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Gold/Mining/Energy : Canadian REITS, Trusts & Dividend Stocks -- Ignore unavailable to you. Want to Upgrade?

To: Scott Mc who wrote (3061)	3/28/2002 7:29:27 AM
From: kingfisher	Read Replies (1) \| Respond to of 11633

Hydro IPO to entice Ontario By ANDREW WILLIS INVESTMENT REPORTER Thursday, March 28, 2002 – Page B1 Ontario citizens can look forward to preferred treatment when Hydro One stock goes up for sale next week in the largest market debut Canada has ever seen. Ontario is selling its electrical transmission system in an IPO that's expected to fetch $5-billion. A prospectus detailing the transaction is expected to be released today, and sources familiar with the financing say several marketing wrinkles will be used to entice individual Ontario investors. Borrowing the buy now, pay later technique that retailers use to sell TVs and fridges, Ontario residents will have an opportunity to buy Hydro One for 60 per cent down, with the rest of the bill to be paid in a year's time. The rest of the world, including Ontario institutional investors, will pay the full fare up front to buy Hydro One. On Bay Street, the buy now, pay later option is known as an instalment receipt, and such arrangements were used in successful privatizations of Telus Corp., the Alberta phone network, and Canadian National Railway Co. More than 130,000 Albertans bought into the Telus IPO, which saw the stock offered to individuals within the province for $7.50, with a second $7.50 payment due a year later. Financiers working on Hydro One say utilities are popular investments in a low-interest rate, highly volatile market like the one we're now in. They predicted anywhere from $1.5-billion to $3-billion of Hydro One's IPO could end up in the hands of individuals. Both Hydro One instalment receipts and common stock will be listed on the Toronto Stock Exchange. Instalment receipt holders get full voting rights, and would receive the same dividend that Hydro One pays to common shareholders. In other words, if Hydro One's common shares pay out dividends equal to 3.5 per cent of the share price, a rate typical for a large utility, the instalment receipt holders would get a 7-per-cent yield in the first year. Sources familiar with the coming Hydro One offering say Ontario residents will also get an exclusive 21-day window to purchase stock, with the underwriters reserving part of the financing for the province's individual investors. The provincial agency responsible for the stock sale, called SuperBuild, has also asked the Ontario Securities Commission for permission to sell Hydro One shares through bank branches. A spokesman for the market regulator said preliminary discussions on the concept haven't turned up major problems with this marketing scheme. BMO Nesbitt Burns Inc., Goldman Sachs & Co. and RBC Dominion Securities Inc. are leading the Hydro One financing, with a supporting cast that features almost every other investment dealer. Scotia Capital, CIBC World Markets and TD Securities also have a large stake of the instalment receipt portion of the underwriting. The actual selling process will be split between two groups of investment dealers. One so-called tranche of Hydro One will be sold by a syndicate of 14 brokerage houses and cater to the retail market; they will also sell the instalment receipts destined for Ontario residents. A second team of dealers is charged with selling Hydro One stock to the rest of the world. Five of the six Canadian banks are in the first group, and will attempt to sell instalment receipts through both their stockbroker networks and their branches.