MANITOULIN—The province of Ontario has announced that it has now completed the sale of 14,391,012 common shares of Hydro One Limited, representing approximately 2.4 percent of the outstanding common shares, to OFN Power Holdings LP, a limited partnership wholly-owned by Ontario First Nations Sovereign Wealth LP, which is in turn owned by 129 First Nations in Ontario. The shares have been sold at a purchase price of $18 per share for a total purchase price of $259,038,216.
“Yes, I believe all First Nation communities in this (Manitoulin Island) area signed on to be part of this agreement,” said Patrick Madahbee, Grand Council Chief of the Union of Ontario Indians.
Chief Madahbee explained, “we’ve been discussing resource sharing with the governments, and as part of this they had agreed to sell off shares of Hydro One. This is a long time proposition and the hope is that the communities will not touch the funds their receive from this sale for 12 years; so that at that time they would then be available for things like economic development and infrastructure projects in their community.”
“Some of the work to get this agreement can be attributed to Chief Shining Turtle (Whitefish River First Nation),” said Chief Madahbee. “He was involved in some of the negotiations in the early days of this sale agreement,” said Grand Council Chief Madahbee.
The transaction with the First Nations fulfills the province’s commitment in its agreement-in-principle with the Chiefs-in-Assembly on behalf of the First Nations in Ontario, which was previously announced on July 12, 2016. This transaction demonstrates the goodwill envisioned by the political accord to promote stronger economic relations and is one of many steps on Ontario’s journey of healing and reconciliation with Indigenous peoples. It will provide meaningful opportunities to First Nations for collective wealth creation and to advance economic development initiatives.
The purchase is financed through a 25-year term loan from the province with a principle amount of $259,038,216, a release indicates. The interest rate for the term loan is at the province’s relevant borrowing rate, plus 15 basis points. The shares sold in the transaction have been pledged as security for the term loan provided by the province.
The province has also provided seed capital of approximately $29 million in cash to a new investment fund wholly-owned by Ontario First Nations Sovereign Wealth LP.
Immediately prior to closing of the transaction, the province owned 296,803,660 common shares of Hydro One Limited, representing approximately 49.9 percent of the common shares of Hydro One Limited. After completing the transaction, the province owns 282,412,648 common shares of Hydro One Limited, representing approximately 47.4 percent of the common shares of Hydro One Limited.
The province holds common shares of Hydro One Limited for investment purposes.
As announced on May 17, 2017, the province has completed its initiative to broaden the ownership of Hydro One Limited and does not anticipate any further offerings of common shares of the Hydro One Limited by the province. The province continually reviews its investment alternatives and may purchase or sell securities of Hydro One Limited from time to time in accordance with applicable laws and the governance agreement dated as of November 5, 2015 between the province and Hydro One Limited.