By Andrew Willis
As one resource company finally dumps a holding, another puts a massive block on the market, with Nexen (NXY) stating on Wednesday that it will plans to sell its 67 per cent stake in chemical company Canexus Income Fund (CUS.U-T).
In the wake of Cameco’s (CCJ)) successful sale of its stake in Centerra Gold (OTCPK:CAGDF) for $872 million - the stock was sold to underwriters late Tuesday in a bought deal - it’s obvious there is investor demand for resource plays.
As part of a conference call on Wednesday to update investors on its capital spending plans, Nexen said it will dispose of its stake in Canexus over the next 12 to 24 months with the “timing dependent on appropriate market conditions.”
As part of a larger move to focus its oil and gas operations, Nexen began to spin out of Canexus back in 2005, with a $300 million initial public offering of units at $10 each.
Canexus is now changing hands at $5.29 a unit, so the remaining Nexen stake is worth $115 million. In a report on Canexus published early Wednesday, BMO Nesbitt Burns analyst Bert Powell said: “While the sale of Nexen’s ownership position could weigh on the stock in the near term until the block is sold, we believe over the longer term it should improve liquidity.”