Pembina Pipeline Corporation Announces Closing of $1.28 Billion Bought Deal Offering of Subscription Receipts
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Insights
The closure of Pembina Pipeline Corporation's bought deal offering, resulting in the issuance of 29.9 million Subscription Receipts, represents a significant capital raise of approximately $1.28 billion. The capital is earmarked for partial funding of the strategic acquisition of assets from Enbridge Inc., a move that could potentially enhance Pembina's asset base and revenue streams.
From a financial perspective, the use of Subscription Receipts is a strategic tool for raising capital without immediately diluting shareholder equity. Investors should note that the conversion of these receipts into common shares will occur upon the successful completion of the Acquisition, which is contingent upon customary closing conditions being met. The associated risk factors, as detailed in the company's prospectus, should be carefully considered.
Furthermore, the arrangement for Subscription Receipt holders to receive dividend-equivalent payments suggests that Pembina is confident in maintaining its dividend payments throughout the period leading up to the Acquisition's closure. This confidence may reflect positively on the company's cash flow projections and financial stability.
However, the long-term success of this capital raise and subsequent Acquisition will depend on Pembina's ability to effectively integrate and leverage the new assets to generate sufficient returns. Investors will need to track the progress of the Acquisition and evaluate Pembina's post-acquisition performance to assess the impact on the company's financial health and stock valuation.
The strategic acquisition by Pembina Pipeline Corporation of assets from Enbridge Inc. is indicative of the ongoing consolidation in the energy infrastructure industry. By acquiring interests in the Alliance, Aux Sable and NRGreen joint ventures, Pembina is poised to enhance its market position in the North American energy sector.
The scale of this transaction and the funding mechanism via Subscription Receipts may also signal Pembina's competitive stance and its ambition to strengthen its operational capabilities. The acquisition could lead to synergies, expanded geographical reach and diversified offerings, which are critical in an industry that is sensitive to commodity price fluctuations and regulatory changes.
Although the Acquisition is set to close in the first half of 2024, the immediate market reaction and the performance of the Subscription Receipts trading under 'PPL.R' will provide insights into investor sentiment and confidence in the value proposition of this deal. The long-term impact on Pembina's business operations and competitive edge in the industry will be closely monitored by market participants.
Each Subscription Receipt entitles the holder thereof to receive (i) automatically upon the closing of the Acquisition (as defined below), without any further action on the part of the holder thereof and without payment of additional consideration, one (1) common share ("Common Share") of Pembina, and (ii) payments per Subscription Receipt equal to the cash dividends per Common Share, if any, paid or payable to holders of Common Shares in respect of all record dates for such dividends occurring from the date hereof to, but excluding, the closing date of the Acquisition, to be paid to Subscription Receipt holders of record on the record date for the corresponding dividend on the Common Shares on the date on which such dividend is paid to holders of Common Shares.
The Subscription Receipts will begin trading on the Toronto Stock Exchange under the symbol "PPL.R" today.
The net proceeds of the Offering will be held in escrow and are expected to be used by Pembina to fund a portion of the purchase price of Pembina's previously announced acquisition of all of the interests of Enbridge Inc. in the Alliance, Aux Sable and NRGreen joint ventures (the "Acquisition"). Closing of the Acquisition is expected to occur in the first half of 2024 and is subject to the satisfaction or waiver of customary closing conditions. For further information regarding the Acquisition and the Subscription Receipts, including related risk factors, refer to the Company's prospectus supplement dated December 14, 2023 to the base shelf prospectus dated December 13, 2023, a copy of which is available on the Company's profile at www.sedarplus.ca and at www.sec.gov.
The Subscription Receipts were offered through a syndicate of underwriters, co-led by TD Securities Inc., RBC Capital Markets and Scotiabank.
This news release does not constitute an offer to sell or the solicitation of an offer to buy the Subscription Receipts. The Subscription Receipts have not been approved or disapproved by any regulatory authority.
About Pembina
Pembina Pipeline Corporation is a leading energy transportation and midstream service provider that has served
Purpose of Pembina: We deliver extraordinary energy solutions so the world can thrive.
Pembina is structured into three Divisions: Pipelines Division, Facilities Division and Marketing & New Ventures Division.
Pembina's common shares trade on the
Forward-Looking Information and Statements
This document contains certain forward-looking statements and information (collectively, "forward-looking statements") within the meaning of the "safe harbor" provisions of applicable securities legislation that are based on Pembina's current expectations, estimates, projections and assumptions in light of its experience and its perception of historical trends. In some cases, forward-looking statements can be identified by terminology such as "intend", "will", "shall", and similar expressions suggesting future events or future performance.
In particular, this news release contains forward-looking statements relating to: the expected use of the net proceeds of the Offering; the listing of the Subscription Receipts on the TSX; the Acquisition including the anticipated timing of closing thereof. These forward-looking statements are based on certain assumptions that Pembina has made in respect thereof as at the date of this news release, including: the ability to close the Acquisition, including the timing thereof; the ability to obtain, in a timely manner, regulatory, stock exchange and other required approvals in connection with the Offering and the Acquisition; prevailing commodity prices, margins and exchange rates, that Pembina's businesses will continue to achieve sustainable financial results and that future results of operations will be consistent with past performance and management expectations in relation thereto, the availability and sources of capital, operating costs, ongoing utilization and future expansions, the ability to reach required commercial agreements, and the ability to obtain required regulatory approvals. These forward-looking statements are not guarantees of future performance and are subject to a number of known and unknown risks and uncertainties, including, but not limited to: failure to complete the Acquisition; failure to obtain, in a timely manner, regulatory, stock exchange and other required approvals in connection with the Offering and the Acquisition; unexpected costs or liabilities related to the Acquisition; the anticipated effect of the Acquisition on Pembina's credit ratings; non-performance of agreements in accordance with their terms; the impact of competitive entities and pricing; reliance on key industry partners, alliances and agreements; the strength and operations of the oil and natural gas production industry and related commodity prices; the continuation or completion of third-party projects; regulatory environment and inability to obtain required regulatory approvals; tax laws and treatment; fluctuations in operating results; the ability of Pembina to raise sufficient capital to complete future projects and satisfy future commitments; construction delays; labour and material shortages; risks relating to widespread epidemics or pandemic outbreaks, including the COVID-19 pandemic; general economic, market and business conditions; and the behaviour of financial markets, including fluctuations in interest and exchange rates, the pricing of comparable securities and Pembina's credit ratings; and certain other risks detailed from time to time in Pembina's public disclosure documents including, among others, those detailed under the heading "Risk Factors" in Pembina's management's discussion and analysis and annual information form, each for the year ended December 31, 2022, and in Pembina's management's discussion and analysis for the three and nine months ended September 30, 2023, all which can be found at www.sedarplus.com and with the
Accordingly, readers are cautioned that events or circumstances could cause results to differ materially from those predicted, forecasted or projected. Such forward-looking statements are expressly qualified by the above statements. Pembina does not undertake any obligation to publicly update or revise any forward-looking statements or information contained herein, except as required by applicable laws.
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For further information:
Investor Relations
(403) 231-3156
1-855-880-7404
e-mail: investor-relations@pembina.com
www.pembina.com
Source: Pembina Pipeline Corporation
FAQ
What is the company name and ticker symbol for Pembina Pipeline Corporation?
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What is the purpose of the net proceeds from the Offering?
When is the Acquisition expected to close?
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