ECA will gain from share sale

Article Excerpt

ENCANA $14.42 (Toronto symbol ECA; Shares outstanding: 849.9 million; Market cap: $13.8 billion; TSINetwork Rating: Average; Dividend yield: 0.5%; www.encana.com) has raised $1.2 billion through a public offering of 123.1 million common shares at $9.35 each (all amounts except share price in U.S. dollars). The company plans to apply half of the proceeds to its long-term debt of $7.3 billion U.S. That’s equal to 70% of its market cap. Encana will use the other half to pay for its 2017 capital spending. This share issue dilutes the holdings of current shareholders. However, paying down debt will cut interest costs; moreover, higher production from increased drilling will improve cash flow. Encana is still a buy. buy…

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