Oct. 28 (Bloomberg) -- Borealis Infrastructure Management Inc., a unit of the Ontario Municipal Employees Retirement System, cut its offer price for the Teranet Income Fund land- registry business to C$1.57 billion ($1.22 billion) to reflect the slumping economy.

Borealis will offer C$10.25 a unit in cash, down 6.8 percent from a Sept. 4 offer of C$11 a unit, the Toronto-based pension fund said today in a statement. Teranet is the sole provider of access to the Electronic Land Registration System for Ontario, Canada's most populous province.

The pension fund cited a ``deterioration in economic and financial markets,'' and higher borrowing costs in cutting the offer price. Canada may slip into a recession, according to two of the country's commercial banks, and the benchmark stock index has plunged more than a third this year amid the credit crisis.

``It's pretty obvious given the market conditions and the cost of capital,'' Borealis spokesman John Lute said in an interview. ``We still think it's a very fair offer for a good company.''

Teranet units fell 81 cents, or 7.7 percent, to C$9.70 at 4:17 p.m. in trading on the Toronto Stock Exchange, the biggest one-day decline in almost two years.

Teranet will review Borealis's revised offer and ``communicate'' with unitholders, the company said in a Canada NewsWire statement. ``Borealis has not revised or waived any of the conditions in its offer and therefore this reduced offer remains highly conditional.''

Teranet's board of trustees reversed its opposition to the hostile takeover bid earlier this month, saying a better offer isn't likely to emerge. Teranet said Sept. 26 that more than 10 potential bidders were interested in the company and urged investors to reject the Borealis bid.

Omers and Borealis own 1 million units of Teranet, the company said in a Sept. 29 statement. Teranet has 154.4 million units outstanding, according to corporate filings. The revised offer was extended to Nov. 10.

To contact the reporter on this story: Doug Alexander in Toronto at dalexander3@bloomberg.net

Last Updated: October 28, 2008 16:54 EDT