|
|
|
|
|
|
|
|
|
|
|
|
|
Price to the
Subscribers
|
|
Commitment
Fee(1)
|
|
Net proceeds to
Fortis(2)
|
|
Per Offered Share
|
|
$
|
52.15
|
|
$
|
0.52
|
|
$
|
51.63
|
|
Total
|
|
$
|
500,000,015
|
|
$
|
5,000,000
|
|
$
|
495,000,015
|
|
-
(1)
-
Fortis
has agreed to pay the Subscribers a commitment fee equal to 1% of the gross proceeds of the Offering on the Closing Date, or the
Commitment Fee.
-
(2)
-
After
deducting the Commitment Fee to be paid to the Subscribers, but before deducting expenses of the Offering, estimated at $0.2 million, which
will be paid from the proceeds of the Offering.
Investing in the Common Shares involves certain risks that should be carefully considered. See the "Risk Factors" section of the Prospectus, as well as "Risks Related to the
Common Shares" in this Prospectus Supplement.
The sale of the Offered Shares to the Subscribers will be settled under the book-based system through the facilities of The Depository Trust Company, or DTC, or by such other
means as we and the Subscribers may agree. Unless otherwise determined by the Corporation and the Subscribers, the Subscribers will receive only a customer confirmation from the registered dealer that
is a DTC participant through which the Offered Shares are purchased.
This Offering is being made by a Canadian issuer that is permitted, under the multi-jurisdictional disclosure system adopted by the U.S. and Canada, or MJDS, to prepare this
Prospectus Supplement in accordance with Canadian disclosure requirements. You should be aware that such requirements are different from U.S. disclosure requirements. Financial statements
incorporated by reference herein have been prepared in accordance with U.S. generally accepted accounting principles, or U.S. GAAP.
Table of Contents
The acquisition of the securities described herein may subject you to tax consequences in both the U.S. and Canada. This Prospectus Supplement does not describe these tax
consequences. See "Certain Canadian and U.S. Federal Income Tax Considerations".
Your ability to enforce civil liabilities under U.S. federal securities laws may be affected adversely because Fortis is incorporated under the laws of the Province of
Newfoundland and Labrador, Canada, some of the Corporation's officers and directors and some of the experts named in this Prospectus Supplement and the Prospectus are non-U.S. residents, and
some of the Corporation's assets and some of the assets of those officers, directors and experts are located outside of the U.S. See "Enforceability of Civil
Liabilities".
Six
of our directors, Mr. Paul J. Bonavia, Mr. Lawrence T. Borgard, Ms. Maura J. Clark, Ms. Margarita K. Dilley, Ms. Julie A. Dobson and Mr. Joseph L. Welch,
reside outside of Canada and each has appointed Fortis Inc., Suite 1100, 5 Springdale Street, P.O. Box 8837, St. John's, Newfoundland and Labrador
A1B 3T2, as agent for service of process. You are advised that it may not be possible to enforce judgments obtained in Canada against any person that resides outside of Canada, even if such
person has appointed an agent for service of process.
THE SECURITIES OFFERED HEREIN HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SEC, NOR HAS THE SEC OR ANY STATE OR CANADIAN SECURITIES REGULATOR PASSED UPON THE ADEQUACY OR
ACCURACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
No underwriter or dealer has been involved in the preparation of, or has performed any review of, this Prospectus Supplement or the Prospectus.
The
Corporation's head and registered office are located at Suite 1100, 5 Springdale Street, St. John's, Newfoundland and Labrador A1E 0E4.
Table of Contents
TABLE OF CONTENTS
Prospectus Supplement
Prospectus
Table of Contents
NOTICE TO READERS
This document is in two parts. The first part is this Prospectus Supplement, which describes the specific terms of the Offering and
also adds to and updates certain information contained in the Prospectus and the documents incorporated by reference herein and therein. The second part is the Prospectus, which gives more general
information, some of which may not apply to the Offering. This Prospectus Supplement is deemed to be incorporated by reference in the Prospectus solely for the purpose of the Offering.
If the description of the Common Shares varies between this Prospectus Supplement and the Prospectus, you should rely on the information in this Prospectus
Supplement.
You should rely only on the information contained in or incorporated by reference in this Prospectus Supplement and the Prospectus. We have not authorized anyone
to provide you with different or additional information. We are not making an offer of Common Shares in any jurisdiction where the offer is not permitted by law. The information contained in this
Prospectus Supplement, the Prospectus and the documents incorporated by reference herein and therein is accurate only as of the respective dates of those documents, and you should not assume
otherwise.
We
further note that the representations, warranties and covenants made by us in any agreement that is filed as an exhibit to any document that is incorporated by reference into this
Prospectus Supplement and the accompanying Prospectus were made solely for the benefit of the parties to such agreement, including, in some cases, for the purpose of allocating risk among the parties
to such agreements, and should not be deemed to be a representation, warranty or covenant to you. Moreover, such representations, warranties and covenants were accurate only as of the date when made.
Accordingly, such representations, warranties and covenants should not be relied on as accurately representing the current state of our affairs.
Unless
we have indicated otherwise, or the context otherwise requires, references in this Prospectus Supplement to "Fortis", the "Corporation", "we", "us" and "our" refer to
Fortis Inc. and its consolidated subsidiaries.
SPECIAL NOTE REGARDING FORWARD-LOOKING INFORMATION
This Prospectus Supplement and the Prospectus, including the documents incorporated by reference herein and therein, contain
forward-looking information within the meaning of applicable Canadian securities laws and forward-looking statements within the meaning of the U.S. Private Securities
Litigation Reform Act of 1995 (collectively referred to herein as "forward-looking information"). The forward-looking information reflects our current expectations regarding
our future growth, results of operations, performance, business prospects and opportunities. The words anticipates, assumes, believes, budgets, can, could, estimates, expects, forecasts, intends, may,
might, opportunity, plans, projects, schedule, seeks, should, target, will, would and the negative of these terms and other similar expressions are often intended to identify forward-looking
information.
