Fortis Completes $1.8B Offering and Obtains $2B in acquisition Credit Facilities

Fortis Inc., through its direct wholly owned subsidiary FortisUS Holdings Nova Scotia Limited, completed the sale of $1.8-billion aggregate principal amount of 4 per cent convertible unsecured subordinated debentures (Convertible Debentures) of Fortis represented by instalment receipts.  The offering consisted of a secondary offering to the public of approximately $1.6-billion aggregate principal amount of Convertible Debentures on a bought deal basis and the sale of $206-million aggregate principal amount of Convertible Debentures to institutional investors on a private placement basis.

The Convertible Debentures were sold on an instalment basis at a price of $1,000 per Convertible Debenture, of which $333 was paid on closing and the remaining $667 is payable on a date (Final Instalment Date) to be fixed following satisfaction of all conditions precedent to the closing of the Corporation's acquisition of UNS Energy Corporation.  At the option of investors and provided that payment of the final instalment has been made, each Convertible Debenture will be convertible into common shares of Fortis at any time after the Final Instalment Date but prior to maturity or redemption by the Corporation at a conversion price of $30.72 per common share, being a conversion rate of 32.5521 common shares per $1,000 principal amount of Debentures, subject to adjustment in certain circumstances.  Prior to the Final Instalment Date, beneficial ownership of the Convertible Debentures is represented by Instalment Receipts which began trading on the Toronto Stock Exchange on Jan. 9, 2014 under the symbol FTS.IR.

The public offering of Convertible Debentures was made through a syndicate of underwriters led by Scotiabank, RBC Capital Markets, TD Securities Inc. and CIBC, and including BMO Capital Markets, National Bank Financial Inc. and Desjardins Securities Inc.  Each of Scotiabank, RBC Capital Markets, TD Securities Inc. and CIBC acted as agents in the concurrent private placement.

For purposes of financing the acquisition of UNS Energy Corporation, Fortis obtained a commitment letter on Dec. 11, 2013 from The Bank of Nova Scotia providing for an aggregate of $2-billion non-revolving term credit facilities for Fortis consisting of a $1.7-billion short-term bridge facility, repayable in full nine months following its advance, and a $300-million medium-term bridge facility, repayable in full on the second anniversary of its advance.

Fortis was represented in-house by Ron McCabe, Vice President, General Counsel and Corporate Secretary. Davies Ward Phillips & Vineberg LLP acted as counsel for Fortis, with a team comprised of Jim Reid, Richard Fridman, Robin Upshall and Michael Jemczyk (corporate and securities); Carol Pennycook (banking) and Siobhan Monaghan and Raj Juneja (tax) in Toronto; and Jeffrey Nadler and Scott Tayne (corporate and securities) and Scott Semer (tax) in New York. McInnes Cooper acted as counsel to Fortis with a team of John Green and Basia Dzierzanowska.

Stikeman Elliott LLP acted as counsel to the underwriters and agents, with a team comprised of Joel Binder, Jonah Mann, Bradley Zander, Corinne Geller and Erisa Mara (corporate and securities); John Lorito and Katy Pitch (tax) and Patrick Duffy (regulatory).

Paul, Weiss, Rifkind, Wharton & Garrison LLP acted as US counsel to the underwriters with a team of Edwin Maynard, Christopher Cummings and Ian Hazlett (corporate and securities).

Fasken Martineau DuMoulin LLP acted as lending counsel to The Bank of Nova Scotia with a team that included John Torrey and David Johnson.

Lawyer(s)

James R. Reid Jeffrey Nadler Barbara (Basia) H. Dzierzanowska Carol D. Pennycook Jonah Mann John G. Lorito John W. Torrey Katy Pitch Raj Juneja Richard Fridman John M. Green Michael Jemczyk Patrick G. Duffy Ronald W. McCabe K. A. Siobhan Monaghan Scott Semer David I. Johnson Joel E. Binder Scott Tayne Robin Upshall

Firm(s)

Davies Ward Phillips & Vineberg LLP McInnes Cooper Stikeman Elliott LLP Paul, Weiss, Rifkind, Wharton & Garrison LLP Fasken Martineau DuMoulin LLP