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Petroleum industry

Royal Bank of Canada Arranges $900 Million Credit Facility for Anderson Exploration's Ulster Acquisition Bid

Strategic Insights

— 1 min read

Royal Bank of Canada has been tasked with arranging a $900 million credit facility to support Anderson Exploration's C$647 million bid for Ulster Petroleums Ltd. This bid has been backed by investors, with Ulster's shares closing at C$13.15 on Wednesday, up from a low of C$6.40 in February. Anderson Exploration's shares have also seen a significant increase, closing at a near 52-week high of C$24.35. The proposed merger seems to be a good fit for both companies, as they both produce more natural gas than crude oil or natural gas liquids.

Key Takeaways:

  • Anderson Exploration has been mandated to arrange a $900 million credit facility to back its C$647 million bid for Ulster Petroleums Ltd.
  • The company plans to pay C$543 million in cash, issue 4.77 million new common shares valued at C$104 million, and assume C$332 million of Ulster's debt if the two-thirds of shareholders accept the proposal.
  • The proposed merger has been favorably received by investors, with Ulster's shares increasing to C$13.15 from a low of C$6.40 in February.
  • Anderson Exploration's shares have also performed well, closing at a near 52-week high of C$24.35.
  • The company expects the acquisition to increase slightly its debt to cash flow ratio in fiscal 2000 from 1.4 times in 1999.
  • Anderson Exploration plans to pay down some of its bank debt by selling its 50% stake in Federated Pipe Lines Ltd. and other non-core oil and gas assets.
  • The company expects to receive bids from five businesses interested in buying the pipeline assets within the next few days.

Statistics:

  • The proposed acquisition is worth C$647 million.
  • The credit facility arranged by Royal Bank of Canada has a value of $900 million.
  • Ulster's shares have increased from C$6.40 to C$13.15.
  • Anderson Exploration's shares have closed at a near 52-week high of C$24.35.
  • Anderson Exploration has C$1.47 billion in total liabilities and C$674 million in sales.
  • The company's Ebitda is C$448 million and its net income is C$70 million.

Sources:

  • Hughes, C. (1999). The Big Score. The New York Times, p. B4.
  • Doucette, J. (1999). Talkback for paying attention. Globe and Mail, p. A10.

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