The Canadian arm of Petronas said Monday that its deadline had been extended by 30 days to Nov. 30 and may be extended twice more if the transaction still has not obtained regulatory approval.
Both companies have met with Industry Canada to try to find out why the government rejected their deal just before midnight on Oct. 19 — a move that dismayed many observers.
While federal Industry Minister Christian Paradis said he was "not satisfied that the proposed investment is likely to be of net benefit to Canada," the companies were given 30 days to take another run at winning approval.
"Petronas Canada intends to make further submissions to the minister in order to obtain approval of the proposed transaction," the company said in a release.
Progress shares ran up nearly seven per cent to $19.60 Monday afternoon on the Toronto Stock Exchange. Nexen Inc. (TSX:NXY), whose controversial $15.1-billion takeover by China National Offshore Oil Co. is also being weighed by Industry Canada, rose nearly four per cent to $24.17.
Ottawa's net benefit test for big foreign deals with Canadian companies has been criticized for being ill- defined. Prime Minister Stephen Harper has said clarifications to the process are coming shortly.
Weeks after Petronas and Progress announced their deal, CNOOC announced plans to acquire Calgary-based energy producer Nexen in what would be China's biggest-ever overseas investment. The CNOOC-Nexen deal stoked a great deal more political controversy than the Petronas-Progress proposal.
The Investment Canada Act review of the CNOOC-Nexen deal by Paradis is set to end on Nov. 11, though it can be extended by 30-day increments with the buyer's consent.
Norm Lamarche, a portfolio manager at Front Street Capital, said it's hard to see why Petronas' takeover of Progress should not be considered a net benefit to Canada.
With natural gas prices in the doldrums, Progress' lands in northeastern B.C. won't be developed any time soon without the help of a deep-pocketed player. Furthermore, Petronas has plans to build an terminal on the B.C. coast to export the gas in liquid form to markets where the resource commands a better price.
"The $6 billion is just the beginning of spending, so how can that not be in the best interest of Canadians?" asked Lamarche in a recent interview. "This is a gift."
Without proposals like Petronas' to build West Coast LNG terminals, revenues to the B.C., Alberta and federal governments are also at stake, Lamarche added.
After Progress accepted Petronas' initial $20.45 per share bid earlier this year, another unidentified bidder made an attempt at a rival bid that Petronas trumped by increasing its offer to $22 per share.
Financial analysts have suggested that if the Petronas deal falls through, the likes of ExxonMobil or U.K. gas giant BG Petroleum may also be potential buyers.
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