SEAL COVE POWER PLANT: 2 JULY 2008 -- STAN MARSHALL -- CEO Stan Marshall, CEO of Fortis Inc., a large power and natural gas utility based in St. John's, NL, at the Seal Cove Power plant. Photo by Paul DalyPaul Daly
So much for shaky markets.
In the midst of a deal drought, Fortis Inc. hit the market with a big bought offering Tuesday, issuing $601-million in common shares. The money will be used to help fund its $1.5-billion acquisition of New York-based CH Energy Group.
Though the timing of this offering wasn't known, the deal had been widely expected. Back in May, rating agency Standard & Poor's boosted the outlook for Fortis's rating from 'credit watch' to stable on the assumption that the company will raise at least $600-million in common shares and $250-million in preferred shares. And what a surprise, we got a common share deal of that size today.
On the surface, it may seem odd that Fortis is issuing equity now because the market is still choppy. However, its stock has been pretty stable this year -- basically flat since January -- making Fortis one of the few names that investors have a decent chance of counting on.
As for the banking side of things, the deal is a reminder that Bay Street is fortunate to have a relatively steady stream of mergers and acquisitions this year. There's been a flurry from Quebec of late, which has boosted revenues, and this takeover came with a big bought deal component the benefits most of the Street.
CIBC World Markets, Scotia Capital and TD Securities co-led the latest offering.
Tim Kiladze