EnCana completed its split into two highly focused energy companies on November 30, 2009: Cenovus Energy Inc., an integrated oil company and EnCana Corporation, a pure play natural gas company. The split transaction was accomplished through a shareholder approved, court-sanctioned plan of arrangement.
As a result of the arrangement, shareholders of EnCana received one new EnCana common share (which continued to be represented by existing EnCana common share certificates) and one common share of Cenovus for each EnCana common share held.
In connection with the transaction, EnCana shares (ex-distribution) and Cenovus shares were traded on a “when issued” basis from November 2, 2009 through December 2, 2009 on the Toronto Stock Exchange, and through December 8, 2009 on the New York Stock Exchange. Cenovus and post-split EnCana shares began regular trading on the Toronto Stock Exchange on December 3, 2009 and on the New York Stock Exchange on December 9, 2009 under the symbols CVE and ECA, respectively.
Prior to the completion of the split, on September 18, 2009, Cenovus Energy Inc. completed, in three tranches, a US$3.5 billion private offering of debt securities (comprised of US$800,000,000 aggregate principal amount of 4.50 per cent senior notes due September 15, 2014; US$1,300,000,000 aggregate principal amount of 5.70 per cent senior notes due October 15, 2019; and US$1,400,000,000 aggregate principal amount of 6.75 per cent senior notes due November 15, 2039) which are exempt from the registration requirements of the United States Securities Act of 1933, as amended, under Rule 144A and Regulation S.
The net proceeds of the offering were placed into an escrow account pending the completion of the arrangement. Upon completion of the arrangement, the net proceeds, together with other pre-funded amounts, were released from escrow and were applied to repay all of the amount outstanding under a demand intercompany note issued by Cenovus in favour of EnCana pursuant to the arrangement in the amount of approximately US$3.5 billion.
Cenovus also obtained from a syndicate of lenders a $2.0 billion three-year revolving credit facility and a $500 million 364-day revolving credit facility, the terms of such facilities commencing on the effective date of the arrangement.
The transaction comprised a number of elements that spanned the period from the initial announcement in May 2008 to the closing in November 2009, including strategy and alternatives development, corporate governance, regulatory compliance, tax planning, asset reorganization and separation, the plan of arrangement, court and shareholder approval processes, securities regulatory compliance, stock exchange listings, the intercompany commercial arrangements process, the financial and non-financial disclosure process and the financings.
EnCana's in-house corporate legal team, which was responsible for the planning and implementation of the transaction, as well as the coordination of the efforts of project team personnel in finance, treasury, financial reporting, information technology, human resources, shareholder communications and the business units, comprised Kerry Dyte, QC, Vice-President, General Counsel and Corporate Secretary; Patricia Smith-Grayton, Associate General Counsel, Legal and Corporate Secretarial; Barry Gilchrist, Associate General Counsel; Carmelle Hunka, Advisor, Governance and Compliance; Gary Molnar, Associate General Counsel; Jeffrey Paulson, Associate General Counsel; David Sheridan, Associate General Counsel; Mark Van de Veen, QC, Associate General Counsel; Nancy Brennan, Associate General Counsel; Evan Dann, Associate General Counsel; Mark Sykes, Associate General Counsel and John Philp, Legal Counsel. In addition to the main corporate legal team, a number of other operating division and corporate legal team members were involved with the transaction.
EnCana's lead outside counsel for the transaction consisted of Bennett Jones LLP (Canadian counsel), Felesky Flynn LLP (Canadian tax counsel), Paul, Weiss, Rifkind, Wharton & Garrison LLP (US counsel) and Dewey & LeBeouf LLP (US tax counsel). Within the firms, overall coordination for the transaction was the responsibility of John MacNeil at Bennett Jones, John Burghardt at Felesky Flynn, Andrew Foley at Paul Weiss and Gordon Warnke at Dewey & LeBeouf.
