Cenovus shareholder looks to regulator to stop ConocoPhillips assets buy

Part of the ConocoPhillips deal includes some natural gas assets, which concerns some Cenovus shareholders.  ConocoPhillips photo.

Investor says Cenovus Conoco buy dilutes value of shares

Cenovus shareholder Coerente Capital Management has filed a complaint with the Ontario Securities Commission, hoping to stop the Canadian oilsands company from purchasing some ConocoPhillips assets.

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In a Reuters report, Len Racioppo, Coerente’s managing director said the new stock issued to help pay for the deal has significantly diluted the value of Cenovus shares.

“It is pretty outrageous that they would do a deal that would dilute shareholders by 47 per cent and not bring it to a vote,” Racioppo told Reuters. “If you’re going to transform a company without asking shareholders — I don’t care if it’s legal — it’s not right,” he added.

Racioppo told the Financial Post he was looking to the regulator to stop the deal, pending a shareholder vote.  Coerente owns or controls 524,000 Cenovus shares for its clients.

Last month, Cenovus announced it was purchasing most of ConocoPhillips’ Canadian oil and gas shares.  The deal effectively doubled the size of the company, however, it also impacted the company’s balance sheet and moved the oilsands company into natural gas.

The deal is structured in a way that does not require shareholder approval, and was funded in part by selling new shares.

On Wednesday, Cenovus is scheduled to report its earnings and hold its shareholder meeting.

Cenovus spokesman Brett Harris told Reuters that the ConocoPhillips deal would create “significant” shareholder value while maintaining financial resiliency.

“The board of directors then structured the overall transaction as it believed was in the best interests of the company, and did so within its authority,” he added.

In trading on Tuesday, Cenovus shares were flat after losing about a fifth of their value since the deal was announced.

The OSC declined to comment.