The
forward-looking information in this Prospectus Supplement and the Prospectus, including the documents incorporated by reference herein and therein, includes, but is not limited to,
statements regarding: the aggregate amount of the total proceeds that we will receive pursuant to the Offering and the expected uses of such proceeds; the expectation that the Concurrent Offering
(as defined below) will be completed; the aggregate amount of the gross proceeds of the Concurrent Offering and the expected uses of such proceeds; the expectation that the Corporation's equity
requirements will be satisfied through the Offering, the Concurrent Offering and the dividend reinvestment and share purchase plan, or DRIP and as a result, the ATM Distribution (as defined
below) is no longer necessary; the expectation that the Corporation will eliminate the discount under its DRIP prior to payment of its March 1, 2020 dividend and that the rate of participation
in the DRIP by the Corporation's shareholders may decrease as a result; targeted average annual dividend growth through 2024; forecast capital expenditures for 2019 and the period 2020 through 2024
and potential funding sources for the capital plan; expected timing of filing of regulatory applications and timing, outcome and impact of regulatory decisions; expected or potential funding sources
for operating expenses, interest costs and capital expenditure plans; the expectation that maintaining the targeted capital
structure of the regulated operating subsidiaries will not have an impact on its ability to pay dividends in the foreseeable future; expected consolidated fixed-term debt maturities and repayments
over the next five years; the expectation that the Corporation and its
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Table of Contents
subsidiaries
will remain compliant with debt covenants throughout 2019; the nature, timing, benefits, funding sources and expected costs of certain capital projects including the Oso Grande Wind
Project, Wataynikaneyap Transmission Power Project, Eagle Mountain Woodfibre Gas Line Project, Tilbury 1B, Multi-Value Regional Transmission Projects, 34.5 to 69 kilovolt Transmission
Conversion Project, Southline Transmission Project, Lower Mainland Intermediate Pressure System Upgrade; Transmission Integrity Management Capabilities Project and additional opportunities beyond the
base capital expenditure plan; the expectation that the adoption of future accounting pronouncements will not have a material impact on the Corporation's consolidated financial statements and the
anticipated timing for adoption; forecast rate base for 2019 and the period 2020 through 2024; the expectation that capital investment will support growth in earnings and dividends; the expectation
that the Corporation and its subsidiaries will continue to have reasonable access to long-term capital in 2019; the expectation that subsidiary operating expenses and interest costs will be paid out
of subsidiary operating cash flows; the expected sources of cash required of our subsidiaries and Fortis to complete subsidiary capital expenditure programs; the intent of management to refinance
certain borrowings under our and our subsidiaries' long-term committed credit facilities with long-term permanent financing; the expected timing and impact, if any, of the adoption of future
accounting pronouncements; statements relating to the addition of renewable capacity at Tucson Electric Power Company, or TEP; the expectation that allocated revenues recognized by ITC Holdings Corp,
or ITC, from Canadian entities reserving transmission over the Ontario or Manitoba interface are not expected to be material to ITC; the expectation that TEP has sufficient generating capacity,
together with existing power purchase agreements and expected generation plant additions, to satisfy the requirements of its customer base and meet future peak demand requirements; the expectation
that changes in energy supply costs may increase electricity prices in a manner that adversely affects Newfoundland Power Inc.'s, or Newfoundland Power, sales; and TEP's expected share of mine
reclamation costs.
The
forecasts and projections that make up the forward-looking information included in this Prospectus Supplement and the Prospectus are based on assumptions which include, but are not
limited to: the receipt of applicable regulatory approvals and requested rate orders, no material adverse regulatory decisions being received, and the expectation of regulatory stability; the
implementation of the five-year capital expenditure plan; no material capital project and financing cost overrun related to any of our capital projects; the realization of additional opportunities;
our board of directors, or the Board of Directors, exercising its discretion to declare dividends, taking into account our business performance and financial condition; no significant variability in
interest rates; no significant operational disruptions or environmental liability due to a catastrophic event or environmental upset caused by severe weather, other acts of nature or other major
events; the continued ability to maintain our electricity and gas systems to ensure their continued performance; no severe and prolonged downturn in economic conditions; no significant decline in
capital spending; sufficient liquidity and capital resources; the continuation of regulator-approved mechanisms to flow through the cost of natural gas and energy supply costs in customer rates; the
ability to hedge exposures to fluctuations in foreign exchange rates, natural gas prices and electricity prices; no significant changes in tax laws or proposed tax laws; no significant counterparty
defaults; the continued competitiveness of natural gas pricing when compared with electricity and other alternative sources of energy; the continued availability of natural gas, fuel, coal and
electricity supply; continuation and regulatory approval of power supply and capacity purchase contracts; the ability to fund defined benefit pension plans, earn the assumed long-term rates of return
on the related assets and recover net pension costs in customer rates; no significant changes
in government energy plans, environmental laws and regulations that may materially negatively affect us or our subsidiaries; no material change in public policies and directions by governments that
could materially negatively affect us or our subsidiaries; maintenance of adequate insurance coverage; the ability to obtain and maintain licences and permits; retention of existing service areas; the
continued tax deferred treatment of earnings from our foreign operations; continued maintenance of information technology infrastructure and no material breach of cybersecurity; continued favourable
relations with Indigenous Peoples; favourable labour relations; that we can reasonably assess the merit of and potential liability attributable to ongoing legal proceedings; and sufficient human
resources to deliver service and execute the capital expenditure program.
The
forward-looking information is subject to risks, uncertainties and other factors that could cause actual results to differ materially from historical results or results anticipated
by the forward-looking information. These factors should be considered carefully and undue reliance should not be placed on the forward-looking information. Factors which could cause results or events
to differ from current expectations include, but are not
S-2
Table of Contents
limited
to: the price at which the Offered Shares are sold in the Offering and the aggregate net proceeds received by us as a result of the Offering and Concurrent Offering; failure to obtain TSX
approval for the amendment of the DRIP to eliminate the discount thereunder; uncertainty regarding the outcome of regulatory proceedings at our utilities; the impact of fluctuations in foreign
exchange rates; risks relating to pending and future changes in environmental regulations; interest rate risk; risks associated with the continuation, renewal, replacement and/or regulatory approval
of power supply and capacity purchase contracts; risks relating to energy prices; provincial, state and federal regulatory legislative decisions and actions; risks relating to any potential downgrade
of our credit ratings; risks relating to our ability to access capital markets on favourable terms or at all; the cost of debt and equity capital; risks associated with changes in economic conditions;
changes in regional economic and market conditions which could affect customer growth and energy usage; risks relating to the impact of actual loads, forecasted loads, regional economic conditions,
weather conditions, union strikes, labour shortages, material and equipment prices and availability; the performance of the stock market and changing interest rate environment; risks from regulatory
approvals for reasons relating to rate construct, environmental, siting, regional planning, cost recovery or other issues or as a result of legal proceedings; risks arising from variances between
estimated and actual costs of construction contracts awarded and the potential for greater competition; insurance coverage risk; risk of loss of licences and permits; risk of loss of service area;
risks relating to derivatives; the continued ability to hedge foreign exchange risk; counterparty risk; environmental risks; competitiveness of natural gas; natural gas, fuel, coal and electricity
supply risk; risks relating to human resources and labour relations; risk of unexpected outcomes of legal proceedings currently against us; risk of not being able to access Indigenous Peoples' lands;
weather and seasonality risk; commodity price risk; capital resources and liquidity risks; changes in critical accounting estimates; risks related to changes in tax legislation; the ongoing
restructuring of the electric industry; changes to long-term contracts; risk of failure of information technology infrastructure and cyber-attacks or challenges to our information security; risk
associated with the impacts of less favourable economic conditions on our results of operations; risk associated with the completion of our 2019 capital expenditure plan, including completion of major
capital projects on the timelines anticipated and at the expected amounts; uncertainty in the timing and access to capital markets to arrange sufficient and cost-effective financing to finance, among
other things, capital expenditures and the repayment of maturing debt; and certain presently unknown or unforeseen risks, including, but not limited to, acts of terrorism. This list is not exhaustive
of the factors that may affect any of our forward-looking information. For additional information with respect to our risk factors and risk factors relating to the Offered Shares,
reference should be made to the section of this Prospectus Supplement entitled "Risks Related to the Common Shares", the section of the Prospectus entitled "Risk Factors", to the documents
incorporated by reference herein and therein and to our continuous disclosure materials filed from time to time with Canadian securities regulatory authorities and with the SEC.
