Canadian 88 Energy Corp. plans to file a preliminary short-form prospectus on Wednesday by way of a secondary offering in Canada after 19% shareholder Duke Energy said it would sell its entire stake in the Calgary-based producer. Duke announced that it has accepted an offer to sell its 25.79 million shares to an underwriting syndicate for C$72.2 million (US$47.2 million) — about C$2.80 each.

Duke has held its Canadian 88 stake for a little more than two years, after it made a strategic investment in March 2000 to form an alliance to market gas production and optimize gathering lines and about a dozen processing plants. Initially, Duke was marketing about 100 MMcf/d of Canadian 88 production (see NGI, March 27, 2000). In the deal, Duke gained its common shares for about C$2/share, or about C$50 million.

Duke also helped Canadian 88 fend off a takeover attempt by rival Canadian Superior last year (see NGI, May 14, 2001). Former Canadian 88 founder and CEO Greg Noval is Canadian Superior’s CEO. He left the company in 2000 after 13 years, apparently forced out after Duke bought into Canadian 88, but he remained on the board of directors until last year. Whether Canadian Superior again attempts to gain control of its cross-town rival remained a question mark Tuesday. After some bitter litigation that was finally settled last August between the Calgary-based companies, they agreed to not launch any takeover attempts.

Duke’s underwriting syndicate is led by CIBC World Markets Inc. and TD Securities Inc. Canadian 88 will not receive any of the sale’s proceeds, and the closing is expected before the end of the month. At its annual shareholders meeting in late May, Canadian 88 appointed the former CEO of Canadian Hunter Exploration, Steve Savidant, as its CEO, replacing former Duke executive Joseph Pritchett III. Burlington Resources Inc. bought Canadian Hunter for C$3.3 billion last year.

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