on hand and short-term borrowings.

BofA Securities, Inc. (888 292-0070 or 980 387-3907; debt_advisory@bofa.com), J.P. Morgan Securities LLC (866 834-4666 or 212 834-3554) and Mizuho Securities USA LLC (866 271-7403 or 212 205-7736) are the lead dealer managers, and BMO Capital Markets Corp. and CIBC World Markets Corp. are the co-dealer managers for the tender offers.

D.F. King & Co., Inc. (cve@dfking.com; 212 269-5550 for banks and brokers only or 888 644-5854 for all others) is the tender and information agent.

Cenovus is a Calgary, Alta.-based oil and gas company.

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