It was only a matter of time before a Canadian company took advantage of the soaring energy prices over the past few days.
Legacy Oil + Gas Inc. was in the market Tuesday morning to finance its purchase of light oil assets in southwest Manitoba, continuing the trend of deals coming on the back of acquisitions that gathered a bit of steam at the end of 2010.
The $100-million offering of common shares will provide the company with money to partially pay for its $185-million acquisition of light oil assets from Molopo Energy Canada Ltd. 2010 exit production for the assets was 800 barrels per day and the deal comes with proved and probable reserves of 9.1 million barrels of oil.
Similar deals that came to light late last year include TransGlobe Apartment REIT's $96-million offering of subscription receipts, Uni-Select Inc.'s financing for its purchase of FinishMaster Inc. and Ratel Gold Ltd.'s marketed private placement.
The fact that companies are looking to do financings like these is good news for deal flow because many firms already cashed up for the capital funding needs during the equity market rally late last year.
Legacy's deal was sold to investors at $14.95 per share, a discount of 3.5 per cent. The company says the offering fits into its business plan of acquiring high quality light oil assets that have big development and exploration opportunities.
FirstEnergy served as Legacy's financial adviser. While GMP Securities and Macquarie both acted as strategic advisers and co-led the bought deal.
Update: The deal has been upsized to $140-million on the back of strong investor demand.
Tim Kiladze