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Fortis to issue $2 billion debt in U.S. market to fund ITC acquisition
By Lisa Kerner
Charlotte, N.C., Feb. 9 – Fortis Inc. will use cash and common shares for its $11.3 billion acquisition of ITC Holdings Corp. The enterprise value includes the assumption of $4.4 billion of ITC debt.
To finance the cash portion, Fortis plans to issue $2 billion of debt in the U.S. market and to sell up to 19.9% of ITC to one or more infrastructure-focused minority investors, according to Fortis chief financial officer Karl Smith.
Fortis’ financing approach mirrors its current capital structure and will enable the company to retain its solid investment-grade credit rating, Smith said during a conference call on Tuesday.
The company has $3.7 billion of fully committed bridge financing through Goldman Sachs and Scotiabank to ensure the acquisition will close. Closing is expected to occur in late 2016.
Under the merger agreement, ITC shareholders will receive a combination of $22.57 in cash and 0.7520 Fortis shares per ITC share.
ITC shareholders will hold 27% of Fortis common shares once the transaction is completed. ITC, an electricity transmission company, will keep its headquarters location in Novi, Mich.
Fortis said it will apply to list its common shares on the New York Stock Exchange.
Fortis is a St. John's, Newfoundland-based investor-owned gas and electric distributor.
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