CALGARY, Alberta (Reuters) - Alberta’s premier said on Thursday his government will not give financial assistance to Nova Chemicals Corp, a major employer in the Western Canadian province, as the company tries to secure funds to help it meet its debt obligations.
Nova’s shares surged on Wednesday on speculation -- since denied -- that an Alberta institution such as its government-owned bank or pension fund might help the petrochemical producer with $100 million in financing.
Premier Ed Stelmach said only “No,” when asked on Thursday by reporters if the government might help out with funding. He did not elaborate.
Nova’s roots are in Alberta and its Joffre ethylene and polyethylene complex in the central part of the province is one of the world’s largest.
Officials with bank ATB Financial and Alberta Investment Management Corp, which manages C$70 billion ($57 billion) of public pensions, which had been cited as possible lenders, said on Wednesday that speculation of their involvement was false.
In recent days, bond rating agencies have downgraded Nova’s debt on worries about the company’s ability to meet its financial obligations with the raw plastics industry in a downturn amid the economic meltdown.
It has a series of debt maturities coming due over the next 18 months starting with a $250 million bond repayment in April. The company must raise $100 million by the end of this month to access the necessary funding and another $100 million by June.
Nova has won relaxations on some of its debt covenants, and officials have said they are confident in the company’s ability to work with its lenders.
Alberta Energy Minister Mel Knight said the province is adamant that the petrochemical industry remains a key part of its strategy to wrest value-added dollars from oil and gas production.
“There’s no doubt that Alberta is home to the largest petrochemical industry in Canada. We continue to put effort into making sure that it stays that way and, in fact, that it will grow,” Knight said.
The company also has operations in the United States and Europe.
Nova shares jumped more than 75 percent at one point on Wednesday amid the financing rumors.
The stock gained 3 Canadian cents to C$1.98 on the Toronto Stock Exchange on Thursday on volume of more than 8.2 million shares. Its New York-listed shares rose 5 cents to $1.67.
Editing by Rob Wilson