Fortis Inc.

Fortis Inc.

February 26, 2007 15:07 ET

Fortis Inc. Announces $1 Billion Bought Deal Offering of Subscription Receipts

ST. JOHN'S, NEWFOUNDLAND and LABRADOR--(CCNMatthews - Feb. 26, 2007) -

Not for distribution to U.S. news wire services or dissemination in the United States.

Fortis Inc. (TSX:FTS) ("Fortis" or the "Corporation") announced today that it has entered into an agreement with CIBC World Markets Inc., Scotia Capital Inc. and TD Securities Inc. (the "Underwriters") pursuant to which they have agreed to purchase from Fortis and sell to the public 38,500,000 Subscription Receipts of the Corporation (the "Offering") for a purchase price of $26.00 per Subscription Receipt (the "Purchase Price"). The Underwriters will also have the option to purchase up to an additional 5,775,000 Subscription Receipts at the Purchase Price to cover over-allotments, if any, during the 30 days following the closing of the Offering (the "Over-Allotment Option").

Fortis announced today that it entered into a share purchase agreement whereby it will acquire the British Columbia regulated gas distribution business of Terasen Inc. (formerly BC Gas Inc.), a wholly owned subsidiary of Kinder Morgan, Inc., a U.S. energy transportation, storage and distribution company based in Houston, Texas, for a purchase price of $3.7 billion, including the assumption of approximately $2.3 billion of debt. The acquisition is subject to certain regulatory and other approvals, and is expected to close in mid-2007.

The gross proceeds from the sale of Subscription Receipts of $1,001,000,000 ($1,151,150,000 if the Over-Allotment Option is exercised in full) will be held by an escrow agent pending, among other things, receipt of all regulatory and government approvals required to finalize the acquisition 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 and a cash payment equal to the dividends declared on Fortis Common Shares to holders of record 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. (Toronto time) on November 30, 2007, or if the share purchase agreement 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.

The net proceeds of the Offering will be used, subsequent to receipt of all required approvals and satisfaction of closing conditions, to finance a portion of the purchase price of the acquisition. The Offering is subject to the receipt of all necessary regulatory and stock exchange approvals. Closing of the Offering is expected to occur on or about March 15, 2007.

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 principally a diversified, international electric utility holding company with assets exceeding $5.4 billion and annual revenues of approximately $1.5 billion. Fortis has holdings in regulated electric distribution utilities in Alberta, British Columbia, Newfoundland, Ontario, Prince Edward Island, Belize, Grand Cayman and the Turks and Caicos Islands. It has non-regulated generation operations in Belize, Ontario, Newfoundland, British Columbia and upper New York State. Fortis also has investments in real estate and hotels through its wholly owned non-utility subsidiary.

The Common Shares, First Preference Shares, Series C; First Preference Shares, Series E; and First Preference Shares, Series F of Fortis are traded on the Toronto Stock Exchange under the symbols FTS, FTS.PR.C, FTS.PR.E and FTS.PR.F, respectively. Fortis information can be accessed at

Fortis includes forward-looking statements in media releases which reflect management's expectations regarding the Corporation's future growth, results of operations, performance and business prospects and opportunities. Wherever possible, words such as "anticipate", "believe", "expects", "intend" and similar expressions have been used to identify the forward-looking statements. These statements reflect management's current beliefs and are based on information currently available to the Corporation's management. Forward-looking statements involve significant risk, uncertainties and assumptions. Certain material factors or assumptions have been applied in drawing the conclusions contained in the forward-looking statements. These factors or assumptions are subject to inherent risks and uncertainties surrounding future expectations generally. Such risk factors or assumptions include, but are not limited to, regulation, energy prices, general economic conditions, weather, derivatives and hedging, capital resources, loss of service area, licences and permits, environment, insurance, labour relations, human resources and liquidity risk. Fortis cautions readers that a number of factors could cause actual results, performance or achievements to differ materially from the results discussed or implied in the forward-looking statements. These factors should be considered carefully and undue reliance should not be placed on the forward-looking statements. For additional information with respect to certain of these risks or factors, reference should be made to the Corporation's continuous disclosure materials filed from time to time with Canadian securities regulatory authorities. The Corporation disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Contact Information

  • Fortis Inc.
    Mr. Barry Perry
    Vice President, Finance and Chief Financial Officer
    (709) 737-2800
    (709) 737-5307 (FAX)
    Fortis Inc.
    Ms. Donna Hynes
    Manager, Investor & Public Relations
    (709) 737-5323
    (709) 737-5307 (FAX)