Husky Energy Inc. cumulative redeemable preferred T.HSE.PR.B

Preferred Shares

[Number13]

James Hymas has commented on the preferred shares. His opinion is that the merger cannot "fully" happen without the prefs being bought out. I.e. Husky would have to remain a subsidiary entity. I don't think holding all of HSE's assets in a subsidiary would create the value CVE is looking for. Thus... there needs to be a WAY sweeter deal for the prefs than this before I'll vote to convert my pref shares. James recommends voting against the current proposal (assuming the new CVE prefs are like-for-like)

[RagingBull3]

In my opinion: Holding Husky assest in a "subsidiary" is just another attempt a run around to the terms of the Preferreds.   It's the main/only reason probably for creating a "subsidiary".   Doesn't change the fact that effectively Husky won't exist any more, that Husky effectively will wind up it's affairs.    That's the whole

[Number13]

I think what James is saying is that Husky would still exist. It's assets would still be held in Husky. Thus when CVE refines  oil in a Husky refinery, there would have to be a contract between CVE and HSE. Husky would not be wound up.  its a possibility to do this, but I don't think  this is the intention of CVE. They want all the assets under CVE, not a disjointed

[Number13]

Though... prefs are "sort of" like debt. Another option would be for CVE to issue more debt to buy up the prefs. And they could probably get debt at an interest rate much lower than the prefs.  so yes, There are some arguments for taking the prefs out at $25 (or $24 like Lowe's did with Rona's prefs)

[Number13]

There also might be a third option- I'm not so sure how it works though- it's something that was discussed during the Rona pref battle... the prefs could be treated as a guarantee by CVE. So HSE assets would be moved to CVE, and the only thing that HSE owns is a "promise" by CVE to pay the HSE dividend. But this "promise" gets treated essentially like debt. Thus the

[RagingBull3]

This "promise" is already there....    Preferreds are Cummulative.   So, eventually they have to be paid if they hold any back.  

[RagingBull3]

Then it would be a PARTNERSHIP..... With Husky still actively having "affairs"..... But what you are saying I think basically the "subsidiary" would be just a holding company...not doing much of anything.....  That's a run around in my opinion.    Effectively, Husky would be winding up it's affairs.  

[rad10]

Always thankful for James Hymas' blog - exceptional resource.  Surprised at his take though.  The last thing I want is an unlisted security, and the merger is a done deal.  The thinking there will be a persistent differential in the rating between the two merged entities is counter- intuitive.  HSE / CVE preferred - once merged - it's academic isn't it? I bow to

[RagingBull3]

It's like calling a Cat a Dog.....  Effectively it would be ONE company.   Cenovus would have complete control most likely.    Having Husky as a "subsidary" to make it look like it's 2 separate companies is just more BS.   Anyways, just my opinion.