Although
the Corporation has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in the forward-looking
information, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. This forward-looking information is made as of the date of this
Prospectus Supplement. There can be no assurance that the forward-looking information will prove to be accurate, as actual results and future events could differ materially from those anticipated in
such information. Accordingly, readers are cautioned not to place undue reliance on the forward-looking information. All forward-looking information in this Prospectus Supplement, the Prospectus and
in the documents incorporated herein and therein by reference is qualified in its entirety by the above cautionary statements and, except as required by law, we undertake no obligation to revise or
update any forward-looking information as a result of new information, future events or otherwise.
S-3
Table of Contents
DOCUMENTS INCORPORATED BY REFERENCE
This Prospectus Supplement is deemed to be incorporated by reference in the Prospectus solely for the purpose of the Offering. The
following documents filed by us with the securities commission or similar authority in each of the provinces of Canada are specifically incorporated by reference in, and form an integral part of, this
Prospectus Supplement and the Prospectus:
|
|
|
|
|
(a)
|
|
our Annual Information Form dated February 14, 2019, for the fiscal year ended December 31, 2018;
|
|
(b)
|
|
our audited consolidated financial statements as at and for the years ended December 31, 2018 and 2017,
together with the notes thereto, or the Annual Financial Statements, and the auditor's report thereon of Deloitte LLP dated February 14, 2019;
|
|
(c)
|
|
our Management Discussion and Analysis of financial condition and results of operations dated February 14, 2019 for
the fiscal year ended December 31, 2018, or the Annual MD&A;
|
|
(d)
|
|
our Management Information Circular dated March 15, 2019 prepared in connection with our annual meeting of
shareholders held on May 2, 2019;
|
|
(e)
|
|
our unaudited interim condensed consolidated financial statements as at September 30, 2019 and 2018 for the
three and nine months ended September 30, 2019 and 2018, together with the notes thereto; and
|
|
(f)
|
|
our Management Discussion and Analysis of financial condition and results of operations dated October 31, 2019
for the three and nine months ended September 30, 2019.
|
Any
document of the type referred to above, and any material change report (other than any confidential material change report), any business acquisition report and any prospectus
supplement relating to the Offering disclosing additional or updated information, subsequently filed by us with such securities commissions or regulatory authorities in Canada after the date of this
Prospectus Supplement, and prior to the termination of the Offering, shall be deemed to be incorporated by reference into this Prospectus Supplement and the Prospectus.
Documents
and information in an annual report on Form 40-F filed by us with the SEC under the U.S. Securities Exchange Act of
1934, as amended, or the Exchange Act, from the date of this Prospectus Supplement and prior to the termination or completion of the Offering shall be deemed to be incorporated
by reference into this Prospectus Supplement and the registration statement of which this Prospectus Supplement forms a part. In addition, any other report on Form 6-K and the
exhibits thereto filed or furnished by us with the SEC under the Exchange Act from the date of this Prospectus Supplement and prior to the termination or completion of the Offering shall be deemed to
be incorporated by reference into this Prospectus Supplement or as exhibits to the registration statement of which this Prospectus Supplement forms a part, as applicable, but only if and to the
extent expressly so provided in such reports. Our current reports on Form 6-K and our annual reports on Form 40-F are available on the SEC's Electronic Data Gathering and
Retrieval website, or EDGAR, at www.sec.gov.
Any statement contained in this Prospectus Supplement, the Prospectus or in a document incorporated or deemed to be incorporated by reference in this Prospectus
Supplement or the Prospectus shall be deemed to be modified or superseded for the purposes of this Prospectus Supplement and the Prospectus to the extent that a statement contained in this Prospectus
Supplement, or in any subsequently filed document which is or is deemed to be incorporated by reference in this Prospectus Supplement or the Prospectus, modifies or
supersedes that statement. The modifying or superseding statement need not state that it has modified or superseded a prior statement. The making of a modifying or superseding statement shall not be
deemed an admission for any purposes that the modified or superseded statement, when made, constituted a misrepresentation, an untrue statement of a material fact or an omission to state a material
fact that is required to be stated or that is necessary to make a statement not misleading in light of the circumstances in which it was made. Any statement so modified or superseded shall not
constitute a part of this Prospectus Supplement or the Prospectus except as so modified or superseded.
S-4
Table of Contents
WHERE YOU CAN FIND ADDITIONAL INFORMATION
Copies of the documents incorporated in this Prospectus Supplement and the Prospectus by reference may be obtained on request without
charge from our Corporate Secretary at Suite 1100, 5 Springdale Street, P.O. Box 8837, St. John's, Newfoundland and Labrador A1B 3T2 (telephone
(709) 737-2800). These documents are also available through the Internet on our website at www.fortisinc.com or on the Canadian Securities Administrators' System
for Electronic Document Analysis and Retrieval, or SEDAR, which can be accessed at www.sedar.com. The information contained on, or accessible through, any of these
websites is not incorporated by reference into this Prospectus Supplement or the Prospectus and is not, and should not be considered to be, a part of this Prospectus Supplement or the Prospectus
unless it is explicitly so incorporated.
