By Rebecca Melvin
New York, Dec. 11 - FortisUS Holdings Nova Scotia Ltd., a subsidiary of Fortis Inc., has priced a secondary offering of C$1,594,000,000 of 4% convertible debentures due Jan. 9, 2024 on a bought-deal basis via a syndicate of underwriters, according to a news release Wednesday.
There is an over-allotment option to purchase up to an additional C$239.1 million of debentures.
The syndicate is being co-led by Scotiabank, RBC Capital Markets, TD Securities Inc. and CIBC, and includes BMO Capital Markets, National Bank Financial Inc. and Desjardins Securities Inc.
Fortis has also agreed to sell $206 million of debentures in a private placement together with the public offering.
All debentures are being sold on an installment basis, of which $333 is payable on the closing of the offerings, with the remaining $667 payable on a date to be fixed upon closing of Fortis' planned acquisition of UNS Energy Corp.
Fortis has agreed to acquire U.S.-based UNS Energy for $4.3 billion, or $60.25 per common share, in cash, including the assumption of about $1.8 billion of debt. The acquisition is expected to occur by the end of 2014.
The unsecured subordinated debentures will have an effective annual yield of 12%, based on a first installment of $333 until the final installment date, after which the interest rate will be 0%.
The debentures are convertible at C$30.72 per Fortis share, which is a conversion rate of 32.5521 common shares per $1,000 principal amount of debentures, subject to adjustment in certain circumstances.
The debentures are redeemable on until July 2, 2015 if notice of the final installment date has not been given to investors before June 30, 2015.
At maturity, Fortis will have the right to pay the principal amount due in common shares, which will be valued at 95% of their weighted average trading price on the Toronto Stock Exchange for the 20 consecutive trading days ending five trading days preceding the maturity date.
Proceeds of the first installment payment will be used to repay borrowings under Fortis' existing revolving credit facility and for other general corporate purposes. Proceeds of the final installment payment will be used to repay borrowings under non-revolving term credit facilities, which will be used to finance the acquisition.
The offerings are subject to regulatory and stock exchange approvals. Closing is expected to occur Jan. 9. The closing of the private placement is subject to the concurrent closing of the public offering.
Application has been made to list the installment receipts on the Toronto Stock Exchange. The debentures will not be listed.
St. John's, Newfoundland and Labrador-based Fortis is an investor-owned gas and electric distribution utility in Canada.
| Issuer: | FortisUS Holdings Nova Scotia Ltd.
|
| Guarantor: | Fortis Inc.
|
| Issue: | Convertible debentures
|
| Amount: | C$1,594,000,000
|
| Greenshoe: | C$239.1 million
|
| Maturity: | Jan. 9, 2024
|
| Concurrent offering: | C$206 million
|
| Bookrunners: | Syndicate co-led by Scotiabank, RBC Capital Markets, TD Securities Inc. and CIBC, and includes BMO Capital Markets, National Bank Financial Inc., Desjardins Securities Inc.
|
| Coupon: | 4%
|
| Price: | Par, C$1,000
|
| Conversion price: | $30.72
|
| Conversion ratio: | 32.5521 shares
|
| Calls: | Redeemable on July 2, 2015, if notice of the final instalment date has not been given to investors before June 30, 2015
|
| Pricing date: | Dec. 11
|
| Settlement date: | Jan. 9
|
| Stock symbol: | Toronto: FTS
|
| Distribution: | Rule 144A
|
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