Hydro One hearings to delay IPO until fall, bankers say
TORONTO -- The Ontario government's decision to hold public hearings on the sale of Hydro One Inc. will delay the utility's initial public offering until late fall, say investment bankers involved in the deal.
Hydro One shares were supposed to go on sale in June and had been expected to raise about $5-billion, making it the largest IPO in Canadian history. The sale was blocked last week after Mr. Justice Arthur Gans of the Ontario Superior Court ruled the province had no authority to sell the utility.
The legal challenge came from two unions who are pushing to stop the privatization along with opposition politicians.
Yesterday, Ontario Premier Ernie Eves said his government will appeal the court ruling. The government will also introduce new leglislation next month to sell the utility, and will hold public hearings on that legislation.
"I believe it's important that Hydro One be privatized," Mr. Eves said yesterday. "And I believe that if there are changes we can make to our course of action through the consultation process then we are quite prepared to consider them."
Mr. Eves' decision to proceed with the privatization was met with relief on Bay Street, where brokerage firms expect to earn up to $113-million in fees from the IPO.
"The way the Premier is going is not a surprise, but it is a relief," said one senior investment banker working on the IPO. "The positive development today is he didn't wilt. The Premier was challenged, his party was challenged, and this wasn't a problem of his making. He could have dropped it [the IPO]. He didn't. He's standing strong and saying he will move forward."
Chris Stockwell, the Energy Minister, said yesterday the new legislation will likely be in place by the summer and the IPO could occur in the fall. Investment bankers involved in the deal met last night to plot their next move, and some said the IPO should be ready by October or November.
Attorney-General David Young said the appeal is necessary to clarify who can sue the government over policy issues.
Legal experts said Judge Gans's ruling handed unions and other groups a powerful tool to challenge governments because he allowed two unions -- the Canadian Union of Public Employees and the Communications, Energy and Paperworkers Union -- to proceed with their case even though neither union directly represents Hydro One workers.
The workers are represented by the Power Workers Union who support privatization.
The province argued that the unions had no standing because their interests were not directly affected.
But Judge Gans said the unions' interests went beyond labour issues and he allowed the case to proceed. |
