Encana To Sell Remaining Stake In PrairieSky Royalty For C$2.6 Bln

(RTTNews) - Canadian energy producer Encana Corp. (ECA.TO, ECA) has agreed to sell its remaining 54 percent stake in PrairieSky Royalty Ltd. (PSK.TO) to a syndicate of underwriters led by TD Securities Inc. for gross proceeds of about C$2.6 billion, or $2.37 billion.

Encana and PrairieSky said they have entered into an agreement with a syndicate of underwriters joint bookrun by TD Securities Inc., CIBC, BMO Capital Markets and RBC Capital Markets for the sale of the PrairieSky stake in a secondary offering.

On a bought deal basis, the underwriters will purchase from Encana 70.20 million common shares of PrairieSky at C$36.50 per share, for aggregate gross proceeds to Encana of about C$2.6 billion.

The offer price represents a 4.2 percent discount to PrairieSky's closing stock price of C$38.09 per share on the Toronto Stock Exchange on Monday. The underwriters will offer the shares to investors.

PrairieSky intends to file a preliminary prospectus on or before September 12, 2014 with the securities regulatory authorities of all provinces and territories in Canada in respect of the Offering.

Encana expects the offering to close on or about September 26, 2014. Following closing of the offering, Encana will no longer hold an interest in PrairieSky.

PrairieSky is a royalty-focused company, generating royalty revenues as petroleum and natural gas are produced from its properties. The company holds about 5.2 million acres of fee simple mineral title lands in Western Canada and collects royalties from oil companies operating on the properties.

In May, Encana spun off a 46 percent stake in PrairieSky in an initial public offering at C$28 per share, raising gross proceeds of about C$1.67 billion. TD Bank and CIBC had co-led the IPO in May.

In a separate statement, PrairieSky said its board of directors has declared a dividend of C$0.1058 per common share, to be paid on October 15, 2014 to shareholders of record on September 30, 2014.

ECA closed Monday's trading at $22.50, down $0.14 or 0.62 percent on a volume of 3.69 million shares. In after-hours, the stock further declined $0.07 or 0.31 percent to $22.43.

PSK.TO closed Monday's trading at C$38.09, down C$0.62 or 1.6 percent on a volume of 106,251 shares.