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Fortis Inc. ("Fortis") (TSX:FTS) announced today that it has entered into an underwriting agreement with a syndicate of underwriters led by Scotia Capital Inc. in connection with a previously announced public offering of Subscription Receipts (the "Offering"). Fortis will offer 6,310,000 Subscription Receipts at $55.50 each for gross proceeds of $350,205,000. On September 29, 2003, Fortis filed a (final) short form prospectus in each of the provinces of Canada in connection with the Offering. The Offering is expected to close on or about October 8, 2003.
The gross proceeds from the sale of Subscription Receipts will be held by an escrow agent pending, among other things, receipt of all regulatory and government approvals required to finalize the acquisition (the "Acquisition") by Fortis of the Canadian regulated electricity assets of Aquila, Inc., and fulfillment or waiver of all other outstanding conditions precedent to closing the Acquisition (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 (subject to any applicable adjustment), and a cash payment equal to the dividends declared on Fortis' Common Shares 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. (Eastern time) on June 30, 2004, or if either of the share purchase agreements 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.
Fortis announced on September 15, 2003 that it entered into definitive share purchase agreements whereby it will acquire the Canadian regulated electricity assets of Aquila, Inc., a U.S. energy company based in Kansas City, for aggregate consideration of $1.36 billion subject to certain adjustments. These acquired assets consist of an Alberta-based, regulated electricity distribution company, a business previously owned by TransAlta Corporation, and a regulated integrated utility located in British Columbia, previously known as West Kootenay Power Ltd. The Acquisition is subject to certain regulatory and other approvals, and is expected to close in the first half of 2004.
The gross proceeds of the Offering will be used, subsequent to receipt of all required approvals and satisfaction or waiver of closing conditions for completion of the Acquisition, to finance a portion of the purchase consideration.
The Acquisition is an important strategic investment opportunity for Fortis and is expected to enhance long-term shareholder value and significantly increase the regulated asset base of the Company, which will create a broader foundation for Fortis to continue to grow its earnings. The utilities being acquired are economically attractive franchises with well-diversified, mature, principally residential, customer bases, operating in separate and predictable regulatory jurisdictions. Fortis expects the Acquisition to be slightly dilutive to earnings in the early years following the closing of the Acquisition.
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 a diversified, international, electric utility holding company with assets of $2 billion and annual revenues of approximately $800 million. The Company has investments in 5 companies which operate regulated electric distribution utilities in Newfoundland, Prince Edward Island, Ontario, Belize and the Cayman Islands. It also has 3 subsidiaries engaged solely in electricity generation in Newfoundland, New York State and Belize. Through its wholly owned non-utility subsidiary, Fortis has investments in real estate and hotel operations.
By their very nature, forward-looking statements are based on underlying assumptions and are subject to certain risks and uncertainties which may cause actual results to vary from plans, objectives and estimates. Such events include, but are not limited to, general economic, market and business conditions; regulatory developments, weather and competition. Fortis Inc. cautions readers that should certain risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary significantly from those expected.
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