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Toronto Hydro receives $250 million equity investment from City of Toronto
Company declares dividend and amends Dividend Policy
TORONTO, June 28, 2017 /CNW/ - Toronto Hydro Corporation (Toronto Hydro) announced today that it has received an equity investment of $250 million from the City of Toronto (City) and has issued to the City an additional 200 common shares. The City continues to be the sole shareholder of Toronto Hydro, with a total of 1,200 common shares outstanding. The book value of shareholder equity in the consolidated financial statements of Toronto Hydro as at March 31, 2017 was $1,462.2 million.
In December 2016, Toronto city council approved making such investment in order to provide support for Toronto Hydro's credit rating and balance sheet strength, and to restore and enhance its capacity to pay dividends to the City.
In connection with receipt of such investment, Toronto Hydro's Board of Directors also declared certain dividends payable to the City and approved amendments to Toronto Hydro's Dividend Policy, which is summarized as follows:
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(a) In respect of fiscal 2017, an aggregate amount of $75 million shall be paid to the City, consisting of two previously declared installments of $6.25 million (one of which had been paid on March 31, 2017 and the other payable on June 30, 2017), and $62.5 million payable within 10 days of Toronto Hydro's receipt of the above-noted investment (by July 8, 2017) |
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(b) In respect of fiscal 2018 and subsequent fiscal years, 60% of Toronto Hydro's immediately previous fiscal year's annual consolidated net income shall be payable to the City in four equal installments on the last business day of each fiscal quarter |
The revised Dividend Policy will be set out in further detail — including that any dividends will be subject to restrictions imposed by law and the Shareholder Direction — through an amendment of the City of Toronto's Shareholder Direction to Toronto Hydro, which includes the company's former Dividend Policy. These changes also supersede Toronto Hydro's decision announced in November 2016 that it would reduce dividend payments to the City to $25 million per year until further notice.
QUOTE
"As we continue to invest heavily in renewing Toronto Hydro's aging infrastructure to address safety, reliability and customer service requirements, we need a flexible, balanced capital structure. This investment better enables us to make these investments while restoring a strong dividend for our sole shareholder, the City of Toronto."
— Anthony Haines, President and CEO
ABOUT TORONTO HYDRO
The Corporation is a holding company which wholly owns two subsidiaries:
- Toronto Hydro-Electric System Limited (THESL) – distributes electricity and engages in conservation and demand management activities
- Toronto Hydro Energy Services Inc. – provides street lighting and expressway lighting services in the city of Toronto
The principal business of the Corporation and its subsidiaries is the distribution of electricity by THESL, which owns and operates the electricity distribution system for Canada's largest city. A leader in conservation and demand management, it has 764,000 customers located in the city of Toronto and distributes approximately 18% of the electricity consumed in Ontario.
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Forward-Looking Information
Toronto Hydro Corporation (the company) includes forward-looking information in its news release within the meaning of applicable securities laws in Canada (forward-looking information). The purpose of the forward looking information is to provide expectations regarding the company's future results of operations, performance, business prospects and opportunities and may not be appropriate for other purposes. All forward-looking information is given pursuant to the "safe harbour" provisions of applicable Canadian securities legislation. The words "can", "could", "will" and similar expressions are often intended to identify forward-looking information, although not all forward-looking information contains these identifying words. The forward-looking information reflects the company's current beliefs and is based on information currently available to it. The forward-looking information in this news release includes, but is not limited to the company's dividend policy, the company's expectation that the dividend policy will be set out in further detail in an amended and restated Shareholder Direction of Toronto Hydro. The statements that make up the forward-looking information are based on assumptions that include, but are not limited to, the use of proceeds of the investment, the company's existing capital structure, the company's capitalization requirements and the infrastructure investments necessary to maintain the safety and reliability of the electricity grid and help the company keep pace with unprecedented growth in Toronto. The forward-looking information is subject to risks, uncertainties and other factors that could cause actual results to differ materially from historical results or results anticipated by the forward-looking information. The factors which could cause results or events to differ from current expectations include, but are not limited to, the possibility that the company's capital requirements, payments, and required infrastructure are significantly different than currently expected.
All forward-looking information in the news release is qualified in its entirety by the above cautionary statements and, except as required by law, the company undertakes no obligation to revise or update any forward-looking information as a result of new information, future events or otherwise after the date hereof.
SOURCE Toronto Hydro Corporation
