Pumpjacks at work pumping crude oil near Stettler, Alta., June 20, 2007. Alberta's oil pipeline hub, where millions of barrels of crude flow each day to pipelines that feed markets in Canada and the United States is a beehive of activity.Larry MacDougal/The Canadian Press
Bellatrix Exploration Ltd. has re-worked the terms of its latest share sale, proving investors will not lunge at every deal in a hot energy market.
On Tuesday the oil and gas company set out to raise $250-million shares at a price of $9.75 each. One day later, both the size and the price were revamped. Bellatrix is now looking to raise $150-million at $9.50 per share.
It is rare to see a bought deal get resized. Under the terms of these offerings, underwriters agree to buy the shares from the issuer, taking all responsibility for re-selling them to public investors.
However, from time to time, bought deals struggle to sell, which hurts the issuer's share price. If there are worries about long-term damage, issuers can feel compelled to re-size the offering, which relieves some of the pressure on the underwriters. Canaccord Genuity and Dundee Securities co-led the Bellatrix deal.
The offering was initially priced at a 4.5 per cent discount to Tuesday's closing price for Bellatrix shares. The stock dropped 6.5 per cent on Wednesday, and the deal was re-worked after the market closed.
Bellatrix intends to use the proceeds to repay some debt.