Skope Energy calls off C$15 million 8% five-year convertibles offering

By Susanna Moon

Chicago, Dec. 15 - Skope Energy Inc. said it canceled its C$15 million bought-deal offering of 8% five-year convertible unsecured subordinated debentures "due to adverse market conditions."

Skope said on Dec. 2 that it set the terms on the 8% convertibles with a minimum principal amount of C$15 million and an initial conversion premium of 30%.

The Regulation S deal had a 15% greenshoe and was to be underwritten by a syndicate co-led by National Bank Financial Inc. and CIBC World Markets Inc. and including GMP Securities LP and HSBC Securities (Canada) Inc.

The bonds were non-callable until Dec. 31, 2014 and then provisionally callable for one year until Dec. 31, 2015 at a price hurdle of 125%. After Dec. 31, 2015, the debentures were to be freely callable.

The public offering, to be offered in all of the provinces of Canada excluding Quebec, was slated to close the week of Dec. 19 subject to regulatory approval.

The company previously said it would use about C$12 million of the note proceeds to reduce debt under its credit facility, which would be permanently reduced to C$48 million. The rest of the proceeds were to be applied to further reduce the credit facility.

Thursday the company noted it would forgo paying a quarterly dividend on its outstanding shares for the quarter and that it would be best to stop paying dividends until it reduced the debt under its facility, given continuing low natural gas prices and volatile capital markets.

The company has not defaulted on its facility but the borrowing base is under review and Skope is in discussion with its lender, according to a company press release Thursday.

Skope said it is considering financing alternatives to lower debt under its facility and strengthen its balance sheet, including alternate debt and equity financing.

Skope is a Calgary, Alta.-based oil and natural gas exploration and development company.

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