Li Ka-shing

Owner of Canada’s Husky to put HK$7 billion into the company

Hong Kong billionaire Li Ka-Shing will take a majority stake in Canadian oil producer’s pipelines.

PUBLISHED : Tuesday, 26 April, 2016, 11:07am
UPDATED : Tuesday, 26 April, 2016, 11:07am

Husky Energy’s controlling shareholder Li Ka-Shing will pay C$1.15 billion (HK$7 billion) for a majority stake in some of the Calgary, Alberta-based oil producer’s pipelines in western Canada.

Cheung Kong Infrastructure Holdings Ltd.,(CKI) and Power Assets Holdings Ltd., (PAH), both part of Hong Kong billionaire Li’s corporate empire, are together buying a 65 per cent stake in the midstream assets. Husky wants to shore up its finances in the worst oil market downturn in decades.

Benchmark Brent crude prices were around US$65 a year ago. They fell as low as US$28.76 in January, according to Bloomberg data. US crude averaged $33.63 a barrel in the first quarter, down from $48.57 a barrel in the same period of 2015.

CKI, PAH and Husky have entered into the investment agreement in relation to, among other things, forming the joint venture HMLP, according to a filing by CKI to the Hong Kong Exchanges and Clearing on Tuesday morning.

CKI has agreed to contribute approximately C$288.46 million in cash to HMLP, in exchange for a 16.25 per cent stake in HMLP.

PAH has agreed to pay C$865.38 million in cash to HMLP, for 48.75 per cent stake in HMLP.

CKI estimates its maximum capital commitment under the joint venture transaction to be around C$373 million and PAH expects its maximum capital commitment will be C$1.12 billion, for a total of C$ 1.5 billion.

Husky posted a loss of C$458 million in the first quarter or this year, or 47 cents a share, compared with a profit of C$191 million or 17 cents a year earlier, the company said on Monday. In addition to depressed oil prices and the lowest refining margins in the US Midwest since 2010, Husky recorded losses tied to its hedging, refining inventories and income tax expenses.