stockwatch tonight Here in Canada, Alberta oil producer Cardinal Energy Ltd. (CJ) lost three cents to $1.29 on 1.84 million shares, after announcing the planned early redemption of $28.2-million worth of outstanding 2022 debentures. This will be the second set of debentures knocked off the balance sheet within weeks. Back in early December, Cardinal landed itself a key major shareholder in the form of N. Murray Edwards, the billionaire oil sands financier behind Canadian Natural Resources Ltd. (CNQ: $32.28) and others. Mr. Edwards was the main participant in a private placement whose proceeds went partly toward repaying a set of convertible debentures that matured on Dec. 31, 2020. He currently owns 17.2 million of Cardinal's 122 million shares.
This time around, Cardinal is raising money for the debenture redemption by issuing $26.8-million worth of notes. The notes will initially bear interest at 8 per cent, but will see the rate rise over time until it reaches 12 per cent. That is higher than the 8-per-cent interest rate on the debentures that they will be replacing. Unlike the debentures, however, the notes are not convertible into shares, removing the potential for future dilution. It is not clear whether Mr. Edwards will be participating in this financing. Cardinal merely says that the notes will be issued to "certain insiders (or companies controlled by them).