Hung deal leaves BMO, RBC-led group with Crescent Point shares

financialpost.com:

Bank of Montreal, Royal Bank of Canada and others have been left holding millions of Crescent Point Energy Corp. shares after leading a $500-million equity raise that failed to win widespread institutional investor support, according to people familiar with the matter.

Calgary-based oil and gas producer Crescent Point issued 48.5 million shares last week at a price of $10.30 each to finance its $2.6-billion acquisition of Hammerhead Resources. The banking syndicate led by BMO and RBC still holds about 25 per cent of the shares offered, the people said, asking not to be identified as the information isn’t public.

That would imply the banks in the syndicate collectively are holding about 12.1 million shares in Crescent Point that they haven’t been able to sell last week, worth about $118 million at current prices, according to Bloomberg calculations.

The acquisition and a concurrent drop in oil prices, caused Crescent Point shares to fall 9.9 per cent last Tuesday. The stock is down 13 per cent on the week and was trading at $9.74 as of 3 p.m. in Toronto, below the price where the shares were offered.

The number of shares held by the banks could change and they could still find buyers for the remaining stock, the people said. BMO and RBC didn’t respond to requests for comment on the status of the shares they underwrote. Crescent Point didn’t respond to a request for comment.

Analysts on Wall Street and Toronto’s Bay Street remain restricted on the stock even though the equity raise closed Friday morning.

Crescent Point’s capital raise is widely seen as a victim of the week’s drop in oil prices.

“The reaction to the share price is bad timing as opposed to a bad deal,” Ninepoint Partners senior portfolio manager and partner