Cenovus gives early results, pricing, acceptance amounts of tenders

By Mary-Katherine Stinson and Wendy Van Sickle

Lexington, Ky., Sept. 19 – Cenovus Energy Inc. gave the pricing, early results and expected acceptance amounts in its tender offers to purchase for cash some of its outstanding series of notes for an aggregate purchase price, excluding accrued interest, of up to $750 million, according to two press releases.

The notes are divided into two pools. The company also amended the offer to increase the maximum amount of the second pool of notes, which covers two series, to $500 million. It was originally $250 million.

The first pool, which includes six series of notes, remains subject to a maximum aggregate purchase price of $500 million.

Pool 1 early results

As of the early tender deadline at 5 p.m. ET on Sept. 18, the following notes were tendered under the first pool, listed in order of acceptance priority level with the total considerations per $1,000 principal amount:

• $400,387,000 of the $583,102,000 outstanding 5.25% notes due 2037 (Cusip: 15135UAP4), for $922.21, based on the 3.875% U.S. Treasury due Aug. 15, 2033 and a fixed spread of 175 basis points with a series cap of $250 million, which the company expects to adhere to resulting in the early tenders for this series being accepted at a proration factor of 62.49%;

• $5,688,000 of the $97,004,000 outstanding 4.45% notes due 2042 (Cusip: 15135UAH2), for $769.18, based on the 4.375% U.S. Treasury due Aug. 15, 2043 and a fixed spread of 200 bps;

• $1,614,000 of the $28,549,000 outstanding 5.2% notes due 2043 (Cusip: 15135UAK5), for $840.93, based on the 4.375% U.S. Treasury due Aug. 15, 2043 and a fixed spread of 205 bps;

• $57,128,000 of the $239,598,000 outstanding 4.4% notes due 2029 (Cusip: 448055AP8), for $927.97, based on the 4.375% U.S. Treasury due Aug. 31, 2028 and a fixed spread of 145 bps; and

• $571,507,000 of the $799,872,000 outstanding 5.4% notes due 2047 (Cusip: 15135UAR0, 15135UAQ2, C23555AH5), for $910.38, based on the 3.625% U.S. Treasury due May 15, 2053 and a fixed spread of 170 bps. The company expects to accept $231,444,000 principal amount of notes tendered from this series at a proration factor of 40.54%.

There were no results listed in the press releases for the $372,906,000 outstanding 4.25% notes due 2027 (Cusips: 15135UAM1, 15135UAL3). Pricing was to have been based on the 4.375% U.S. Treasury due Aug. 31, 2028 and a fixed spread of 95 bps.

Cenovus expects to accept for purchase all the 4.45% notes due 2042, 5.2% notes due 2043 and 4.4% notes due 2029 tendered at the early tender deadline.

Cenovus does not expect to accept for purchase any 4.25% notes due 2027.

Cenovus also does not expect to accept for purchase any pool 1 notes tendered after the early tender date.

Pool 2 early results

The results of the second pool, under which Cenovus is offering to purchase notes for an upped maximum amount of $500 million, are as follows, with the series listed in order of acceptance priority level and the total considerations per $1,000 principal amount:

• $195,551,000 of the $386,773,000 outstanding 6.8% notes due 2037 (Cusip: 448055AD5), for $1,041.95, based on the 3.875% U.S. Treasury due Aug. 15, 2033 and a fixed spread of 200 bps; and

• $398,009,000 of the $935,422,000 outstanding 6.75% notes due 2039 (Cusip: 15135UAF6), for $1,045.09, based on the 4.375% U.S. Treasury due Aug. 15, 2043 and a fixed spread of 170 bps.

As the pool 2 tendered notes also have a total purchase price that exceeds the cap, Cenovus expects to accept for purchase all the 6.8% notes due 2037 validly tendered and not validly withdrawn prior to or at the early tender date and to accept for purchase $283,462,000 of the 6.75% notes due 2039 on a prorated basis using a proration factor of 71.29%.

Additionally, because the tendered pool 2 notes have a total purchase price, excluding accrued and unpaid interest, that exceeds the pool 2 maximum amount, Cenovus does not expect to accept for purchase any pool 2 notes tendered after the early tender date.

Details

Pricing was determined at 10 a.m. ET on Sept. 19.

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

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

The tender offers will expire at 5 p.m. ET on Oct. 3.

Cenovus expects to settle early tendered notes on Sept. 20.

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.

Goldman Sachs & Co. LLC (800 828-3182 or gs-lm-nyc@ny.email.gs.com), BMO Capital Markets Corp. (833 418-0762, 212 702-1840 or LiabilityManagement@bmo.com) and MUFG Securities Americas Inc. (877 744-4532 or 212 405-7481) are the dealer managers.

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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