Alberta Indigenous Loan Agency Denies Involvement in MEG Energy Takeover Bid

Alberta's Indigenous loan agency, Alberta Indigenous Opportunities Corp., has pushed back against reports that it would help finance a joint bid by Indigenous groups and Cenovus Energy to buy MEG Energy Corp. The agency stated that it is not in the business of participating in mergers and acquisitions, and its mandate is to support Indigenous communities' investments in high-quality assets. The news sent MEG's stock higher, but raised concerns about fairness and government financing of a takeover bid.

Alberta's Indigenous loan agency, Alberta Indigenous Opportunities Corp. (AIOC), has dismissed reports that it would provide financial backing for a joint bid by Indigenous groups and Cenovus Energy to acquire MEG Energy Corp. The agency clarified that it is not involved in mergers and acquisitions, emphasizing its mandate to support Indigenous communities' investments in high-quality assets [1].

The news comes amidst ongoing discussions between Cenovus Energy and a group of Indigenous communities, including Chipewyan Prairie First Nation and Heart Lake First Nation, about a potential joint offer for MEG. The Indigenous stake in the deal, valued at $2 billion, would be backed by financial support from federal and provincial governments, while Cenovus would bid for the rest [2].

AIOC's statement, released on Thursday, stated that its role is to backstop Indigenous communities' investments in high-quality assets that will produce income streams for generations. The agency carefully examines the nature of a deal to ensure minimal business risk before providing any financial backing. The agency also addressed concerns about conflicts of interest, noting that it operates with the highest ethical and professional standards [1].

The potential deal has sparked criticism, with Strathcona Resources Ltd. chair Adam Waterous expressing concerns that government financing would amount to a "direct subsidy" for Cenovus' bid. Waterous stated that both AIOC and Cenovus are sophisticated and ethical organizations, and they would know that governments cannot use taxpayer money to pick winners in the middle of a competitive sale process [1].

The news of a rival takeover bid for MEG sent the company's stock higher on Tuesday, with shares rising as much as 2.9% in Toronto [2]. The deal, if successful, would mark the first large, direct Indigenous stake purchase in an oilsands producer and unite two Calgary-based companies with significant operations in northeastern Alberta.

References:
[1] https://ca.finance.yahoo.com/news/alberta-indigenous-loan-agency-pushes-165609140.html
[2] https://www.fortmcmurraytoday.com/news/cenovus-said-to-be-in-talks-with-indigenous-groups-to-buy-meg