In
addition to our continuous disclosure obligations under the securities laws of the provinces of Canada, we are subject to the informational requirements of the Exchange Act and in
accordance therewith file reports and other information with the SEC. Under the MJDS, such reports and other information may be prepared in accordance with the disclosure requirements of Canada, which
requirements are different from those of the U.S. Any information filed with the SEC can be read and copied at prescribed rates at the SEC's Public Reference Room at 100 F Street, N.E.,
Washington, D.C. 20549. Information on the operation of the Public Reference Room may be obtained by calling the SEC at 1-800-SEC-0330 or by accessing its website at
www.sec.gov. Some of the documents that we file with or furnish to the SEC are electronically available from EDGAR, and may be accessed
at www.sec.gov.
We
have filed with the SEC a registration statement on Form F-10 (File No. 333-228593) under the U.S. Securities Act of
1933, as amended, or the Securities Act, with respect to the Offered Shares. This Prospectus Supplement, which forms a part of the registration statement, does not
contain all of the information set forth in the registration statement, certain parts of which have been omitted in accordance with the rules and regulations of the SEC. For further information with
respect to us and the Offering, reference is made to the registration statement and to the schedules and exhibits filed therewith. Statements contained in this Prospectus Supplement as to the contents
of certain documents are not necessarily complete and, in each instance, reference is made to the copy of the document filed as an exhibit to the registration statement. Each such statement is
qualified in its entirety by such reference.
PRESENTATION OF FINANCIAL INFORMATION
Financial statements incorporated by reference in this Prospectus Supplement and the Prospectus have been prepared in accordance with
U.S. GAAP. Certain calculations included in tables and other figures in this Prospectus Supplement and the Prospectus have been rounded for clarity of presentation.
S-5
Table of Contents
CURRENCY AND EXCHANGE RATE INFORMATION
This Prospectus Supplement contains references to U.S. dollars and Canadian dollars. All dollar amounts referenced, unless
otherwise indicated, are expressed in Canadian dollars. References to "$" or "C$" are to Canadian dollars and references to "US$" are to U.S. dollars. The following table shows, for the periods
indicated, certain information regarding the Canadian dollar/U.S. dollar exchange rate. Except as indicated below, the information is based on the average daily exchange rate as reported by the
Bank of Canada. Such exchange rate on November 25, 2019 was C$1.3307 = US$1.00.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Period End
|
|
Average
|
|
Low
|
|
High
|
|
|
|
|
|
(C$ per US$)
|
|
|
|
Year ended December 31,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2018
|
|
|
1.3642
|
|
|
1.2957
|
|
|
1.2288
|
|
|
1.3642
|
|
2017
|
|
|
1.2545
|
|
|
1.2986
|
|
|
1.2128
|
|
|
1.3743
|
|
Quarter ended,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2019
|
|
|
1.3243
|
|
|
1.3204
|
|
|
1.3038
|
|
|
1.3343
|
|
June 30, 2019
|
|
|
1.3087
|
|
|
1.3377
|
|
|
1.3087
|
|
|
1.3527
|
|
March 31, 2019
|
|
|
1.3363
|
|
|
1.3295
|
|
|
1.3095
|
|
|
1.3600
|
|
THE CORPORATION
The following description of Fortis is derived from selected information about the Corporation contained in the
documents incorporated by reference and does not contain all of the information about the Corporation and its business that should be considered before investing in the Offered Shares. This Prospectus
Supplement, the accompanying Prospectus and the documents incorporated by reference herein and therein should be reviewed and considered by you in connection with your investment in the Offered
Shares. This Prospectus Supplement may add to, update or change information in the accompanying Prospectus. You should carefully read this entire Prospectus Supplement and the accompanying Prospectus,
including the risks and uncertainties discussed in the section titled "Risks Related to the Common Shares" in this Prospectus Supplement, the section titled "Risk Factors" in the Prospectus, and the
information incorporated by reference in this Prospectus Supplement, including the consolidated financial statements of the Corporation before making an investment decision.
We
are a North American electric and gas utility holding company, with total assets of approximately $53 billion as at September 30, 2019, and revenue totaling
approximately $8.4 billion and $6.5 billion for the year ended December 31, 2018 and the nine months ended September 30, 2019, respectively. In 2018, our electricity
distribution systems met a combined peak demand of 33,295 megawatts, or MW, and our gas distribution systems met a peak day demand of 1,599 terajoules, or TJ. For the nine months ended
September 30, 2019, our electricity distribution systems met a combined peak demand of 32,441 MW and our gas distribution system met a peak day demand of 1,618 TJ. Our
8,800 employees serve customers at utility operations in five Canadian provinces, nine U.S. states and three Caribbean countries.
Our
business segments are:
-
(a)
-
Regulated
Independent Transmission United States: consisting of the electric transmission operations of ITC,
which is our indirect subsidiary, with Eiffel Investment Pte Ltd (an affiliate of GIC Pte Ltd.) owning a 19.9% interest in ITC. ITC's business consists primarily of the electric
transmission operations of ITC's regulated operating subsidiaries, which include International Transmission Company, Michigan Electric Transmission Company, LLC, ITC Midwest LLC, ITC
Great Plains, LLC and ITC Interconnection LLC. ITC owns and operates high-voltage transmission systems in Michigan's Lower Peninsula and portions of Iowa, Minnesota, Illinois, Missouri,
Kansas and Oklahoma that transmit electricity from generating stations to local distribution facilities connected to ITC's systems;
S-6
Table of Contents
-
(b)
-
Regulated
Electric & Gas Utilities United States: consisting of vertically integrated electrical and
gas utilities in the state of Arizona: TEP, UNS Electric, Inc. and UNS Gas, Inc., each a subsidiary of UNS Energy Corporation, or UNS Energy; together with Central Hudson Gas &
Electric Corporation, a regulated transmission and distribution utility located in New York State's Mid-Hudson River Valley;
-
(c)
-
Regulated
Electric & Gas Utilities Canadian and Caribbean: consisting of: (i) FortisBC Energy, the
largest distributor of natural gas in British Columbia, serving residential, commercial and industrial and transportation customers in more than 135 communities;
(ii) FortisAlberta Inc., a regulated electric distribution utility serving a substantial portion of southern and central Alberta; (iii) FortisBC Inc., an integrated,
regulated electric utility serving the southern interior of British Columbia; (iv) Newfoundland Power, a regulated electric utility that operates throughout the island portion of the Province
of Newfoundland and Labrador; (v) Maritime Electric Company, Limited, a regulated electric utility on Prince Edward Island; (vi) FortisOntario Inc., which provides regulated,
integrated electric utility service in Fort Erie, Cornwall, Gananoque, Port Colborne and the District of Algoma in Ontario; (vii) a 39% equity investment in the Wataynikaneyap Power Limited
Partnership, a power project in Ontario in the development stage; (viii) an indirect approximate 60% controlling ownership interest in Caribbean Utilities Company, Ltd., an integrated
electric utility in Grand Cayman, Cayman Islands, the Class A Ordinary Shares of which are listed on the TSX under the symbol CUP.U; (ix) Fortis Turks and Caicos, integrated electric
utilities on the Turks and Caicos Islands; and (x) an approximate 33% equity investment in Belize Electricity Limited, an integrated electric utility in Belize;
-
(d)
-
Non-Regulated Energy
Infrastructure: consisting of: (i) the Aitken Creek natural gas storage facility in
British Columbia; and (ii) the 25-MW Mollejon, 7-MW Chalillo and 19-MW Vaca hydroelectric generating facilities in Belize; and
-
(e)
-
Non-Regulated Corporate
and Other: captures expense and revenue items not specifically related to any reportable
segment and those business operations that are below the required threshold for reporting as separate segments.
