Each Subscription Receipt will entitle the holder thereof to receive, on satisfaction of the Release Conditions and without payment of additional consideration, one common share of Fortis and a cash payment equal to the dividends declared on Fortis common shares during the period from June 27, 2012 to the date of issuance of the common shares in respect of the Subscription Receipts to holders of record.
If the Release Conditions are not satisfied by June 30, 2013, or if the agreement and plan of merger relating to the acquisition of CH Energy Group is terminated prior to such time, holders of Subscription Receipts shall be entitled to receive from the escrow agent an amount equal to the full subscription price thereof plus their pro rata share of the interest earned on such amount. Closing of the acquisition of CH Energy Group subsequent to June 30, 2013 could result in the Corporation having to raise alternative capital to finance the transaction.
Receipt of Regulatory Decisions: Regulatory decisions were received in 2012 for 2012/2013 revenue requirements at the FortisBC Energy companies and FortisBC Electric, and for 2012 revenue requirements at FortisAlberta. The Alberta Utilities Commission ("AUC") issued a generic decision in September 2012 on its PBR Initiative, outlining the PBR framework applicable to distribution utilities in Alberta for a five-year term, which commenced January 1, 2013. For further information, refer to the "Regulatory Highlights" section of this earnings release.
First Preference Share Offering: In November 2012 Fortis issued 8 million 4.75% First Preference Shares, Series J at $25.00 per share for total proceeds of $200 million. The net proceeds of $194 million were used to repay borrowings under the Corporation's committed corporate credit facility, which borrowings were primarily incurred to support the construction of the non-regulated Waneta Expansion hydroelectric generating facility ("Waneta Expansion") and for other general corporate purposes.
Long-Term Debt Offering - FortisAlberta: In October 2012 FortisAlberta issued 40-year $125 million 3.98% unsecured debentures. The net proceeds of the debt offering are being used to repay borrowings under the Company's credit facility incurred to finance capital expenditures, to fund future capital expenditures, and for general corporate purposes.
Part VI.1 Tax: Under the terms of the Corporation's first preference shares, the Corporation is subject to tax under Part VI.1 of the Income Tax Act (Canada) associated with dividends on its first preference shares. For corporations subject to Part VI.1 tax, there is an equivalent Part I tax deduction. As permitted under the Income Tax Act (Canada), a corporation may allocate its Part VI.1 tax liability and equivalent Part I tax deduction to its related subsidiaries. In the past, Fortis has allocated these items to Maritime Electric, Newfoundland Power and FortisOntario.
Upon transition to US GAAP, the Corporation reduced its consolidated opening 2012 retained earnings by $20 million to reflect the impact of differences between enacted and substantively enacted tax legislation associated with prior assessments and payments of Part VI.1 taxes, and the recovery of Part I taxes. The adjustment was done as US GAAP requires tax provisions to be based on enacted legislation versus substantively enacted legislation. A number of legislative amendments to Part VI.1 tax in Canada have yet to be enacted. The above-noted transitional US GAAP adjustment, as well as certain amounts recognized in 2012, will reverse through the Corporation's earnings in future periods when the legislation is finally enacted, which is expected in 2013, or as reassessment of corporate taxation years, upon which the enacted versus the substantively enacted rates were used to calculate taxes payable under US GAAP, become statute barred. During 2012 Newfoundland Power recorded a favourable $2.5 million adjustment to income taxes associated with statute-barred Part VI.1 taxes (2011 - $1 million).
Most Popular Stories
- SEO Traffic Lab Celebrate Wins at Digital Marketing Event 'Internet World 2013' in London
- Social Media Initiatives Should Follow Customers' Lead
- Apple CEO: Offshore Units Not a 'Tax Gimmick'
- U.S. Senate Accuses Apple of Large-scale Tax Avoidance
- UTEP Water Recycling Project Wins Venture Titles
- Marketo Makes a Mint in IPO: Stock Shoots Up More than 50 Percent
- Bieber Booed at Billboard Awards
- Crude Oil Up, Gasoline Down
- Austin Startup Compare Metrics Raises $3.5 Million for Expansion
- Why So Many Top 'Car Guys' Are Actually Women