Pembina Pipeline Agrees to Purchase Alberta Oil Sands Pipeline

Pembina Pipeline Corporation agreed to purchase Alberta Oil Sands Pipeline Ltd. (AOSPL) from a subsidiary of Alberta Energy Company Ltd. for $225 million on November 1, 2001. AOSPL is the exclusive transporter for the “Syncrude Project”, shipping synthetic crude oil for AEC Oil Sands, L.P., Canadian Oil Sands Investments Inc., Conoco Oil Sands Partnership, Imperial Oil Resources, Mocal Energy Limited, Murphy Oil Company Ltd., Nexen Inc. and Petro-Canada.

Concurrently with committing to acquire the AOSPL system, Pembina obtained new $415 million senior secured credit facilities established by The Toronto-Dominion Bank. In addition, on November 8, 2001, Pembina’s income fund parent announced a bought deal co-led by Scotia Capital Inc. and TD Securities Inc. for concurrent offerings of $75 million aggregate principal amount of convertible 7.5 per cent unsecured subordinated debentures and $75 million of trust units for total gross proceeds of $150 million, with an underwriter’s option to acquire an additional $25 million principal amount of securities, which can be apportioned by the underwriters between the debentures and trust units.

Blake, Cassels & Graydon LLP, counsel to Pembina, assembled a team headed by Dallas Droppo in Calgary, along with Pembina’s general counsel D. James Watkinson, Q.C. For the acquisition, the Blakes team included Ben Rogers and Steve Wheeler (oil & gas). Paul Jeffrey provided advice on pipeline regulation and Mark Nicholson (competition) guided the competition law aspects of the transaction. The Blakes public and private financing team is comprised of Ross Bentley, Pat Finnerty, Scott Cochlan and Nicole Andersen (securities), Warren Nishimura and Kevin Fougere (banking) and Wally Shaw and Ron Mar (tax).

Bruce MacPhail and Oliver Borgers (competition) of McCarthy Tétrault LLP acted for AEC on the acquisition. J. Mike McIntosh (business) of McCarthy Tétrault acted for TD Bank respecting the new credit facilities. David Spencer, Bill Gilliland and John Reynolds of Fraser Milner Casgrain LLP represented Scotia Capital Inc. and TD Securities Inc. on the bought deal.