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Table of Contents
RECENT DEVELOPMENTS
Concurrent Offering
Concurrently with the execution of the Subscription Agreement relating to the Offering, the Corporation entered into an agreement on
November 25, 2019 with Scotia Capital Inc., on behalf of a syndicate of underwriters, or the Underwriters, pursuant to which the Corporation has agreed to sell and the Underwriters have
agreed to purchase, as principals, 11,510,000 Common Shares, or the Concurrent Offering Shares, at a price of $52.15 per Concurrent Offering Share, or the Concurrent Offering Price, for total
gross proceeds of approximately $600 million, or the Concurrent Offering. Fortis has agreed to pay the Underwriters a commission, or the Underwriting Commission, in connection with the
Concurrent Offering.
In
connection with the Concurrent Offering, Fortis has granted the Underwriters an over-allotment option, or the Over-Allotment Option, exercisable in whole or in part within
30 days from the closing of the Concurrent Offering, to purchase up to an additional 1,726,500 Common Shares, or the Additional Shares, on the same terms as in the Concurrent Offering,
solely to cover over-allotments, if any, and for market stabilization purposes. If the Over-Allotment Option is exercised in full, the total price to the public, the aggregate Underwriting Commission
and the net proceeds of the Concurrent Offering will be approximately $690 million, $28 million and $663 million (before deducting other expenses of the Concurrent Offering),
respectively.
Subject
to the terms and conditions set forth in the Underwriting Agreement, the Underwriters have agreed to purchase all of the Concurrent Offering Shares sold under the Underwriting
Agreement if any of the Concurrent Offering Shares are purchased under the Underwriting Agreement. The Underwriters propose to offer the Concurrent Offering Shares initially at the Concurrent Offering
Price. After a reasonable effort has been made by the Underwriters to sell all of the Concurrent Offering Shares at the Concurrent Offering Price, the Underwriters may subsequently reduce the selling
price to investors from time to time in order to sell any of the Concurrent Offering Shares remaining unsold. Any such reduction will not affect the proceeds of the Concurrent Offering received by
Fortis. The Corporation entered into an underwriting agreement, or the Underwriting Agreement, with the Underwriters relating to the Concurrent Offering on November 26, 2019.
The
Concurrent Offering will be completed pursuant to a prospectus supplement filed under the Prospectus and, while subject to certain terms and conditions contained in the Underwriting
Agreement, is not conditional upon the completion of the Offering. The Concurrent Offering is expected to close on or about December 3, 2019.
Appointment of Chief Operating Officer
On November 25, 2019, Fortis announced the appointment of David Hutchens as Chief Operating Officer of Fortis effective
January 1, 2020.
In
this newly created role, Mr. Hutchens' responsibilities will broaden to include operational oversight of the Corporation's ten utilities across Canada, the United States
and the Caribbean. Mr. Hutchens will also continue as Chief Executive Officer of UNS Energy in Arizona. Formerly, Mr. Hutchens held the position of Executive Vice President, Western
Utility Operations with Fortis.
Termination of ATM Distribution
In connection with the announcement of the Offering and the Concurrent Offering, Fortis has provided notice to the agents under the
equity distribution agreement dated December 10, 2018 relating to its at-the-market distribution, or ATM Distribution, that it is terminating the ATM Distribution as of the date of this
Prospectus Supplement. The equity required by the Corporation to fund its ongoing capital plan is expected to be obtained through the Offering, the Concurrent Offering and the Corporation's DRIP and
as a result, the ATM Distribution is no longer necessary.
S-8
Table of Contents
FERC Order
On November 21, 2019, ITC received an order from the Federal Energy Regulatory Commission, or FERC, adopting a new base return
on common equity, or ROE, methodology for transmission owners in the Midcontinent Independent System Operator Inc., or MISO, region.
FERC
adjusted the base ROE to 9.88% with an upper end of the zone of reasonableness at 12.24%. Including ROE incentive adders for Regional Transmission Organization participation and
independence at ITC, this implies an all-in prospective ROE of 10.63% for ITC's subsidiaries operating in the MISO footprint. This compares to an all-in ROE of 11.07% that ITC was previously accruing.
Every 10-basis point change in ROE at ITC impacts earning per share at Fortis by approximately one cent per Common Share. ITC has previously recorded sufficient amounts related to the required refunds
generated from the order.
Elimination of DRIP Discount
Fortis has announced that, subject to the approval of the TSX, it will be terminating the 2% discount currently offered on the purchase
of Common Shares under its DRIP with effect for the March 1, 2020 dividend. As a result of the termination by Fortis of the discount under its DRIP, Fortis expects the rate of DRIP
participation by the Corporation's shareholders to decrease.
RISKS RELATED TO THE COMMON SHARES
An investment in the Offered Shares involves certain risks. You should carefully consider the risk factors described under the heading
"Business Risk Management" found on pages 30 to 40 of the Annual MD&A which is incorporated by reference herein. In addition, before making an investment decision, you should carefully
consider, in light of your own financial circumstances, the risk factors set out below which relate to the Offered Shares, as well as the other information contained in this Prospectus Supplement, the
Prospectus, including under the heading "Risk Factors" found on pages 20 to 21, the documents incorporated by reference herein and therein and in all subsequently filed documents
incorporated by reference.
Price Volatility of Common Shares
The market price of our Common Shares has in the past been, and may in the future be, subject to large fluctuations which may result in
losses for investors. The market price of our Common Shares may increase or decrease in response to a number of events and factors, including:
-
-
our operating performance and the performance of competitors and other similar entities;
-
-
the public's reaction to our press releases, other public announcements and our filings with the various securities
regulatory authorities;
-
-
changes in earnings estimates or recommendations by research analysts who track our securities;
-
-
the operating and share price performance of other entities that investors may deem comparable;
-
-
changes in general economic and/or political conditions;
-
-
changes in the regulatory regimes to which our operating subsidiaries are subject and regulatory decisions affecting our
operating subsidiaries;
-
-
the arrival or departure of key personnel;
-
-
acquisitions, strategic alliances or joint ventures involving us or our competitors; and
-
-
the number of Offered Shares in the Offering and the number of Common Shares issued by the Corporation in any other
offering, including the Concurrent Offering.
