Gas burns from a flare stack at an oil refinery in this file photo.Andrew Vaughan/The Canadian Press
North West Upgrading Inc. is looking to add a huge chunk of debt to its balance sheet to finish its refinery construction, at the same time that equity investors are seeking to get some money out.
Calgary-based North West is looking for $5-billion of debt in the next few months. The closely held company, which is building an increasingly costly bitumen refinery in Alberta, said in a fresh investor presentation that it is planning to have a syndicated credit facility and bond financing in place by mid-year to raise the money. On top of that, it plans to have $225-million of subordinated debt in place by next month.
More money is required as the company has cranked up its capital cost estimate to $8.5-billion from $5.7-billion. So far, $1.5-billion has been spent. Expected returns, as detailed in the presentation, have come way down as a result. After renegotiating its contracts and accounting for cost increases, North West said forecast per-share cash flows have dropped by almost half.
Almost all further fundraising will come from debt markets.
On the equity side of the ledger, the company said "many shareholders [are] looking for liquidity." North West said a plan is in the works to address that later in 2014 once the debt deals are in place and contracts are completed.