Encana Corporation (ticker: ECA) today announced the completion of its offering of 85,616,500 common shares of the company at a price of C$14.60 ($11.42) per share. The aggregate gross proceeds of the offering is C$1.25 billion (about $980 million), according to the company’s press release. ECA has alos granted the underwriters an over-allotment option to purchase up to an additional 12,842,475 shares at the same price. The additional shares would add another C$187.5 million (about $146.72 million) to the aggregate gross proceeds.
The company will use the net proceeds of the offering to redeem its US$700 million of long-term debt maturing in 2017 and C$750 million (about $587 million) of long-term debt maturing in 2018 on April 6, 2015. Pursuant to the terms of their respective indentures, the redemption of this debt requires an estimated on-time early interest payment of approximately US$165 million, which is expected to save Encana a gross amount of approximately US$205 million in future interest expense, based on current foreign exchange and treasury rates.
Based on EnerCom’s E&P Weekly for the week ended March 13, 2015, Encana’s debt-to-market cap ratio of 68% is above the median of 62% for the 88 companies compiled. ECA is paying a dividend of $0.07 per share on March 31, 2015, to all common shareholders of record as of March 13, 2015.
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