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JPMorgan to Serve as Joint Lead Underwriter of Alberta Refinery

JPMorgan Chase & Co. (JPM) will join Royal Bank of Canada and Canadian Imperial Bank of Commerce leading the debt sale to finance a C$8.5 billion Alberta oil refinery that has the backing of the provincial government.

The banks will work as joint-lead underwriters for bonds to finance the Sturgeon upgrader and refinery in Redwater, Alberta, Ian MacGregor, chairman of North West Upgrading Inc., one of the partners in the joint venture, said through spokeswoman Shauna MacDonald.

The project is expected to be 80 percent financed by debt with the rest coming from equity, so long as the project maintains an investment grade credit rating, North West said in a Dec. 4 statement.

The company has incurred C$1.5 billion of the project’s cost and the Alberta government and the other partner in the venture, Canadian Natural Resources Ltd. (CNQ), have committed to further financing through the purchase of C$600 million of subordinated debt, North West said.

Alberta’s government, which has the top AAA rating from Moody’s Investors Service, Standard & Poor’s and DBRS, has agreed to pay down three-quarters of the debt over 30 years through the processing fees it will pay the refinery to process the bitumen the government already receives as royalties.

The government is expected to supply 75 percent of the bitumen to the project.

The project is expected to commence operations in September 2017, the company said.

Toronto-Dominion Bank won top spot among underwriters of Canadian government debt last year after it managed the sale of the largest provincial bond ever: C$5 billion of debt to fund a hydroelectric project in Newfoundland and Labrador, which itself won a loan guarantee from the federal government.

RBC was the top underwriter of corporate debt in Canada last year with CIBC coming in third and JPMorgan in 16th place, according to Bloomberg data.

To contact the reporter on this story: Ari Altstedter in Toronto at aaltstedter@bloomberg.net

To contact the editor responsible for this story: Dave Liedtka at dliedtka@bloomberg.net

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