Kellerman, Jay C.
Stikeman Elliott LLP
(416) 869-5201
jkellerman@stikeman.com
Managing partner of
the Toronto offi ce and
co-head of fi rm's global
mining group. Recognized
internationally as a leading
mining lawyer and acts for
Canadian and international
mining companies and
fi nancial institutions.
Keough, Loyola G.
Bennett Jones LLP
(403) 298-3429
keoughl@bennettjones.com
Mr. Keough is a partner in the
fi rm's Regulatory/Environ-
mental Department. He has
particular experience in oil,
gas, electricity, LNG, rates,
facilities and environmental
matters. His clients include
utilities, buyers, producers,
shippers and banks.
Kravitz, Neil
Davies Ward Phillips
& Vineberg LLP
(514) 841-6522
nkravitz@dwpv.com
Mr. Kravitz specializes in
M&A and securities law. He
has extensive experience in
public off erings, take-over
bids, plans of arrangement,
private placements, public/
private asset and share
purchases, as well as corpor-
ate governance matters.
Kent, Andrew J.F.
McMillan LLP
(416) 865-7160
andrew.kent@mcmillan.ca
Mr. Kent practises business
law with a focus on corporate
restructuring and fi nancing.
Andy is recognized nation-
ally and internationally
both as a leading Canadian
banking practitioner and as
one of Canada's pre-eminent
restructuring practitioners.
Koval, Patricia A.
Torys LLP
(416) 865-7356
pkoval@torys.com
Ms. Koval practises in cor-
porate fi nance (including
investment funds), securities,
M&A and governance. She
has 20 years' experience with
REITS, including domestic
and cross-border IPOs,
fi nancings, management
internalizations and mergers.
Kro , QC, Edwin G.
Blake, Cassels
& Graydon LLP
(416) 863-2500
ed.kro @blakes.com
Mr. Kro is a partner experi-
enced in handling tax and
transfer-pricing disputes.
Appears before all levels of
court including the Supreme
Court of Canada. Published
on taxation issues. Former
member of Tax Court of
Canada Rules Committee.
tion to keep the cash coming in: royalty
streams, or an agreement to forward sell a
percentage of their production. ! e streams
provide a steady cash fl ow, but not everyone
is a fan.
"It's not necessarily an inexpensive way of
fi nancing and it ties up a lot of your upside,"
says John Turner in Toronto, who leads the
global mining group at Fasken Martineau
DuMoulin
LLP. "Typically, with these roy-
alty deals, to the extent that you discover
additional resources then the royalty ap-
plies to that resource, so you're taking away
potential future revenue.
"On the other hand, it's a way to raise
capital that's not as dilutive as others. So
it's one of those
things where I've
seen a lot of term
sheets recently but I
haven't seen a lot of
the deals being done
right now. It's one
alternative, and not
necessarily the most
favoured one."
Another option
open to integrated
producers is selling
off mid-stream as-
sets to raise cash.
Encana Corp. be-
came one of the fi rst
to do a mid-stream
sale, selling 500 kilometres of
pipeline and compression facili-
ties in BC for $412 million.
! e buyer, Veresen Midstream
– a new partnership between
Veresen Inc. in Calgary and
Kohlberg Kravis Roberts & Co.
– agreed to invest up to $5 bil-
lion to support mid-stream de-
velopment in the Montney basin
under a 30-year fee-for-service
agreed arrangement.
Alicia Quesnel, an M&A and
energy practitioner at Burnet,
Duckworth & Palmer in Calgary,
believes it's an emerging trend.
In structuring such sales with
a taker-pay obligation, Quesnel
says, "the company gets the ben-
efi t of cash from the sale but they
still have access to the facility they previ-
ously owned."
LOOKING OUT AT the deal landscape
over the second half of this year, Donald
Greenfi eld, who leads the energy practice
group of Bennett Jones LLP, sees an increase
in the number of insolvencies, especially in
companies that have debt obligations and
fi xed capital spending commitments.
"! ere have been a bunch of
CCAA
[Companies' Creditors Arrangement Act]
fi lings already and if you asked around our
offi ce, I think you'd probably fi nd out we're
22
|
DISTRESS-DRIVEN DEALS
"ONE SIDE THINKS THAT,
WITH TIME, THE PRICING
WILL BE EVEN BETTER WHILE
THE OTHER SIDE, THE DISTRESSED
COMPANY, FEELS THAT THIS IS
THE BOTTOM AND THEY DON'T
WANT TO TRANSACT AT SUCH
A HUGE DISCOUNT. THEY THINK
THEY'LL BE GETTING SKINNED."
– John Cuthbertson, Burnet Duckworth & Palmer LLP
Cenovus Energy Inc. announced in Feb-
ruary it was doing a $1.5-billion bought-
deal share off ering just to fund its 2015 cap-
ital expenditure program. By that point, the
company had already cut 800 jobs, scaled
back its cap-ex program, shelved some ex-
pansion plans, and had been trying to sell or
spin off some of its royalty-free properties
to shore up its balance sheet.
But only the largest producers like Ceno-
vus Energy have the luxury of being able to
issue shares.
Producers of all sizes have another op-
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