AltaGas Ltd. aims to raise up to $297-million for the initial public offering of its regulated Canadian utility business, proceeds that are earmarked for reducing debt.
AltaGas plans to sell 16.5-million shares in the new entity, to be called AltaGas Canada Inc., and has given a price range of $15.50-$18 a share, according to a newly filed preliminary prospectus. That puts the expected proceeds from the IPO at $256-million to $297-million.
The issue will be finalized on October 22, according to the document.
AltaGas’s own shares are down 10 per cent since Sept. 13, when it announced that it will float shares in gas-distribution and wind-farm assets in British Columbia, Alberta, Nova Scotia and Northwest Territories. The company expects to own 37 per cent to 45 per cent of the shares of AltaGas Canada, depending on whether underwriters exercise an overallotment option.
The offering, coupled with the $635-million debt the new firm will assume, is aimed at reducing AltaGas’s bridge loan by almost $1-billion – at the upper end of the price range. It took out the loan to help finance its US$4.5-billion takeover of Washington-based WGL Holdings earlier this year, a deal that has meant a major expansion in the United States.
Some analysts have raised concerns about the Calgary-based company’s debt in the aftermath of the acquisition, however, and that has weighed on the stock.
The IPO, as well as proceeds from other recent asset sales, would add up to about $2.5-billion for debt reduction, AltaGas has said. All that would be used to pay down the loan to US$1.1-billion. The company plans to pay that off through a combination of other debt and an issuance of hybrid securities.