Nexen Inc. has announced:
that we will issue 6 million cumulative redeemable class A rate reset preferred shares, series 2 (the “Series 2 Shares”) at a price of $25 per share, for aggregate gross proceeds of $150 million on a bought deal basis to a syndicate of underwriters co-led by TD Securities Inc. and Scotiabank.
Nexen has granted the underwriters an option, exercisable prior to closing, to purchase up to an additional 2 million Series 2 Shares at $25.00 per share. If the option is exercised in full, the aggregate gross proceeds would be $200 million.
The holders of the Series 2 Shares will be entitled to receive a fixed cumulative dividend at an annual rate of $1.25 per Series 2 Share, payable quarterly, yielding 5.0 per cent per annum, for the initial fixed rate period ending March 31, 2017. Thereafter, the dividend rate will be reset every five years at a rate equal to the then current five-year Government of Canada bond yield plus 3.59 per cent. The Series 2 Shares are redeemable by Nexen, at our option, on March 31, 2017, and on March 31 of every fifth year thereafter.
The holders of Series 2 Shares will have the right, at their option, to convert their shares into cumulative redeemable class A floating rate preferred shares, series 3 (the “Series 3 Shares”), subject to certain conditions, on March 31, 2017 and on March 31 every fifth year thereafter. The holders of the Series 3 Shares will be entitled to receive quarterly floating rate cumulative dividends at a rate equal to the sum of the then 90-day Government of Canada treasury bill rate plus 3.59 per cent.
The net proceeds of the offering may be used to reduce Nexen’s indebtedness, for capital expenditures and for general corporate purposes. The offering is anticipated to close on or about March 7, 2012, and is subject to the receipt of all necessary regulatory approvals.
The Series 2 Shares will be offered in Canada by way of prospectus supplement to the short form base shelf prospectus of Nexen dated June 15, 2011. The prospectus supplement will be filed with securities regulatory authorities in all provinces of Canada.