Ottawa's Petro-Canada stock priced at $64.50
FROM CANADIAN PRESS
CALGARY - The sale price of the federal government's final 19 per cent stake in Petro-Canada has been set at $64.50 per share, about $3 higher than indicated in a preliminary prospectus last week.
The price for the sale of the 49.4 million shares, released late Thursday, followed negotiations between Ottawa and the underwriting syndicate.
With gross proceeds of just under $3.2 billion, the Petro-Canada share sale will be the largest such offering in Canadian history.
"I am pleased that this transaction is proceeding smoothly and that Canadian investment banks are taking a leading role," Finance Minister Ralph Goodale said in a release.
"This share offering maximizes the returns for Canadian taxpayers on their investment in Petro-Canada and illustrates the strength of Canada's capital markets."
After adjustments for the current book value of the shares and the costs of the transaction, the sale is expected to yield $2.6 billion to the federal treasury.
The government has said $1 billion will be used to support new environmental technologies. The cash will also help deal with the government's fiscal needs as it spends tens of billions more dollars on health care over the next decade.
Ottawa outlined its plan to sell its holding in the former Crown corporation in the federal budget last March, and details of the sale - except the price - were made public last week.
A preliminary prospectus filed Sept. 16 suggested that the shares would sell at about $61.50 each, but demand for the stock has been strong since then.
During the past week, Petro-Canada executives have joined the underwriters on roadshows in North America and Europe to promote the sale.
The 22-firm underwriting syndicate, led by CIBC World Markets and RBC Capital Markets of Toronto and Merrill Lynch of New York, will take a fee of 1.75 per cent of the gross proceeds - $55.7 million - which Ottawa said is the lowest such charge for a major transaction in Canada.
The offering is expected to close next Wednesday.
Petro-Canada (TSX: PCA) is not selling any new shares and will not receive any proceeds from the sale of the government's stake.
The government was Petro-Canada's biggest shareholder. But even without any ownership, Ottawa has no plans to repeal the Petro-Canada Public Participation Act, which prevents anyone from owning more than 20 per cent of the company. The act also forces the company to provide bilingual services and requires it to keep its head office in Calgary.
The government of Pierre Trudeau set up the national oil company as a Crown corporation in the mid-1970s with full government ownership. Ottawa sold 30 per cent of Petro-Canada in 1991 and 50 per cent in 1995.
The company has grown dramatically through acquisitions. Already a major force in Canada's offshore and oilsands sectors, it is growing in Libya, the North Sea and elsewhere. It also operates several major Canadian refineries and a national network of gasoline stations. |
