Alberta Indigenous loan agency pushes back against report it would help finance joint bid for MEG Energy

MEG Energy's Christina Lake oilsands facility near Fort McMurray. MEG launched a sales process in June to review its options and invite competing bids after rejecting Strathcona's unsolicited offer in May. (Credit: MEG Energy)

Alberta’s provincial Indigenous loan agency says it “is not in the business of participating in mergers and acquisitions,” pushing back on a report that it could help finance Indigenous groups said to be in talks with oilsands major Cenovus Energy Inc. on a joint takeover offer of MEG Energy Corp.

A Bloomberg story earlier this week said the Alberta Indigenous Opportunities Corp. (AIOC) and its federal counterpart could provide financial backing for a group of First Nations and Métis communities in a potential joint bid with Cenovus to buy MEG as early as September.

But on Thursday, AIOC appeared to dismiss the idea, without flatly denying the report, after concerns were raised by the chair of Strathcona Resources Ltd. — whose hostile bid for MEG in May first put the oilsands producer in play — about the fairness of the government backing one bidder in an active, competitive M&A process.

“Alberta Indigenous Opportunities Corp.’s mandate is to backstop Indigenous communities’ investments in high-quality assets that will produce income streams for generations,” the AIOC said in a statement. “AIOC carefully examines the nature of a deal to ensure that there is minimal business risk before backstopping any deal.”

A request for comment from the federal agency in charge of Ottawa’s Indigenous loan guarantee program was not returned before publication.

The news that a rival takeover bid for MEG from Cenovus, firstreported in the Financial Post, could potentially include financial backing from provincial and federal agencies for Indigenous partners seeking to join the deal sent MEG’s stock higher on Tuesday and drew criticism from Strathcona chair Adam Waterous, who said government financing would amount to a “direct subsidy” for Cenovus’ bid.

“As I said when the report first came out, we would be highly surprised if there was any truth to it,” he said in a statement responding to AIOC’s remarks. “Both AIOC and Cenovus are sophisticated and ethical organizations, and they would know that governments cannot use taxpayer money to pick winners to subsidize on a one-off basis in the middle of the competitive sale process.”

Concerns were also raised that AIOC chief executive Chana Martineau serves on the board of Cenovus Energy, while vice-chair Gary Bosgoed sits on MEG’s board.

“AIOC operates with the highest ethical and professional standards,” the AIOC said in a statement about its governance protocols. “The board of directors and our employees operate under a strict code of conduct that governs their actions and behaviours.”

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Meg Energy urges shareholders to reject takeover offer by Strathcona Resources Cenovus chief strikes cautious note on possibility of bid for MEG Energy

MEG launched a sales process in June to review its options and invite competing bids after rejecting Strathcona’s unsolicited offer in May.

Strathcona offered $4.10 in cash plus 0.62 of a Strathcona share for each MEG share. The implied value when the deal was announced in May was $23.27 per share of MEG, representing a roughly nine per cent premium to its pre-bid share price.

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