HispanicBusiness

A portion of the acquisition purchase price of CH Energy Group is expected to be funded from net proceeds from the $601 million Subscription Receipts offering, issued by the Corporation in June 2012, which proceeds are being held in escrow (Note 4). The Subscription Receipts Agreement ("Agreement") contains a deadline of June 30, 2013 for the release of the proceeds from the offering. If it is determined that PSC approval will not be received in time to allow closing of the acquisition of CH Energy Group to occur on or before June 30, 2013, Fortis may seek an extension of the June 30, 2013 deadline by way of amendment of the Agreement. The Agreement may be amended by a special resolution approved by at least two-thirds of the Subscription Receipts Holders ("Receipts Holders") at a meeting, either in person or by proxy, with a quorum for the meeting of at least two Receipts Holders collectively holding 25% of the Subscription Receipts. If conditions precedent to the closing of the transaction are not fulfilled or waived by June 30, 2013, or by the extension date for the Subscription Receipts if approved by Receipts Holders, or if the agreement and plan of merger related to the acquisition is terminated prior to such time, the proceeds from the Subscription Receipts offering, plus pro rata interest earned, are required to be returned to the Receipts Holders. As a result, closing of the transaction subsequent to June 30, 2013, or the extension date for the Subscription Receipts if approved by Receipts Holders, could result in the Corporation having to raise alternative capital to finance the acquisition.

20. EXPROPRIATED ASSETS

Belize Electricity

On June 20, 2011, the GOB enacted legislation leading to the expropriation of the Corporation's investment in Belize Electricity. Consequent to the deprivation of control over the operations of the utility, the Corporation discontinued the consolidation method of accounting for Belize Electricity, as of June 20, 2011, and classified the book value, including foreign exchange impacts, of the expropriated investment as a long-term other asset on the consolidated balance sheet.

In October 2011 Fortis commenced an action in the Belize Supreme Court with respect to challenging the constitutionality of the expropriation of the Corporation's investment in Belize Electricity. Fortis commissioned an independent valuation of its expropriated investment and submitted its claim for compensation to the GOB in November 2011. The book value of the long-term other asset is below fair value as at the date of expropriation as determined by independent valuators. The GOB also commissioned a valuation of Belize Electricity which is significantly lower than both the fair value determined under the Corporation's valuation and the book value of the long-term other asset.

In July 2012 the Belize Supreme Court dismissed the Corporation's claim of October 2011. Also in July 2012, Fortis filed its appeal of the above-noted trial judgment in the Belize Court of Appeal. The appeal was heard in October 2012 and a decision is pending. Any decision of the Belize Court of Appeal may be appealed to the Caribbean Court of Justice, the highest court of appeal available for judicial matters in Belize.

Fortis believes it has a strong, well-positioned case before the Belize Courts supporting the unconstitutionality of the expropriation. There exists, however, a reasonable possibility that the outcome of the litigation may be unfavourable to the Corporation and the amount of compensation otherwise to be paid to Fortis under the legislation expropriating Belize Electricity could be lower than the book value of the Corporation's expropriated investment in Belize Electricity. The book value was $106 million, including foreign exchange impacts, as at March 31, 2013 (December 31, 2012 and March 31, 2012 - $104 million). If the expropriation is held to be unconstitutional, it is not determinable at this time as to the nature of the relief that would be awarded to Fortis, for example: (i) the ordering of the return of the shares to Fortis and/or award of damages; or (ii) the ordering of compensation to be paid to Fortis for the unconstitutional expropriation of the shares. Based on presently available information, the long-term other asset is not deemed impaired as at March 31, 2013. Fortis will continue to assess for impairment each reporting period based on evaluating the outcomes of court proceedings and/or compensation settlement negotiations. As well as continuing the constitutional challenge of the expropriation, Fortis is also pursuing alternative options for obtaining fair compensation, including compensation under the Belize/United Kingdom Bilateral Investment Treaty.