In
addition, the market price of our Common Shares is affected by many variables not directly related to our success and not within our control, including other developments that affect
the market for all utilities sector securities or the equity markets generally, the breadth of the public market for our Common Shares, and the
S-9
Table of Contents
attractiveness
of alternative investments. These variables may adversely affect the prices of our Common Shares regardless of our operating performance.
Uses of the Net Proceeds from the Offering and the Concurrent Offering
We currently expect to apply the net proceeds we receive from the Offering and the Concurrent Offering as described under "Use of
Proceeds" of this Prospectus Supplement. As described thereunder, management has broad discretion with respect to the actual application of those net proceeds, and may elect to apply such proceeds
differently than is described thereunder if management believes that it would be in the Corporation's best interest to do so. The failure by management to apply the net proceeds effectively could have
a material adverse effect on our business.
The Concurrent Offering May Not be Completed
Completion of the Offering is not conditional on the completion of the Concurrent Offering, and closing of the Offering may occur in
circumstances where the Concurrent Offering is not completed. The completion of the Concurrent Offering is subject to certain customary conditions. Accordingly, there can be no certainty, nor can the
Corporation provide any assurance, that the Concurrent Offering will be completed. If the Concurrent Offering is not completed, the Corporation will not have all of the net proceeds that it requires
to effect the expected use of proceeds from such offerings, see "Use of Proceeds". If the Concurrent Offering is not completed, Fortis could determine, including in the near term, to issue additional
securities, including Common Shares, to fund its operations, see " Future sales or issuances of securities of Fortis".
Future Sales or Issuances of Securities of Fortis
We may issue additional securities to finance future activities outside of the Offering and the Concurrent Offering. We cannot predict
the size of future issuances of securities or the effect, if any, that future issuances and sales of securities will have on the market price of the Common Shares. Sales or issuances of substantial
numbers of Common Shares, or the expectation that such sales could occur, may adversely affect prevailing market prices of the Common Shares. In connection with any issuance of Common Shares,
investors will suffer dilution to their voting power and we may experience dilution in our earnings per share.
Payment of Future Dividends
Our Board of Directors reviews our financial performance quarterly and makes a determination of the appropriate level of dividends to
be declared in the following quarter, if any. Currently, payment of dividends on our Common Shares is funded primarily from dividends we receive from our subsidiaries. Our subsidiaries are separate
legal entities and have no independent obligation to pay dividends to us. Prior to paying dividends to us, the subsidiaries have financial obligations that must be satisfied, including, among others,
their operating expenses and obligations to creditors. Furthermore, our utilities are required by regulation to maintain a minimum equity-to-total capital ratio that may restrict their ability to pay
dividends to us or may require that we contribute capital to them. The future enactment of laws or regulations may prohibit or further restrict the ability of our subsidiaries to pay upstream
dividends or to repay intercorporate indebtedness. In addition, in the event of a subsidiary's liquidation or reorganization, our right to participate in a distribution of assets is subject to the
prior claims of the subsidiary's creditors. As a result, our ability to generate cash flow to pay dividends is reliant on the ability of our subsidiaries to generate sustained earnings and cash flows
and to pay dividends.
CAPITALIZATION
Upon completion of the Offering and the Concurrent Offering, there will be an aggregate of 21,097,728 additional Common Shares
outstanding, or 22,824,228 additional Common Shares if the Over-Allotment Option is exercised in full (in each case on a non-diluted basis).
The
following table sets out the consolidated capitalization of the Corporation as at September 30, 2019 and on a pro forma
basis, assuming the completion of the Concurrent Offering and no exercise of the Over-Allotment Option, as of such date after giving effect to (a) the receipt of the net proceeds of the
Offering and the Concurrent Offering, determined after deducting the estimated expenses of the Offering and the
S-10
Table of Contents
Concurrent
Offering, on an after tax basis, and the Underwriting Commission in connection with the Concurrent Offering, (b) the use of the net proceeds of the Offering and the Concurrent
Offering to fund the Corporation's capital plan, repay indebtedness of the Corporation and for general corporate purposes, see "Use of Proceeds", and (c) the changes in Common Shares, long-term
debt, capital lease and finance obligations from October 1, 2019 up to and including November 22, 2019. See "Changes in Consolidated Capitalization".
|
|
|
|
|
|
|
|
|
|
As at
September 30, 2019
|
|
Pro forma
As at
September 30, 2019(1)
|
|
|
|
(in millions of dollars)
|
|
Total debt, capital lease and finance obligations(2) (net of cash)
|
|
|
23,736
|
|
|
22,949
|
|
Shareholders' equity
|
|
|
|
|
|
|
|
Securities offered hereby
|
|
|
|
|
|
496
|
|
Securities offered in the Concurrent Offering(3)
|
|
|
|
|
|
583
|
|
Common Shares
|
|
|
12,363
|
|
|
12,395
|
|
Preference shares
|
|
|
1,623
|
|
|
1,623
|
|
Additional paid-in capital
|
|
|
11
|
|
|
11
|
|
Accumulated other comprehensive loss
|
|
|
593
|
|
|
593
|
|
Retained earnings
|
|
|
2,791
|
|
|
2,786
|
|
Total capitalization(4)
|
|
|
41,117
|
|
|
41,436
|
|
|
|
|
|
|
|
-
(1)
-
After
giving effect to (a) the receipt of the net proceeds of the Offering, determined after deducting the estimated expenses of the Offering on an
after-tax basis, (b) the receipt of the net proceeds of the Concurrent Offering, assuming no exercise of the Over-Allotment Option, determined after deducting the Underwriting Commission and
the estimated expenses of the Concurrent Offering on an after-tax basis, (c) the use of the net proceeds of the Offering and the Concurrent Offering to fund the Corporation's capital plan,
repay indebtedness of the Corporation and for general corporate purposes, see "Use of Proceeds", and (d) the changes in Common Shares, long-term debt, capital lease and finance obligations from
October 1, 2019 up to and including November 22, 2019. See "Changes in Consolidated Capitalization".
-
(2)
-
Includes
long-term debt, capital lease and finance obligations, including the current portion and short-term borrowings.
-
(3)
-
Assumes
the completion of the Concurrent Offering and no exercise of the Over-Allotment Option.
-
(4)
-
Excludes
non-controlling interests.
