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Calgary advises RBC on C$545m financing for East Tank Farm Development

November 22, 2017 Client: RBC Capital Markets

Our Calgary office has advised RBC Capital Markets on the C$545 million financing of First Nations ETF Limited Partnership’s acquisition of a 49 per cent interest in Suncor Energy Inc.’s East Tank Farm Development.

The East Tank Farm Development was independently financed by a newly formed limited partnership owned by the Fort McKay First Nations (70 per cemtcent) and the Mikisew Cree First Nations (30 per cent). The financing involved the issuance of C$545 million 4.136 per cent senior secured amortizing notes due December 31, 2041, which were rated Baa1 by Moody’s and BBB (high) by DBRS.

The East Tank Farm Development is a bitumen and diluent storage, blending and cooling facility located approximately 30 kilometres north of Fort McMurray, Alberta. It is primarily dedicated to servicing bitumen production from the $16.5 – 17 billion Fort Hills oil sands mining project. Revenue from long-term terminal services agreements with the Fort Hills oil sands partners underpins the financing and provides significant creditor protection akin to a traditional project financing.

This historic transaction represents the largest business investment to date by a First Nations entity in Canada and will serve as a model for future economic partnerships between First Nations and industry. The unique debt structure will provide the First Nations owners with substantial and consistent cash flows over a 25 year period and involves minimal daily oversight by First Nations ETF Limited Partnership given (i) trustee operated cash flow waterfall, (ii) formulaic cash reserves, and (iii) involvement only required for fundamental governance matters.

The team included Rick Borden, Jennifer Kennedy, Dion Legge, Peter Wiazowski, Marlow Gereluk, Alan Harvie, Aaron Bowler, Matthew Longstaff, Kate Stevens, Brian Milne, Tina Sun, Jillian Karras, Zoe Abreder, Katherine MacPhail and Caitlin Jenkins.