ST. JOHN'S, NEWFOUNDLAND AND LABRADOR--(CCNMatthews - May 17, 2007) - Fortis Inc. (TSX:FTS)("Fortis" or the "Corporation") announced today that it has completed the transaction to acquire all of the outstanding shares of Terasen Inc. ("Terasen") from a wholly owned subsidiary of Kinder Morgan, Inc. (NYSE:KMI) for a purchase price of $3.7 billion.
Terasen (formerly BC Gas Inc.), a holding company headquartered in Vancouver, British Columbia, owns and operates Terasen Gas, one of the largest natural gas distribution utilities in Canada. The acquisition did not include the petroleum transportation assets of Kinder Morgan Canada (formerly Terasen Pipelines) which are comprised primarily of refined and crude oil pipelines.
Terasen Gas serves approximately 900,000 customers or 95% of gas users in British Columbia. The Company owns and operates 44,100 kilometres of natural gas distribution pipelines and 4,300 kilometres of natural gas transmission pipelines. Its service territory includes the populous lower mainland, Vancouver Island and the southern interior of the province. As of December 31, 2006, Terasen Gas had approximately $3.7 billion of assets and a regulated rate base of $3.0 billion.
Fortis received a no-action letter from the Competition Bureau of Canada in respect of the transaction on March 21, 2007 and regulatory approval for the transaction was received from the British Columbia Utilities Commission on April 30, 2007.
"Our expansion into natural gas distribution adds a third business segment and doubles the regulated rate base of Fortis to approximately $6.0 billion. The acquisition is expected to be accretive to earnings in the first full year," says Stan Marshall, President and Chief Executive Officer, Fortis Inc.
Regulated utility assets comprise approximately 92 per cent of total assets and regulated utility assets in Canada comprise approximately 84 per cent of total assets. Fortis now serves almost 2,000,000 gas and electric customers.
"Terasen Gas is a well-run utility which gives Fortis a platform for future growth in the gas distribution business. It will complement our electric utilities, providing value for our customers and shareholders," adds Marshall. "We welcome the employees of Terasen Gas to the Fortis Group and look forward to their continuing strong commitment to serving customers," concludes Marshall.
Subscription Receipts Automatically Exchanged for Common Shares of Fortis
A significant portion of the purchase price for Terasen was satisfied with the net proceeds of the public offering of Subscription Receipts completed by Fortis on March 15, 2007. Each Subscription Receipt has been automatically exchanged, without payment of additional consideration, for one common share of Fortis and a cash payment of $0.21 per Subscription Receipt, which is an amount equal to the dividends declared on the common shares of Fortis since March 15, 2007. Effective immediately upon closing of the Terasen acquisition, the Subscription Receipts were cancelled and the common shares issued in exchange for the Subscription Receipts began trading on the Toronto Stock Exchange.
Fortis Inc., the largest investor-owned distribution utility in Canada, serves almost 2,000,000 gas and electric customers and has approximately $10 billion of assets. Its regulated holdings include a natural gas utility in British Columbia and electric utilities in 5 Canadian provinces and 3 Caribbean countries. Fortis owns non-regulated hydroelectric generation assets across Canada and in Belize and upper New York State. It also owns hotels and commercial real estate in Canada. The Common Shares; First Preference Shares, Series C; First Preference Shares, Series E; and First Preference Shares, Series F of Fortis are traded on the Toronto Stock Exchange under the symbols FTS, FTS.PR.C, FTS.PR.E and FTS.PR.F, respectively. Additional information can be accessed at www.fortisinc.com or www.sedar.com.
Fortis includes forward-looking statements in this material which reflect management's expectations regarding the Corporation's future growth, results of operations, performance, business prospects and opportunities. Wherever possible, words such as "anticipate", "believe", "expects", "intend" and similar expressions have been used to identify the forward-looking statements. These statements reflect management's current beliefs and are based on information currently available to the Corporation's management. Certain material factors or assumptions have been applied in drawing the conclusions contained in the forward-looking statements. These factors or assumptions are subject to inherent risks and uncertainties surrounding future expectations generally. Such risk factors or assumptions include, but are not limited to, regulation, the integration of Terasen Gas, energy prices, general economic conditions, weather, derivatives and hedging, capital resources, loss of service area, licences and permits, environment, insurance, labour relations, human resources and liquidity risk. Fortis cautions readers that a number of factors could cause actual results, performance or achievements to differ materially from the results discussed or implied in the forward-looking statements. These factors should be considered carefully and undue reliance should not be placed on the forward-looking statements. For additional information with respect to certain of these risks or factors, reference should be made to the Corporation's continuous disclosure materials filed from time to time with Canadian securities regulatory authorities including those factors described under the heading "Business Risk Management" in the Management Discussion and Analysis for the year ended December 31, 2006 and in the Management Discussion and Analysis for the three months ended March 31, 2007. The Corporation disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
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