The Bennett Jones team from Calgary and Toronto consisted of John MacNeil, Margaret Lemay, Frank Allen, John Piasta, Harinder Basra, Kahlan Mills, Jessica Ferguson, Scott Jeffers and Jonathan Hoyles (corporate, cross-border securities and financing); Neil Stevenson, Nicholas Fader, Bryan Haynes and Sean Mason (corporate reorganization, pre-arrangement and separation transactions and commercial arrangements); Anu Nijhawan (tax); Anthony Friend, Scott Bower and Laurie Goldbach (plan of arrangement, litigation); Philip Backman and David Lennox (financing and security package); Mark Powell (derivatives); James D'Andrea and John Gilmore (employment); Donald Greenfield and Patrick Maguire (energy); Ronald Barron (real estate); Stephen Burns (intellectual property) and Beth Riley (competition).
The Felesky Flynn team consisted of John Burghardt, Brian Felesky, QC, Brent Perry, QC, Craig McDougall, QC, Brett Anderson and Gail Lai.
The Paul Weiss team consisted of Andrew Foley, Jane Danek, Leah Fleck, and Alexis Fink and Krista McDonough and former associates Kate Fischer and David Walders (corporate, cross-border securities and financing); Lawrence Witdorchic and Paul Koppel (compensation and benefits); David Sicular and Mashiho Yuasa (tax) and William O'Brien (environmental).
The Dewey & LeBeouf team consisted of Gordon Warnke, Joseph Pari, Todd McArthur, Arthur Hazlitt, Shane Milam and Sean McKeever.
Richard Shaw, QC (corporate and securities); and Doug Ewens, QC, and Jerald Wortsman (tax) of McCarthy Tétrault LLP acted as independent legal counsel to the board of directors of EnCana. Thomas Pepevnak of Borden Ladner Gervais LLP assisted Cenovus in establishing hedging documentation with its principal counterparties, as well as documenting the transfer of a percentage of the economic value of EnCana's outstanding hedging portfolio to Cenovus. Jeremy Forgie of Blake, Cassels & Graydon LLP provided pension advice.
Fraser Milner Casgrain LLP was counsel to EnCana with respect to the downtown Calgary real estate matters affected by the corporate split, including the division of EnCana's two million square foot future leasehold in “The Bow” (the 58-storey head office tower being constructed in downtown Calgary by Centre Street Trust for occupancy commencing in 2012) into two head offices for EnCana and Cenovus. The Fraser Milner team, led by Jillian Shortt of the Toronto office and Don Kowalenko of the Calgary office, assisted in structuring and documenting the co-tenancy relationship between EnCana and Cenovus. Other members of the Fraser Milner team included John Marner and Jonathan Ryder of the Calgary office.
The private placement was managed by Barclays Capital Inc., Banc of America Securities LLC and RBC Capital Markets Corporation, as joint book-running managers and representatives of the initial purchasers of the senior notes.
The credit facilities were made available by a syndicate of banks led by Royal Bank of Canada. The notes, together with registration rights, were privately placed with institutional investors primarily in the US.
Shearman & Sterling LLP was counsel for initial purchasers in the notes financing. The Shearman team consisted of: Christopher Cummings, Laurence Crouch, Douglas McFadyen, Jeffrey Salinger, Jonathan Handyside, Tina Li, Emily Atkinson and Anil Kalia.
Macleod Dixon LLP was counsel for the syndicate of banks in the credit financing. The Macleod Dixon team consisted of Richard Borden, Craig Maurice and Danielle Maksimow.
As a result of the arrangement, shareholders of EnCana received one new EnCana common share (which continued to be represented by existing EnCana common share certificates) and one common share of Cenovus for each EnCana common share held.
In connection with the transaction, EnCana shares (ex-distribution) and Cenovus shares were traded on a “when issued” basis from November 2, 2009 through December 2, 2009 on the Toronto Stock Exchange, and through December 8, 2009 on the New York Stock Exchange. Cenovus and post-split EnCana shares began regular trading on the Toronto Stock Exchange on December 3, 2009 and on the New York Stock Exchange on December 9, 2009 under the symbols CVE and ECA, respectively.
