TORONTO -- Connacher Oil and Gas Ltd on Tuesday said it was taking steps to raise financing that could help fund its Algar oil sands project through an equity offering and a syndicated loan.

Net proceeds of the stock offering would go to fund capital expenditures and general corporate purposes, and could be used to restart construction at Algar, its second steam-driven oil sands development in northern Alberta. The company did not specify the expected size of the offering in its statement.

Connacher suspended construction on the $345-million (US$298-million) Algar project late last year

The company is one of several oil sands developers that deferred plans for projects due to weak oil prices and shaky credit markets.

Along with the offering, Connacher is negotiating with a Canadian bank on behalf of a syndicate of proposed lenders. It aims to secure a revolving working-capital facility and a construction loan for Algar.

While a decision has not yet been made on whether to push ahead with Algar, the loan and the offering would likely raise enough to fund the remaining $200-million of constructions costs for the project, the company said.

Early this year, Connacher resumed production from its Great Divide project in Alberta after curtailing it when operations became unprofitable.

Connacher shares were down almost 5% to $1.35 on Tuesday on the Toronto Stock Exchange.

© Thomson Reuters 2009