CHANGES IN CONSOLIDATED CAPITALIZATION
The following describes the changes in our share and loan capital structure since
September 30, 2019:
-
(a)
-
During
the period from October 1, 2019 up to and including November 22, 2019, we issued an aggregate of 594,789 Common Shares as a
result of (i) the sale of Common Shares pursuant to the ATM Distribution, and (ii) the exercise of options granted pursuant to our 2012 Stock Option Plan.
-
(b)
-
During
the period from October 1, 2019 up to and including November 22, 2019, our consolidated long-term debt, capital lease and finance
obligations, including current portions and committed credit facility borrowings classified as long-term debt increased by approximately $280 million, principally due to the issuance of
US$100 million of long-term debt, the net increase in committed credit facility borrowings and changes in foreign exchange rates over the period.
S-11
Table of Contents
DESCRIPTION OF THE COMMON SHARES
We are authorized to issue an unlimited number of Common Shares. See "Description of Securities
Offered Common Shares" in the Prospectus for a description of the material attributes and characteristics of the Common Shares. As of November 25, 2019,
438,872,038 Common Shares were issued and outstanding.
DIVIDEND POLICY
Dividends on the Common Shares are declared at the discretion of our Board of Directors. We declared cumulative cash dividends on our
Common Shares of $1.75 per Common Share in 2018, $1.65 per Common Share in 2017 and $1.55 per Common Share in 2016. On November 28, 2018, our Board of Directors declared a first quarter
dividend of $0.45 per Common Share, which was paid on March 1, 2019 to holders of record on February 15, 2019. On February 14, 2019, our Board of Directors declared a second
quarter dividend of $0.45 per Common Share, which was paid on June 1, 2019 to holders of record on May 17, 2019. On July 31, 2019, our Board of Directors announced a third quarter
dividend of $0.45 per Common Share, which was paid on September 1, 2019 to holders of record on August 20, 2019. On September 10, 2019, our Board of Directors declared a fourth
quarter dividend of $0.4775 per Common Share, which will be paid on December 1, 2019 to holders of record on November 19, 2019. On November 20, 2019, our Board of Directors
declared a first quarter dividend for 2020 of $0.4775 per Common Share, which will be paid on March 1, 2020 to holders of record on February 18, 2020. We have increased our annual Common
Share dividend payment for 46 consecutive years.
Fortis
is targeting average annual dividend growth of 6% through 2024. This dividend guidance takes into account many factors, including the expectation of reasonable outcomes for
regulatory proceedings at the Fortis utilities, the successful execution of the Corporation's five-year capital plan and management's continued confidence in the strength of its diversified portfolio
of utilities and record of operational excellence.
USE OF PROCEEDS
The estimated net proceeds of the Offering are approximately $495 million. The estimated net proceeds of the Concurrent Offering
are approximately $575 million, or approximately $662 million if the Over-Allotment Option is exercised in full. We intend to use the net proceeds from the Offering and the Concurrent
Offering, if any, to fund the Corporation's capital plan, the repayment of indebtedness of the Corporation and for general corporate purposes. To the extent that the Corporation does not fully deploy
the proceeds of the Offering and the Concurrent Offering immediately following closing, we may enter into hedging arrangements with one or more financial counterparties, including affiliates of one or
more of the Underwriters, to hedge any currency risk relating to such retained proceeds.
All
expenses relating to the Offering will be paid out of the proceeds to the Corporation.
PLAN OF DISTRIBUTION
The Offered Shares will be issued directly to the Subscribers under the Subscription Agreement as follows:
|
|
|
|
|
Subscriber
|
|
Number of
Offered Shares
|
|
ZP Master Utility Fund, Ltd.
|
|
|
6,638,233
|
|
ZP Energy Fund, L.P.
|
|
|
1,568,428
|
|
ZP Master Energy Fund, L.P.
|
|
|
993,222
|
|
EP Zimmer Ltd.
|
|
|
387,845
|
|
The
closing of the Offering under the Subscription Agreement is subject to customary conditions and the Closing Date is expected to occur on November 29, 2019, or such other date
as may be agreed upon by us and the Subscribers, but not later than December 6, 2019. It is expected that the Corporation will arrange to electronically deposit the Offered Shares to or for the
account of the Subscribers under the book-based system through DTC (or its nominee) on the Closing Date, against payment by the Subscribers to the Corporation of the aggregate purchase price
for the Offered Shares. No certificate evidencing the Offered Shares will be issued to the Subscribers, unless otherwise agreed to by the Corporation and the Subscribers. In accordance with the
S-12
Table of Contents
book-based
system, DTC will record a DTC participant as the registered owner of Offered Shares on behalf of the Subscribers. The Subscribers will receive only a customer confirmation from the
registered dealer who is a DTC participant and through whom a beneficial interest in the Offered Shares is purchased.
It
is expected that delivery of the Offered Shares will be made against payment therefor on the Closing Date, which will not be two business days following the date of this Prospectus
Supplement (this settlement cycle being referred to as T+2). Under Rule 15c6-1 of the Exchange Act, trades in the secondary market generally are required to settle in two business days, unless
the parties to any such trade expressly agree otherwise.
This
Prospectus Supplement does not qualify the offering or issuance of Concurrent Offering Shares in the Concurrent Offering, the Over-Allotment Option or the offering or issuance of
Additional Shares in the Over-Allotment Option. The Offering will be completed on the terms and conditions contained in the Subscription Agreement, and closing of the Offering may occur in
circumstances where the Concurrent Offering is not completed.
In
connection with the Offering, the Corporation may distribute this Prospectus Supplement and the Prospectus electronically.
The
terms of the Offering and Offering Price of the Offered Shares were determined by negotiation between Fortis and the Subscribers. On closing, the Subscribers will receive the
Commitment Fee equal to 1% of the gross proceeds of the Offering, being $5 million and have agreed not to dispose of the Offered Shares for a period of 45 days from the Closing Date.
Fortis has not engaged the services of any underwriters in connection with the distribution of the Offered Shares hereunder. The expenses of the Offering are estimated to be $0.2 million and
are payable by Fortis.
The
head office of each of the Subscribers purchasing the Offered Shares is located in New York, New York. The securities being offered under this Prospectus Supplement are
registered in the U.S. under the Securities Act in accordance with MJDS.
Stock Exchange Listing
We have applied to list the Offered Shares for trading on the TSX and the NYSE. The listing of the Offered Shares on the TSX and the
NYSE will be subject to our fulfillment of all of the listing requirements of the TSX and the NYSE, respectively.