Prior to the completion of the split, on September 18, 2009, Cenovus Energy Inc. completed, in three tranches, a US$3.5 billion private offering of debt securities (comprised of US$800,000,000 aggregate principal amount of 4.50 per cent senior notes due September 15, 2014; US$1,300,000,000 aggregate principal amount of 5.70 per cent senior notes due October 15, 2019; and US$1,400,000,000 aggregate principal amount of 6.75 per cent senior notes due November 15, 2039) which are exempt from the registration requirements of the United States Securities Act of 1933, as amended, under Rule 144A and Regulation S.
The net proceeds of the offering were placed into an escrow account pending the completion of the arrangement. Upon completion of the arrangement, the net proceeds, together with other pre-funded amounts, were released from escrow and were applied to repay all of the amount outstanding under a demand intercompany note issued by Cenovus in favour of EnCana pursuant to the arrangement in the amount of approximately US$3.5 billion.
Cenovus also obtained from a syndicate of lenders a $2.0 billion three-year revolving credit facility and a $500 million 364-day revolving credit facility, the terms of such facilities commencing on the effective date of the arrangement.
The transaction comprised a number of elements that spanned the period from the initial announcement in May 2008 to the closing in November 2009, including strategy and alternatives development, corporate governance, regulatory compliance, tax planning, asset reorganization and separation, the plan of arrangement, court and shareholder approval processes, securities regulatory compliance, stock exchange listings, the intercompany commercial arrangements process, the financial and non-financial disclosure process and the financings.
EnCana's in-house corporate legal team, which was responsible for the planning and implementation of the transaction, as well as the coordination of the efforts of project team personnel in finance, treasury, financial reporting, information technology, human resources, shareholder communications and the business units, comprised Kerry Dyte, QC, Vice-President, General Counsel and Corporate Secretary; Patricia Smith-Grayton, Associate General Counsel, Legal and Corporate Secretarial; Barry Gilchrist, Associate General Counsel; Carmelle Hunka, Advisor, Governance and Compliance; Gary Molnar, Associate General Counsel; Jeffrey Paulson, Associate General Counsel; David Sheridan, Associate General Counsel; Mark Van de Veen, QC, Associate General Counsel; Nancy Brennan, Associate General Counsel; Evan Dann, Associate General Counsel; Mark Sykes, Associate General Counsel and John Philp, Legal Counsel. In addition to the main corporate legal team, a number of other operating division and corporate legal team members were involved with the transaction.
EnCana's lead outside counsel for the transaction consisted of Bennett Jones LLP (Canadian counsel), Felesky Flynn LLP (Canadian tax counsel), Paul, Weiss, Rifkind, Wharton & Garrison LLP (US counsel) and Dewey & LeBeouf LLP (US tax counsel). Within the firms, overall coordination for the transaction was the responsibility of John MacNeil at Bennett Jones, John Burghardt at Felesky Flynn, Andrew Foley at Paul Weiss and Gordon Warnke at Dewey & LeBeouf.
The Bennett Jones team from Calgary and Toronto consisted of John MacNeil, Margaret Lemay, Frank Allen, John Piasta, Harinder Basra, Kahlan Mills, Jessica Ferguson, Scott Jeffers and Jonathan Hoyles (corporate, cross-border securities and financing); Neil Stevenson, Nicholas Fader, Bryan Haynes and Sean Mason (corporate reorganization, pre-arrangement and separation transactions and commercial arrangements); Anu Nijhawan (tax); Anthony Friend, Scott Bower and Laurie Goldbach (plan of arrangement, litigation); Philip Backman and David Lennox (financing and security package); Mark Powell (derivatives); James D'Andrea and John Gilmore (employment); Donald Greenfield and Patrick Maguire (energy); Ronald Barron (real estate); Stephen Burns (intellectual property) and Beth Riley (competition).
The Felesky Flynn team consisted of John Burghardt, Brian Felesky, QC, Brent Perry, QC, Craig McDougall, QC, Brett Anderson and Gail Lai.
The Paul Weiss team consisted of Andrew Foley, Jane Danek, Leah Fleck, and Alexis Fink and Krista McDonough and former associates Kate Fischer and David Walders (corporate, cross-border securities and financing); Lawrence Witdorchic and Paul Koppel (compensation and benefits); David Sicular and Mashiho Yuasa (tax) and William O'Brien (environmental).
