Hydro One plans $2.4 billion of U.S. dollar notes for Avista purchase

New York, July 19 – Hydro One Ltd. plans to issue $2.4 billion of notes to help finance its acquisition of Avista Corp. for C$6.7 billion, or $5.3 billion equivalent.

The notes will have maturities of five, 10 and 30 years, according to an investor presentation.

Hydro One said the debt financing has been structured to balance maturities and to create a natural currency hedge.

Both Hydro One and Avista are expected to maintain a “strong” investment-grade status, according to the company.

In addition to the bonds, Hydro One will issue contingent convertible debentures as the equity component of the financing.

Hydro One announced a C$1.4 billion bought deal sale of 4% convertible unsecured subordinated debentures due 2027 via RBC Capital Markets, CIBC Capital Markets and BMO Capital Markets on Wednesday afternoon.

The offering has a C$140 million greenshoe.

The debentures will be sold on an installment basis, C$333 of the C$1,000 per-debenture price being payable on closing and C$667 payable after all the conditions are met for the closing of the acquisition.

Before the final installment, the debentures will be represented by installment receipts.

The acquisition will make Hydro One the 20th largest utility in North America, according to the company presentation.

It will serve customers in Ontario, Washington, Oregon, Idaho, Montana and Alaska.

Closing is planned for the second half of 2018.

Hydro One is a Toronto-based electric utility.

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