Ontario Selling Hydro One Stake in $1.3 Billion Share Dealby
Government could reduce holding to 70% from 84% with deal
Royal Bank and Bank of Nova Scotia leading secondary offering
Ontario is selling a stake in Hydro One Ltd. for C$1.71 billion ($1.3 billion) five months after completing Canada’s largest initial public offering since 2000.
In the so-called bought deal, where banks commit to buying the entire offering for resale to investors, the province is selling 72.4 million shares of Hydro One at C$23.65 apiece, the Toronto-based utility said in a statement. The secondary offering is led by Royal Bank of Canada and Bank of Nova Scotia. The banks have an option to buy more shares that could boost proceeds to as much as C$1.97 billion. The price represents a 2.1 percent discount from Tuesday’s closing price.
The offer was expected as Ontario Premier Kathleen Wynne a year ago said she aimed to sell as much as 60 percent of the company over four to five years to raise funds for debt repayment and infrastructure in Canada’s most-populous province. Ontario will continue to own roughly 70 percent of Hydro One if the over-allotment option is fully exercised, according to the statement, down from 84 percent currently.
Since the IPO last year, Hydro One has come under scrutiny from Ontario’s auditor general, who warned in December that the utility’s transmission system was increasingly unreliable and will cost the province billions to fix.
With the secondary offering, the Ontario government remains on track to generate about C$9 billion in proceeds and other revenues from selling shares in Hydro One, according to a statement Tuesday by the office of Energy Minister Bob Chiarelli.