Cenovus lifts tender cap for seven note series to $748.01 million

By Marisa Wong

Morgantown, W.Va., June 18 – Cenovus Energy Inc. said it intends to repurchase $748,009,000 of notes under its cash tender offers announced on June 4.

The offers, originally for up to $500 million aggregate principal amount of notes from seven series, were fully subscribed as of the 5 p.m. ET on June 17, the early tender date. As a result, the company has decided to exercise its right to increase the overall tender cap.

As of the early tender time, holders had tendered $505,561,000 of 4.45% notes due 2042 and $242,448,000 of 5.2% notes due 2043. These notes will be accepted for purchase without proration on June 19.

The company said it does not expect to purchase notes from any of the other five series or any notes tendered after the early tender date.

Tenders may no longer be withdrawn.

As previously announced, the company is offering to purchase notes from the following series, listed in order of acceptance priority:

• $673,825,000 of outstanding 4.45% notes due 2042, with pricing based on the 3% U.S. Treasury due Feb. 15, 2049 and a fixed spread of 230 basis points;

• $300,174,000 of outstanding 5.2% notes due 2043, with pricing based on the 3% U.S. Treasury due Feb. 15, 2049 and a fixed spread of 265 bps;

• $500 million of outstanding 3% notes due 2022, with pricing based on the 2.125% U.S. Treasury due May 15, 2022 and a fixed spread of 90 bps;

• $961,851,000 of outstanding 4¼% notes due 2027, with pricing based on the 2.375% U.S. Treasury due May 15, 2029 and a fixed spread of 190 bps;

• $641,502,000 of outstanding 5¼% notes due 2037, with pricing based on the 3% U.S. Treasury due Feb. 15, 2049 and a fixed spread of 263 bps;

• $831,665,000 of outstanding 5.4% notes due 2047, with pricing based on the 3% U.S. Treasury due Feb. 15, 2049 and a fixed spread of 275 bps; and

• $450 million of outstanding 3.8% notes due 2023, with pricing based on the 2% U.S. Treasury due May 31, 2024 and a fixed spread of 120 bps.

The total consideration per $1,000 principal amount of notes will be an amount based on the yield to maturity of the applicable U.S. Treasury reference security plus the fixed spread. Pricing will be determined at 10 a.m. ET on June 18.

Holders who tender their notes by 5 p.m. ET on June 17, the early tender date, will be eligible to receive the total consideration, which includes an early tender payment of $30 per $1,000 principal amount.

Holders tendering after the early tender date but at or prior to midnight ET at the end of the day on July 1, the expiration date, would be eligible to receive the tender offer consideration, which is the total consideration less the early tender payment.

The company will also pay accrued interest from the last interest payment date to but excluding the applicable settlement date.

Final settlement is expected to occur on July 3.

Tendered notes will be purchased based on the acceptance priority levels and may be subject to proration.

The tender offers are not conditioned on any minimum principal amount of notes being tendered.

Barclays (800 438-3242 or 212 528-7581) and MUFG Securities Americas Inc. (877 744-4532 or 212 405-7481) are dealer managers for the tender offers. D.F. King & Co., Inc. (cve@dfking.com and 212 269-5550 for banks and brokers only or 866 796-7182 for all others) is tender and information agent.

The company said the offers support its continued focus on deleveraging its balance sheet and that debt reduction continues to be a top priority for 2019 after funding its sustaining capital requirements and maintaining its current dividend level. The company plans to use internally generated cash for these tender offers.

Cenovus is an integrated oil and natural gas company based in Calgary, Alta.

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