Hydro One’s new share offer should raise $1.7B
The Ontario government is selling off another 15-per-cent chunk of its Hydro One electricity utility.

thestar.com
April 5, 2016
By Robert Benzie

The Ontario government is selling off another 15-per-cent chunk of its Hydro One electricity utility.
Following the successful initial public offering last November, a second tranche of shares was announced late Tuesday.

“The market has clearly responded to the company,” said Ed Clark, chair of Premier Kathleen Wynne’s advisory council on government assets.

Another 72.4 million shares will be offered as early as next week at a starting price of $23.65, which should raise at least $1.7 billion.

Clark, the former TD Bank chair who now serves as an unpaid business adviser to Wynne, noted Hydro One shares closed Tuesday at $24.16 - well up from the $20.50 opening in November when the first 15-per-cent stake was offered.

“It’s pretty spectacular,” said the Bay Street veteran.

Wynne’s government is planning to eventually sell off 60 per cent of the utility - with the next of two final public offerings likely coming in 2017 - to generate a total of $9 billion. It will retain 40 per cent ownership.

After paying down $5 billion in Hydro One’s debt, the $4 billion in proceeds will help fund the government’s 10-year $30.5-billion plan to build new transit, roads, and bridges.

Clark, the key architect of the sale, said “the market has accepted this tranche approach and, in fact, likes it.”

“It clearly works for the taxpayer - to go up 15 per cent (in value since November’s IPO) and have only sold the 15 (per cent of the utility) to find out where the market is - it’s worked exactly like a textbook,” he said.

“But it also works for the market. We’ve learned that the market has confidence in our governance structure.”

That refers to the new management team running Hydro One, which Clark and others believe will make the former Crown asset a better-run and more valuable company.

Energy Minister Bob Chiarelli said “this transaction represents yet another important milestone as the province continues to fulfill its commitment to broaden the ownership of Hydro One.”

“By realizing the value of this public asset, we will be able to build new roads, bridges, rapid transit, schools and hospitals in communities across Ontario, while remaining the single largest shareholder,” Chiarelli said in a statement.

Finance Minister Charles Sousa said “province will proceed with future offerings as planned, in a staged and prudent manner that will, over time, bring government ownership of Hydro One to 40 per cent.”

Both the Progressive Conservatives, who tried to sell the utility when they were in government in 2001, and the New Democrats oppose the Hydro One sale.

But Wynne noted in a speech last Wednesday that the liquidation is a “new way forward” reached after Ontario hit a “fork-in-the-road moment” because the province needed money to bankroll new transportation infrastructure.