Canadian Manufacturing

Hydro One IPO nets Ontario over $5 billion

Controversial sale of 15 per cent of utility adds to government coffers

TORONTO—The Ontario government raised a total of $1.83 billion from the sale of the first 15 per cent of shares in Hydro One, the giant electricity transmission utility.

The province also gained about $2.2 billion from a deferred tax asset benefit and another $1 billion from a special dividend and payments-in-lieu of taxes.

Money raised in the IPO and the other payments put the government over halfway towards its goal of raising $9 billion by privatizing 60 per cent of Hydro One.

The Liberals plan to use $5 billion to pay down some of the $8.3 billion in stranded debt left after the old Ontario Hydro was broken into five companies, while the remaining $4 billion would fund transit and infrastructure projects.

The government plans another three offerings of Hydro One shares, but insists it will retain control with 40 per cent of the shares in the newly-privatized company by limiting all other owners to a maximum of 10 per cent of shares.

Hydro One owns the province’s electricity grid, with 29,000 kilometres of transmission lines, and also serves as the local electricity distributor for 1.3 million customers, mostly in rural and northern Ontario.

The company issued a statement saying the underwriters for the IPO exercised their option to buy an additional 8,150,000 common shares at the IPO price of $20.50 per share.

The sale of the additional shares, the over-allotment, was completed Thursday, and increased the gross proceeds from the IPO by an additional $167 million, resulting in total gross proceeds of $1.83 billion.

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