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CALGARY, Alberta, Oct. 14, 2021 (GLOBE NEWSWIRE) — Cenovus Energy Inc. (TSX:CVE) (NYSE:CVE) ("Cenovus") and Headwater Exploration Inc. (TSX:HWX) ("Headwater" or the "Company") have closed the previously announced bought deal secondary offering (the "Offering") of common shares of Headwater (the "Common Shares"). The Offering was completed on a bought deal basis, pursuant to an underwriting agreement dated effective September 27, 2021 among the Company, Cenovus, Cenovus Marten Hills Partnership, a wholly-owned subsidiary of Cenovus (the "Selling Shareholder"), and a syndicate of underwriters led by Peters & Co. Limited and BMO Nesbitt Burns Inc. and including CIBC World Markets Inc., RBC Dominion Securities Inc., Scotia Capital Inc., and TD Securities Inc. (collectively, the "Underwriters").
Pursuant to the Offering, Cenovus, through the Selling Shareholder, sold a total of 50,000,000 Common Shares (collectively, the "Offered Shares"), including 5,000,000 Common Shares sold pursuant to the exercise in full of an over-allotment option granted to the Underwriters. The Offered Shares were sold at a price of $4.55 per Offered Share for total gross proceeds to the Selling Shareholder of $227,500,000. The Company has not and will not receive any of the proceeds of the Offering. In connection with the Offering, the Underwriters received a cash commission equal to 4% of the gross proceeds from the sale of the Offered Shares.
The Selling Shareholder and the Company entered into an investor agreement dated December 2, 2020 (the "Investor Agreement") in connection with the issuance of Common Shares and Common Share purchase warrants (the "Warrants") to the Selling Shareholder. As a result of the completion of the Offering, the Investor Agreement automatically terminated in accordance with its terms. The Investor Agreement provided the Selling Shareholder with certain contractual rights related to, among other things, the nomination of directors of the Company. In connection with the termination of the Investor Agreement, Sarah Walters, who was a nominee of the Selling Shareholder on the Board of Directors (the "Board") of the Company, resigned as a director of the Company effective upon completion of the Offering. Kam Sandhar, who was also nominated to the Board by the Selling Shareholder pursuant to the Investor Agreement, is expected to remain on the Board following the Offering notwithstanding the termination of the Investor Agreement.
Cenovus sold the Common Shares as part of its plan to reduce its net debt levels towards its $10 billion interim target and accelerate shareholder returns. The Common Shares and Warrants were originally issued to the Selling Shareholder as partial consideration for the acquisition by Headwater of the Selling Shareholder's assets in the Marten Hills area of Alberta. Through its active development plan and early success, Headwater has accelerated the value generated from the Marten Hills asset and continues to progress its exploration program. The Offering expands Headwater's free-trading float and is expected to provide new and existing shareholders with enhanced trading liquidity.
The Common Shares were offered by way of a short form prospectus filed by the Company in all provinces of Canada, excluding Quebec. Offered Shares were sold on a private placement basis in the United States to "qualified institutional buyers" pursuant to Rule 144A of the Securities Act of 1933 (as amended, the "U.S. Securities Act"). No securities regulatory authority has either approved or disapproved of the …