NEW YORK (TheStreet)----Shares of Encana (ECA) rose 3.47% to $23.28 after announcing that it will sell the remainder of its stake in PrairieSky Royalty to an underwriting group through a C$2.6 billion ($2.4 billion) secondary offering.
The Calagary-based company will sell 70.2 million shares of PrairieSky at $36.50 each, 30% above what investors paid in the June IPO. and expects to close the deal on September 26.
Encana raised $1.67 billion in the PrairieSky IPO in June, almost twice what it anticipated. The shares were sold at $28 each and immediately spiked, and the deal was the largest IPO in Canada in over 14 years, according to the Globe and Mail.
Encana's decision to sell the stake so shortly after the IPO was a surprise, however, the market has been very receptive to the equity financing, analyst David Meats of Morningstar (MORN) told the Globe And Mail.
TheStreet Ratings team rates ENCANA CORP as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate ENCANA CORP (ECA) a HOLD. The primary factors that have impacted our rating are mixed some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its good cash flow from operations, expanding profit margins and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we find that the growth in the company's net income has been quite unimpressive."