The Dewey & LeBeouf team consisted of Gordon Warnke, Joseph Pari, Todd McArthur, Arthur Hazlitt, Shane Milam and Sean McKeever.
Richard Shaw, QC (corporate and securities); and Doug Ewens, QC, and Jerald Wortsman (tax) of McCarthy Tétrault LLP acted as independent legal counsel to the board of directors of EnCana. Thomas Pepevnak of Borden Ladner Gervais LLP assisted Cenovus in establishing hedging documentation with its principal counterparties, as well as documenting the transfer of a percentage of the economic value of EnCana's outstanding hedging portfolio to Cenovus. Jeremy Forgie of Blake, Cassels & Graydon LLP provided pension advice.
Fraser Milner Casgrain LLP was counsel to EnCana with respect to the downtown Calgary real estate matters affected by the corporate split, including the division of EnCana's two million square foot future leasehold in “The Bow” (the 58-storey head office tower being constructed in downtown Calgary by Centre Street Trust for occupancy commencing in 2012) into two head offices for EnCana and Cenovus. The Fraser Milner team, led by Jillian Shortt of the Toronto office and Don Kowalenko of the Calgary office, assisted in structuring and documenting the co-tenancy relationship between EnCana and Cenovus. Other members of the Fraser Milner team included John Marner and Jonathan Ryder of the Calgary office.
The private placement was managed by Barclays Capital Inc., Banc of America Securities LLC and RBC Capital Markets Corporation, as joint book-running managers and representatives of the initial purchasers of the senior notes.
The credit facilities were made available by a syndicate of banks led by Royal Bank of Canada. The notes, together with registration rights, were privately placed with institutional investors primarily in the US.
Shearman & Sterling LLP was counsel for initial purchasers in the notes financing. The Shearman team consisted of: Christopher Cummings, Laurence Crouch, Douglas McFadyen, Jeffrey Salinger, Jonathan Handyside, Tina Li, Emily Atkinson and Anil Kalia.
Macleod Dixon LLP was counsel for the syndicate of banks in the credit financing. The Macleod Dixon team consisted of Richard Borden, Craig Maurice and Danielle Maksimow.
Lawyer(s)
John P. Marner
Laurence E. Crouch
Mark S. Powell
Kerry D. Dyte
Christopher J. Cummings
Mark P. Sykes
David M. Lennox
William J. O'Brien
John R. Gilmore
Jeremy J. Forgie
Nancy L. Brennan
Bryan C.G. Haynes
Sean R. Mason
Philip D. Backman
James A. D'Andrea
Donald E. Greenfield
Gail Lai
Douglas S. Ewens
Nicholas P. Fader
Stephen D. Burns
Craig M. McDougall
Danielle L. Maksimow
Mark R. Van de Veen
Barry D. Gilchrist
Scott Jeffers
John J. Burghardt
Don G. Kowalenko
Kahlan K. Mills
Andrew J. Foley
C. Evan Dann
Craig A. Maurice
Jessica D. Ferguson
David R. Sicular
F. Brent Perry
John E. Piasta
Anu Nijhawan
Jeffrey G. Paulson
John D. Philp
Gary F. Molnar
Jerald M. Wortsman
Richard A. Shaw
Francis R. Allen
Ronald M. Barron
Y. Beth Riley
Margaret G. Lemay
Jillian Shortt
John D. MacNeil
Laurie A. Goldbach
Carmelle D. Hunka
Thomas F. Pepevnak
Jonathan Hoyles
Scott H. D. Bower
Patrick T. Maguire
Neil H. Stevenson
David F.C. Sheridan
Harinder Basra
Jonathan Ryder
Richard P. Borden
Brian A. Felesky
Anthony L. Friend
Firm(s)
Bennett Jones LLP
Felesky Flynn LLP
Paul, Weiss, Rifkind, Wharton & Garrison LLP
Dewey & LeBoeuf LLP
McCarthy Tétrault LLP
Borden Ladner Gervais LLP (BLG)
Blake, Cassels & Graydon LLP
Dentons Canada LLP
Shearman & Sterling LLP
Norton Rose Fulbright Canada LLP