SCR had disclosed in the summer that a special distribution of $10.00 per share if its takeover bid for MEG fails. The takeover bid for MEG was terminated by SCR in October. A meeting of shareholders is scheduled for November 27, 2025 to approve the plan of arrangement and special distribution. Its balance sheet is fairly strong, with an equity position of $6.6B, almost no net debt, cash of $1.3B, and a total debt/equity ratio of 0.2X. There are some concerns that its asset quality is not as strong as some peers, with general thoughts that MEG's Christina Lake SAGD asset could be higher quality than SCR's assets. Approval of the distribution seems likely given that the primary owner (WEF) intends to vote in favour of the plan. All else equal, the share price is likely to drop by approximately the same amount of the distribution, post-payment. We would be cautious around trying to time the market by selling between record date and payment date, as a lot of volatility can take place. We would be comfortable continuing to hold the name given its decent momentum recently, even if there is a post-distribution decline equal to roughly that of the distribution.
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