Athabasca plans $750-million IPO; oil sands play to go public with PetroChina's backing
March 2, 2010 ALBERTA -- Athabasca Oil Sands Corp. is raising the cash needed to be the next big thing in Alberta, announcing a $750-million initial public offer that follows on last year’s $1.9-billion investment in the company by state-owned PetroChina.
Privately owned Athabasca is out marketing an initial public offering (IPO) that will rank among the largest public market debuts seen in the past two years. The money raised in this offering will be used to develop six projects in northern Alberta; existing Athabasca shareholders are expected to hold on to their stakes.
This deal comes after PetroChina bought a 60% stake in two Athabasca projects in August. Investment banking sources say backing from the state-owned Asian company will validate Athabasca’s plan when the company pitches potential investors.
“Athabasca can legitimately claim to be the next great oil and gas story,” said one investment banker who is familiar with the company, but not involved in the IPO. He said while investors will eventually decide whether to buy shares based on the valuation of this stock, “there is every reason to think this will be a successful deal.”
Morgan Stanley Canada and GMP Securities are leading this transaction, with 11 investment dealers in the underwriting group. Only one of those brokerage houses, TD Securities, is a domestic bank-owned dealer. The rest are either boutique domestic dealers or arms of global firms.
In the past three years, only two Canadian IPOs raised more money than the proposed Athabasca offering. Mortgage insurer Genworth MI Canada Inc. raised a total of $946 million in August of last year, and Franco Nevada pulled in $1.26 billion in December, 2007.
PetroChina is not the first Chinese firm with a stake in Alberta's vast oil sands reserves, which are second only to Saudi Arabia's in size. Sinopec Corp., China National Petroleum Co. and the Chinese Offshore Oil Corp., also own pieces of projects in this region.
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