- Simplifies Capital Structure and Improves
Liquidity
- Continued Participation in Canadian Utilities Growth and
Income
- Shareholder Meeting Expected to be Held in December 2023
CALGARY,
AB, Oct. 31, 2023 /CNW/ - Canadian
Utilities Limited (TSX: CU) (TSX: CU.X)
Canadian Utilities Limited ("Canadian Utilities") today
announced that its Board of Directors has determined to make a
proposal to the holders of Class B common shares ("Class B
Shares") other than ATCO Ltd. and certain of its related
parties (collectively, "ATCO"). Subject to the approval of
holders of Class B Shares ("Class B Share Owners"), the
transaction will be effected by way of a court-approved plan of
arrangement under the Canada Business Corporations
Act (the "Arrangement").
Under the terms of the Arrangement, each Class B Share held by a
Class B Share Owner other than ATCO ("Non-Controlling Class B
Share Owners") will be exchanged for 1.1 Class A non-voting
shares ("Class A Shares") of Canadian Utilities (the
"Exchange Ratio").
The Class B Shares held by ATCO, currently comprising
approximately 97.4% of the outstanding Class B Shares, will not be
exchanged pursuant to the Arrangement. As a result, upon completion
of the Arrangement, ATCO will be the sole holder of Class B
Shares.
KEY HIGHLIGHTS AND RATIONALE FOR
THE ARRANGEMENT
Since Canadian Utilities implemented its dual class share
structure in 1982, the Non-Controlling Class B Share Owners'
relative ownership of Class B Shares has gradually decreased from
approximately 49.5% to under 3% as Non-Controlling Class B Share
Owners have elected to convert their Class B Shares into Class A
Shares on a 1:1 basis in accordance with their terms. The
Arrangement represents an opportunity to simplify Canadian
Utilities' capital structure and reduce its administrative
obligations, while offering the following expected benefits for
Non-Controlling Class B Share Owners:
- Premium to Existing Conversion Rights: The Exchange
Ratio represents an effective premium of 10% relative to the
existing conversion right which provides Class B Share Owners the
right to convert their Class B Shares into Class A Shares at any
time at a ratio of 1:1.
- Tax Free Exchange: Non-Controlling Class B Share Owners
can generally achieve a deferral for Canadian tax purposes of the
capital gain that would otherwise have been realized upon a
disposition of their Class B Shares.
- Continued Participation in the Growth and Income
Opportunities of Canadian Utilities:
Non-Controlling Class B Share Owners will receive Class A Shares
pursuant to the Arrangement and will therefore be able to continue
to participate in the benefits of equity ownership in Canadian
Utilities, including the right to continue to receive the same
dividend per share as is paid in respect of the Class B Shares and
to participate in the anticipated growth opportunities being
pursued by Canadian Utilities as a diversified global energy
infrastructure business.
- Enhanced Liquidity: The Arrangement will provide
Non-Controlling Class B Share Owners with immediate access to the
enhanced liquidity provided through ownership of Class A Shares, at
a premium represented by the Exchange Ratio, and without incurring
any transaction costs.
ADDITIONAL INFORMATION ON THE
ARRANGEMENT
The Arrangement is subject to the approval by: (i) two-thirds of
the votes cast by Class B Share Owners present or represented by
proxy at a special meeting of Class B Share Owners (the
"Meeting") called to consider the Arrangement; and (ii) a
majority of the votes cast by Class B Share Owners present or
represented by proxy at the Meeting, after excluding the votes
attached to Class B Shares held by ATCO and any other Class B Share
Owners whose votes are required to be excluded in determining
whether "minority approval" for the Arrangement has been obtained
pursuant to applicable Canadian securities laws.
In addition to the required approvals of Class B Share Owners,
closing of the Arrangement is also subject to obtaining the
approval of the Court of King's Bench of Alberta and the
Toronto Stock Exchange, as well as other customary closing
conditions.
