Ontario and the First Nations in Ontario, as represented by the Chiefs-in-Assembly, on Tuesday announced an agreement-in-principle for the Province to sell to First Nations up to approximately 15 million shares of Hydro One Limited (2.5 per cent of the total current outstanding common shares), depending on the level of First Nation participation.
This agreement-in-principle 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, an official statement said.
If ratified, this new arrangement will provide meaningful opportunities to First Nations for collective wealth creation and to advance economic development initiatives. Each First Nation will have up to two years from signing of binding agreements to decide whether to participate in this arrangement. All First Nations in Ontario are invited to participate. A minimum threshold of 80 per cent First Nation participation by the end of 2017 is required for this transaction to close.
Glenn Thibeault, Minister of Energy,said: “Meaningful First Nations’ participation in the energy sector is a priority for the Province and enables economic development opportunities with First Nation communities across Ontario. This new agreement-in-principle is transformational and unprecedented, and reflects the spirit of the Political Accord in strengthening Ontario’s relationship with First Nations.”
New Investment Vehicle
If the agreement is ratified, Ontario would sell the shares to a new investment vehicle owned collectively by First Nations. This purchase would be financed with a 25-year loan from the Province of up to approximately $268 million, depending on the level of First Nation participation. The interest rate for the loan would be at the Province’s relevant borrowing rate, plus 15 basis points. The shares would be sold at $18 per share, which is above the Province’s book value for the shares. Ontario would also provide seed capital to a new First Nation investment fund of up to $45 million in cash, depending on the level of First Nation participation, over the initial three years.
- The Chiefs-in-Assembly established a Chiefs Committee on Energy to undertake this initiative on behalf of the 133 First Nation communities in Ontario.
- As the Province and the Chiefs Committee on Energy work towards definitive agreements and to respect the ongoing First Nation discussions, the Government of Ontario does not intend to comment further pending outcomes of that process.
- The Ontario government will remain the largest shareholder of Hydro One Limited, and by law no other shareholder or group of shareholders is permitted to own more than 10 per cent.
- Hydro One rates will continue to be set by the independent regulator, the Ontario Energy Board.
- Net revenue gains from the Province’s public sales of Hydro One Limited common shares will be dedicated to the Trillium Trust to help fund infrastructure projects that will create jobs and strengthen the economy.
Ontario and the Chiefs Committee on Energy, on behalf of First Nations, began engaging in discussions regarding potential equity ownership as part of the initial stages of the Initial Public Offering (IPO), as described in the October 2015 Hydro One Limited Supplemented PREP Prospectus. – CINEWS