Canada’s Canexus raises funds for oil railcar capacity expansion

17 January 2014 16:59  [Source: ICIS news]

TORONTO (ICIS)--Canadian commodities chemical firm Canexus is raising Canadian dollar (C$) 150m ($136m) to help fund an expansion of its oil railcar loading capacities in Alberta province, it said on Friday.

Canexus warned earlier that the expansion’s costs would be much higher than first expected.

The chlor-alkali and sodium chlorate producer provides fee-for-service oil transloading to the oil industry from its terminal in Bruderheim, Alberta. Canexus moved into oil rail shipping as Canadian crude oil producers do not have enough pipeline capacity, in particular for exports to the US.

Canexus said it is raising the funds in a “bought deal” under which a syndicate of underwriting Canadian banks agreed to purchase 26.8m Canexus common shares for C$5.60/shares.

The shares will be offered to investors in all Canadian provinces, except Quebec, and they may also be offered by way of private placement in the US.

"The market fundamentals for oil-by-rail movements remain sound and we believe that our state-of-the-art facility at Bruderheim is well-positioned to deliver consistent, long-term value to shareholders, on a site that has additional attractive future development opportunities," said CEO Gary Kubera.

Canexus has begun ramping up the initial project phase for 30,000 bbl/day by next month. Full project completion is expected by mid-2014.

Despite a string of recent rail accidents, North American oil railcar shipments continue to increase amid tight pipeline capacities.

According to the American Railroad Association, US railcar shipments of oil and oil products in 2013 rose 31.1% year on year to 708,371 carloads while Canadian carloads rose 13.7% to 347,764.

($1 = C$1.10)

By: Stefan Baumgarten
+1 713 525 2653

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