City of Toronto Considers Sale of Enwave, Toronto Hydro Stake
The City of Toronto may get C$600 million ($592 million) from selling Enwave Energy Corp., a stake in Toronto Hydro Corp. and some surplus property, according to a report by Deputy City Manager and Chief Financial Officer Cam Weldon.
Toronto and pension fund partner Ontario Municipal Employees Retirement System should sell Enwave, a provider of heating and cooling to buildings in Toronto and Windsor, Weldon said in an Oct. 18 report. Toronto should also sell 10 percent of city-owned Toronto Hydro, he said.
Canada’s largest city is considering sales of assets to offset some of its spending and debt pressures, according to the report. Toronto’s net debt to support its capital budget is forecast to rise to C$4.3 billion by 2014, from C$2.6 billion in 2011, the report said.
Toronto’s “policy objectives and value creation opportunities through owning Enwave appear to have been exhausted” so the city should consider selling it to reinvest in other areas, the report said. Enwave may draw interest from pension or other investment funds, and energy or utility companies around the world, the report said. Toronto owns 43 percent of Enwave, with a unit of OMERS holding the rest.
The city should sell 10 percent of Toronto Hydro, which owns and operates the monopoly distribution of electricity in Toronto, through an initial public offering, the report said. The IPO price depends on the outcome of a rate application before the Ontario Energy Board, which likely won’t be resolved before the spring of 2012, the report said.
The proposal is scheduled to be discussed at the city’s Nov. 1 executive committee, and may be considered by City Council on Nov. 29. A sale of Toronto Hydro has been rejected by city council in the past, the report said.
OMERS spokesman John Pierce declined to comment. A telephone message left with Enwave Chief Executive Officer Dennis Fotinos wasn’t immediately returned.
To contact the reporter on this story: Doug Alexander in Toronto at dalexander3@bloomberg.net
To contact the editors responsible for this story: David Scheer at dscheer@bloomberg.net; David Scanlan at dscanlan@bloomberg.net
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