CALGARY — Shares in oil and gas producer Pengrowth Energy Corp. tumbled by 75 per cent on Friday after it announced a deal to be acquired by Cona Resources Ltd. for five cents per share and the assumption of debt.
Shares in Pengrowth closed at five cents to match the offering price, down from Thursday's 20-cent close and at a fraction of their 10-year high close of $13.85 in April 2011.
Pengrowth says Cona, which is a portfolio company of the Waterous Energy Fund, has also agreed to pay shareholders a “potential contingent value payment” if funds result from pending litigation.
Pengrowth CEO Pete Sametz says the company's inability to raise capital to fund its ongoing heavy oil business led to the initiation of a strategic review process last spring.
He says the sale of the company was the best outcome after it failed in the face of “lacklustre oil pricing and increased political and regulatory uncertainty” to restructure its debt, listed at $702 million as of June 30, or find new sources of funding.
The arrangement requires approval by debtholders holding at least two-thirds of its debt and shareholders with at least two-thirds of its stock at meetings to be held in December.
“The extreme volatility in the price of western Canadian oil in the fall of 2018, coupled with an uncertain political and regulatory environment, has led to a severe funding crisis in the Canadian energy capital markets which impeded the company's ability to achieve a funding solution,” said Kel Johnston, chairman of the Pengrowth board of directors, in a statement.
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