The Consumers' Waterheater Income Fund Completes Transactions

On December 17, 2002, The Consumers’ Waterheater Income Fund completed its initial public offering of $250 million of trust units and The Consumers’ Waterheater Operating Trust, a wholly owned entity of the fund, completed a private placement of $500 million of floating rate notes. After closing, the underwriters exercised their over-allotment option in full, and additional units of the fund were issued on December 31, 2002, for $37.5 million.

The proceeds of this offering and sale of the floating rate notes were used to indirectly acquire a 65 per cent co-ownership interest in approximately 1.3 million water heater rental contracts previously owned by Enbridge Services Inc. (SI), a wholly owned subsidiary of Centrica Canada Limited, and other related assets. SI retained the remaining 35 per cent co-ownership interest, as well as the servicing duties and customer relationships for these water heaters, and entered into an origination agreement with a wholly owned entity of the fund providing for the future sale of rented water heaters indirectly to the fund. The fund and its various subsidiary entities are being managed by a SI subsidiary.

On January 22, 2003, the trust completed its public offering of $275 million of 4.7 per cent secured notes having an expected final payment date of January 28, 2008, and $225 million of 5.245 per cent secured notes having an expected final payment date of January 28, 2010. The proceeds of this offering were used to repay the trust’s floating rate notes.

Centrica Canada was represented in-house by Gordon Currie, senior vice-president and general counsel, and Steve Bodley, vice-president and principal legal counsel. SI was represented in-house by David Purdy, vice-president and general counsel. Torys LLP acted for Centrica Canada, SI, the fund and the trust, with a team that included Michael Feldman, Phil Mohtadi, Simon Knowling, Mike Pickersgill, Janie Tremblay, John Toffoletto, Karen Burke, John Guccione and Gavin Sinclair (corporate/securities), Corrado Cardarelli, Ann Marie McGovern and Tim Rorabeck (tax) and Jay Holsten and Carolyn Naiman (competition).

The underwriters, led by Scotia Capital Inc. on the offering of units, and by TD Securities Inc. on the offering of secured notes, were represented by Blake, Cassels & Graydon LLP with a team that included Ric McIvor, Greg Frenette, Pat Finnerty, Mario Josipovic, Neil Kothari and Karen Murray (corporate/securities), Rob Kwinter (competition) and Paul Tamaki and Peter Lee (tax).