Real Estate — June 19, 2012Fortis Inc. Announces $601 Million Bought Deal Offering of Subscription Receipts
ST. JOHN'S, NEWFOUNDLAND and LABRADOR--(Marketwire - June 19, 2012) -
NOT FOR DISTRIBUTION TO U.S. NEWS WIRE SERVICES OR DISSEMINATION IN THE UNITED STATES.
Fortis Inc. ("Fortis" or the "Corporation") (TSX:FTS) announced today that it has entered into an agreement with CIBC, Scotiabank and TD Securities Inc. (the "Underwriters") pursuant to which the Underwriters have agreed to purchase from Fortis and sell to the public 18,500,000 Subscription Receipts of the Corporation (the "Offering") for a purchase price of $32.50 per Subscription Receipt (the "Purchase Price"). The Underwriters will also have the option to purchase up to an additional 2,775,000 Subscription Receipts at the Purchase Price to cover over-allotments, if any, during the 30 days following the closing of the Offering (the "Over-Allotment Option").
Fortis announced on February 21, 2012 that it had entered into a share purchase agreement whereby the Corporation will acquire CH Energy Group, Inc., ("CH Energy Group") (NYSE:CHG) for US$65.00 per common share in cash, for an aggregate purchase price of approximately US$1.5 billion, including the assumption of approximately US$500 million of debt on closing. CH Energy Group is an energy delivery company headquartered in Poughkeepsie, New York. Its main business, Central Hudson Gas & Electric Corporation, is a regulated transmission and distribution utility serving approximately 300,000 electric and 75,000 natural gas customers in eight counties of New York State's Mid-Hudson River Valley. The acquisition is subject to certain regulatory and other approvals and is expected to close by the end of the first quarter of 2013.
The gross proceeds from the sale of Subscription Receipts of $601,250,000 ($691,437,500 if the Over-Allotment Option is exercised in full) will be held by an escrow agent pending, among other things, receipt of all regulatory and government approvals required to finalize the acquisition and fulfillment or waiver of all other outstanding conditions precedent to closing the acquisition by Fortis (collectively, the "Release Conditions").
Each Subscription Receipt will entitle the holder thereof to receive, on satisfaction of the Release Conditions, and without payment of additional consideration, one Common Share of Fortis and a cash payment equal to the dividends declared on Fortis Common Shares to holders of record during the period from the closing of the Offering to the date of issuance of the Common Shares in respect of the Subscription Receipts. In the event that the Release Conditions are not satisfied prior to 5:00 p.m. (Toronto time) on June 30, 2013, or if the share purchase agreement relating to the acquisition is terminated prior to such time, the holders of Subscription Receipts will be entitled to receive an amount equal to the full subscription price thereof plus their pro rata share of the interest earned or income generated on such amount.
The net proceeds of the Offering will be used, subsequent to receipt of all required approvals and satisfaction of closing conditions, to finance a portion of the purchase price of the acquisition. The Offering is subject to the receipt of all necessary regulatory and stock exchange approvals. Closing of the Offering is expected to occur on or about June 27, 2012.
The securities offered have not been registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements. This media release shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any offer, solicitation or sale of the securities in any state in which such offer, solicitation or sale would be unlawful.
Fortis is the largest investor-owned distribution utility in Canada, with total assets of more than $14 billion and fiscal 2011 revenue totalling approximately $3.7 billion. The Corporation serves more than 2,000,000 gas and electricity customers. Its regulated holdings include electric distribution utilities in five Canadian provinces and two Caribbean countries and a natural gas utility in British Columbia, Canada. Fortis owns and operates non-regulated generation assets across Canada and in Belize and Upper New York State. It also owns hotels across Canada and commercial office and retail space primarily in Atlantic Canada. The Corporation's common shares are listed on the Toronto Stock Exchange and trade under the symbol FTS. Additional information can be accessed at www.fortisinc.com or www.sedar.com.
Fortis includes forward-looking information in this material within the meaning of applicable securities laws in Canada ("forward-looking information"). The purpose of the forward-looking information is to provide management's expectations regarding the Corporation's future growth, results of operations, performance, business prospects and opportunities, and it may not be appropriate for other purposes. All forward-looking information is given pursuant to the safe harbour provisions of applicable Canadian securities legislation. The words "anticipates", "believes", "budgets", "could", "estimates", "expects", "forecasts", "intends", "may", "might", "plans", "projects", "schedule", "should", "will", "would" and similar expressions are often intended to identify forward-looking information, although not all forward-looking information contains these identifying words. The forward-looking information reflects management's current beliefs and is based on assumptions developed using information currently available to the Corporation's management. Although Fortis believes that the forward-looking statements are based on information and assumptions which are current, reasonable and complete, these statements are necessarily subject to a variety of risks and uncertainties. For additional information on risk factors that have the potential to affect the Corporation, reference should be made to the Corporation's continuous disclosure materials filed from time to time with Canadian securities regulatory authorities and to the heading "Business Risk Management" in the Corporation's annual and quarterly Management Discussion and Analysis and the "Risk Factors" section of the Annual Information Form. Except as required by law, the Corporation undertakes no obligation to revise or update any forward-looking information as a result of new information, future events or otherwise after the date hereof.
Mr. Barry Perry
Vice President, Finance and Chief Financial Officer
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