Further details regarding the Arrangement will be contained in a
management information circular (the "Circular") for the
Meeting to be sent to holders of Class A Shares and Class B Shares
in connection with the Meeting. The Circular is expected to be
mailed on or about November 22, 2023, and the Meeting is
expected to be held on or about December 14, 2023.
If all approvals are received and other closing conditions are
satisfied in a timely manner, the Arrangement is expected to
be completed on or about December 15,
2023.
The Circular, as well as other filings containing information
about the Arrangement, will be available for viewing under Canadian
Utilities' SEDAR+ profile at www.sedarplus.ca. All Class B
Share Owners are urged to read the Circular once available, as it
will contain additional important information concerning the
Arrangement and how to vote their Class B Shares.
INDEPENDENT OVERSIGHT AND
DECISION-MAKING PROCESS
The Arrangement is the result of an independent and
comprehensive review process. The Board of Directors of Canadian
Utilities (the "Board") delegated to a special committee
consisting solely of independent directors of Canadian Utilities
(the "Special Committee") the authority to, among other
things, negotiate, examine, review and evaluate the merits and
risks of the Arrangement.
BMO Nesbitt Burns Inc. ("BMO Capital Markets"), acting as
independent financial advisor to the Special Committee, has
provided its opinion (the "Fairness Opinion") to the Special
Committee (subject to certain assumptions, limitations and
qualifications contained therein) that the consideration to be
received by Non-Controlling Class B Share Owners pursuant to the
Arrangement is fair, from a financial point of view, to
Non-Controlling Class B Share Owners.
The Special Committee, having undertaken a thorough review of,
and having carefully considered, among other things, the terms of
the Arrangement and its impact on Canadian Utilities and all
relevant stakeholders; information concerning Canadian Utilities,
including its share structure; ATCO's ownership of Class B Shares
and resulting voting control of Canadian Utilities; the Fairness
Opinion and other relevant matters, unanimously determined to
recommend to the Board that it: (i) determine that the Arrangement
is in the best interests of Canadian Utilities and fair to
Non-Controlling Class B Share Owners; (ii) approve the Arrangement;
and (iii) direct that the Arrangement be submitted to Class B Share
Owners for approval and recommend that Class B Share Owners vote
FOR the Arrangement.
After considering, among other things, the unanimous
recommendation of the Special Committee and the Fairness Opinion,
the Board (with five directors who are not independent abstaining)
unanimously: (i) determined that the Arrangement is in the best
interests of Canadian Utilities and fair to Non-Controlling Class B
Share Owners; (ii) approved the Arrangement; and (iii) directed
that the Arrangement be submitted to Class B Share Owners for
approval and recommended that Class B Share Owners vote FOR the
Arrangement.
Shareholders who have any questions should contact Kingsdale
Advisors by calling 1-888-518-1565 (toll-free in North America), or 647-251-9704 (call and text
outside of North America), or by
email at contactus@kingsdaleadvisors.com.
ADVISORS
Blake, Cassels & Graydon LLP is acting as legal advisor to
Canadian Utilities. Felesky Flynn LLP is acting as Canadian tax
counsel to Canadian Utilities. Stikeman Elliott LLP is acting as
legal advisor to the Special Committee. BMO Capital Markets is
acting as financial advisor to the Special Committee. Canadian
Utilities has retained Kingsdale Advisors as its strategic
shareholder advisor in connection with the Meeting.
ABOUT CANADIAN UTILITIES
Canadian Utilities Limited and its subsidiary and affiliate
companies have approximately 8,000 employees and assets of
$23 billion. Canadian Utilities, an
ATCO company, is a diversified global energy infrastructure
corporation delivering essential services and innovative business
solutions in Utilities (electricity and natural gas transmission
and distribution, and international operations); Energy
Infrastructure (energy storage, energy generation, industrial water
solutions, and clean fuels); and Retail Energy (electricity and
natural gas retail sales, and whole-home solutions). More
information can be found at www.canadianutilities.com.
