Ontario said it plans to sell as many as 15 million sharesin electricity distributor HydroOne Ltd. to First Nations groups for C$18 apiece, to be purchasedwith a province-backed C$268 million loan.
The deal will give the groups as much as 2.5% of theformerly province-owned utility, according to a statement from the OntarioMinistry of Energy. An agreement with Chiefs-in-Assembly, which representsFirst Nations groups, was signed July 12, the statement said. The offer pricerepresents a discount of about 32% from the July 12 opening price of theshares, although the province said it is above its book value for the stock,which traded at C$25.95 per share as of about 3 p.m. ET on the Toronto Stock Exchange.
Ontario hailed the offer as a good will gesture aimed atstronger economic relations with its Aboriginal population. First Nationsgroups will have up to two years to decide whether to participate in theagreement. The Chiefs-in-Assembly represent 133 groups. The province alsoannounced that it will provide seed capital of as much as C$45 million in cashto a First Nation investment fund over three years.
"This agreement-in-principle demonstrates the good willenvisioned by the Political Accord to promote stronger economic relations andis one of many steps on Ontario's journey of healing and reconciliation withIndigenous peoples," the government statement said. "If ratified,this new arrangement will provide meaningful opportunities to First Nations forcollective wealth creation and to advance economic development initiatives."
Ontario's government remains the largest holder of Hydro OneLtd. shares, which it began selling to the public through an IPO last year. Theprovince has said it intends to reduce its stake in the company to 40% throughadditional share sales, although a clause that limits ownership in the companyto no more than 10% by any other group or individual ensures the governmentwill retain effective control of Hydro One.
The government started talks with First Nations on equityownership of the company during the initial stages of the IPO, according to thestatement. The plan to offer shares to the groups was disclosed in the company'soffering documents.
A minimum of 80% participation by First Nations by the endof 2017 is required for the transaction to close. The province-backed loanwould have a 25-year term and be offered at the government's borrowing rate,plus 15 basis points.