Investor & Analyst Inquiries
Colin Jackson
Senior Vice President, Finance, Treasury & Sustainability
Colin.Jackson@atco.com
(403) 808 2636
Media Inquiries
Kurt Kadatz
Director, Corporate Communications
Kurt.Kadatz@atco.com
(587) 228 4571
Subscription Inquiries
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FORWARD-LOOKING
INFORMATION
Certain statements contained in this news release constitute
forward-looking information. Forward-looking information is often,
but not always, identified by the use of words such as
"anticipate", "plan", "estimate", "expect", "may", "will",
"intend", "should", "goals", "targets", "strategy", "future", and
similar expressions. In particular, forward-looking information in
this news release includes, but is not limited to, references to:
the expected benefits of the Arrangement to Non-Controlling Class B
Share Owners, including with respect to enhanced liquidity and
continued participation in Canadian Utilities' anticipated growth
opportunities and dividend payments; expectations with respect to
the impact of the Arrangement on Canadian Utilities, including its
anticipated impact on Canadian Utilities' administrative
obligations, capital structure and the level of voting control
exercised by ATCO; the tax implications of the Arrangement for
Non-Controlling Class B Share Owners; the anticipated date of the
Meeting, the Circular sent in connection therewith and the expected
mailing date thereof; the anticipated closing conditions and
approvals required in connection with the Arrangement; and the
expected structure and anticipated timing and completion of the
Arrangement, including the expected closing date of the
Arrangement.
Although Canadian Utilities believes that the expectations
reflected in the forward-looking information are reasonable based
on the information available on the date such statements are made
and processes used to prepare the information, such statements are
not guarantees of future performance and no assurance can be given
that these expectations will prove to be correct. Forward looking
information should not be unduly relied upon. By their nature,
these statements involve a variety of assumptions, known and
unknown risks and uncertainties, and other factors, which may cause
actual results, levels of activity, and achievements to differ
materially from those anticipated in such forward-looking
information. The forward-looking information reflects Canadian
Utilities' beliefs and assumptions with respect to, among other
things: the satisfaction of the conditions to closing of the
Arrangement in a timely manner, including the receipt of all
necessary approvals; Canadian Utilities' ability to issue Class A
Shares pursuant to the Arrangement in the manner expected; the
anticipated Canadian income tax consequences of
the Arrangement; and other assumptions inherent in
management's expectations in respect of the forward-looking
information identified herein.
Actual results could differ materially from those anticipated in
this forward-looking information as a result of, among other
things: the failure of Canadian Utilities to receive, in a timely
manner, the necessary court, shareholder and stock exchange
approvals and to satisfy the other conditions to closing of the
Arrangement in a timely manner and on acceptable terms; the
inability of Canadian Utilities to complete the Arrangement on the
terms contemplated or at all; the inability of Canadian Utilities
to realize the anticipated benefits of the Arrangement; negative
reactions from investors in respect of the Arrangement; payments to
Non-Controlling Class B Share Owners who validly exercise dissent
rights in respect of the Arrangement; the focus of management's
time and attention on the Arrangement and other disruptions arising
from the Arrangement; the failure of Canadian Utilities to realize
upon its anticipated growth opportunities; and other risk factors,
many of which are beyond the control of Canadian Utilities. Due to
the interdependencies and correlation of these factors, the impact
of any one material assumption or risk on a forward-looking
statement cannot be determined with certainty. Readers are
cautioned that the foregoing lists are not exhaustive. Additional
risk factors relating to Canadian Utilities are described in
further detail in its management's discussion and analysis and
annual information form for the year ended December 31, 2022,
and in its management's discussion and analysis for the three and
nine months ended September 30, 2023, which are available on
SEDAR+ at www.sedarplus.ca.
Any forward-looking information contained in this news release
represents Canadian Utilities' expectations as of the date hereof
and is subject to change after such date. Canadian Utilities
disclaims any intention or obligation to update or revise any
forward-looking information whether as a result of new information,
future events or otherwise, except as required by applicable
securities legislation.
SOURCE Canadian Utilities Limited