S-13
Table of Contents
PRIOR SALES
The following table summarizes our issuances of Common Shares and securities convertible into Common Shares during the 12 months
prior to the date of this Prospectus Supplement:
|
|
|
|
|
|
|
|
|
|
Date
|
|
Security
|
|
Weighted
Average
Issue Price or
Exercise Price
per
Security, as
applicable
|
|
Number of
Securities
|
|
November 2018
|
|
Common Exercise of Stock Options(1)
|
|
$
|
33.58
|
|
|
67,356
|
|
December 3, 2018
|
|
Common DRIP(2)
|
|
$
|
45.04
|
|
|
1,618,001
|
|
December 3, 2018
|
|
Common ESPP(3)
|
|
$
|
45.95
|
|
|
75,984
|
|
December 2018
|
|
Common Exercise of Stock Options(1)
|
|
$
|
35.08
|
|
|
44,682
|
|
February 2019
|
|
Common Exercise of Stock Options(1)
|
|
$
|
35.18
|
|
|
117,537
|
|
March 1, 2019
|
|
Common DRIP(2)
|
|
$
|
46.13
|
|
|
1,629,076
|
|
March 1, 2019
|
|
Common ESPP(3)
|
|
$
|
47.07
|
|
|
187,046
|
|
March 2019
|
|
Common Exercise of Stock Options(1)
|
|
$
|
35.06
|
|
|
521,653
|
|
April 2019
|
|
Common Exercise of Stock Options(1)
|
|
$
|
35.77
|
|
|
10,187
|
|
May 2019
|
|
Common Exercise of Stock Options(1)
|
|
$
|
33.10
|
|
|
149,505
|
|
May 2019
|
|
Common ATM Distribution(4)
|
|
$
|
50.56
|
|
|
1,055,682
|
|
June 1, 2019
|
|
Common DRIP(2)
|
|
$
|
50.01
|
|
|
1,528,703
|
|
June 1, 2019
|
|
Common ESPP(3)
|
|
$
|
51.03
|
|
|
94,519
|
|
June 2019
|
|
Common Exercise of Stock Options(1)
|
|
$
|
37.22
|
|
|
376,518
|
|
June 2019
|
|
Common ATM Distribution(4)
|
|
$
|
51.79
|
|
|
1,716,371
|
|
July 2019
|
|
Common Exercise of Stock Options(1)
|
|
$
|
32.71
|
|
|
6,928
|
|
July 2019
|
|
Common ATM Distribution(4)
|
|
$
|
52.20
|
|
|
733,923
|
|
August 2019
|
|
Common Exercise of Stock Options(1)
|
|
$
|
33.82
|
|
|
171,983
|
|
September 1, 2019
|
|
Common DRIP(2)
|
|
$
|
53.57
|
|
|
1,378,813
|
|
September 1, 2019
|
|
Common ESPP(3)
|
|
$
|
54.66
|
|
|
74,891
|
|
September 2019
|
|
Common Exercise of Stock Options(1)
|
|
$
|
38.05
|
|
|
63,454
|
|
October 2019
|
|
Common Exercise of Stock Options(1)
|
|
$
|
35.01
|
|
|
15,283
|
|
October 2019
|
|
Common ATM Distribution(4)
|
|
$
|
56.22
|
|
|
563,446
|
|
November 2019
|
|
Common Exercise of Stock Options(1)
|
|
$
|
30.73
|
|
|
16,060
|
|
-
(1)
-
Issued
on the exercise of options granted pursuant to our 2012 Stock Option Plan.
-
(2)
-
Issued
pursuant to our DRIP.
-
(3)
-
Issued
pursuant to our Employee Share Purchase Plan, or ESPP.
-
(4)
-
Issued
pursuant to the ATM Distribution.
S-14
Table of Contents
TRADING PRICES AND VOLUMES
The following table sets forth, for the periods indicated, the reported high and low daily trading prices and the aggregate volume of
trading of our Common Shares on the TSX (as reported by TSX) and the NYSE (as reported by NYSE).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trading of
Common Shares
|
|
Trading of
Common Shares
|
|
|
|
TSX
|
|
NYSE
|
|
|
|
High
|
|
Low
|
|
Volume
|
|
High
|
|
Low
|
|
Volume
|
|
|
|
($)
|
|
($)
|
|
(#)
|
|
(US$)
|
|
(US$)
|
|
(#)
|
|
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
November
|
|
|
47.06
|
|
|
42.60
|
|
|
28,786,806
|
|
|
35.82
|
|
|
32.48
|
|
|
6,370,720
|
|
December
|
|
|
47.36
|
|
|
43.49
|
|
|
27,966,319
|
|
|
35.86
|
|
|
31.80
|
|
|
8,971,774
|
|
2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
January
|
|
|
46.96
|
|
|
44.00
|
|
|
24,601,842
|
|
|
35.74
|
|
|
32.85
|
|
|
6,753,913
|
|
February
|
|
|
48.10
|
|
|
46.11
|
|
|
22,820,085
|
|
|
36.25
|
|
|
34.96
|
|
|
6,703,655
|
|
March
|
|
|
50.06
|
|
|
47.22
|
|
|
26,985,538
|
|
|
37.29
|
|
|
35.50
|
|
|
7,566,171
|
|
April
|
|
|
50.47
|
|
|
48.88
|
|
|
21,753,244
|
|
|
37.76
|
|
|
36.46
|
|
|
6,648,254
|
|
May
|
|
|
51.35
|
|
|
49.13
|
|
|
27,291,236
|
|
|
38.04
|
|
|
36.49
|
|
|
11,148,765
|
|
June
|
|
|
52.95
|
|
|
50.95
|
|
|
22,571,031
|
|
|
40.09
|
|
|
37.78
|
|
|
7,067,672
|
|
July
|
|
|
52.90
|
|
|
51.44
|
|
|
15,382,634
|
|
|
40.47
|
|
|
39.14
|
|
|
6,953,052
|
|
August
|
|
|
55.31
|
|
|
51.62
|
|
|
21,514,936
|
|
|
41.52
|
|
|
39.16
|
|
|
7,886,637
|
|
September
|
|
|
56.79
|
|
|
54.70
|
|
|
24,174,617
|
|
|
42.80
|
|
|
41.20
|
|
|
10,575,457
|
|
October
|
|
|
56.94
|
|
|
53.24
|
|
|
24,646,611
|
|
|
42.75
|
|
|
40.74
|
|
|
9,937,964
|
|
November 1 - 25
|
|
|
55.36
|
|
|
51.96
|
|
|
25,417,715
|
|
|
41.98
|
|
|
39.29
|
|
|
6,797,700
|
|
CERTAIN CANADIAN AND U.S. FEDERAL INCOME TAX CONSIDERATIONS
The acquisition of the Offered Shares described herein may subject you to tax consequences in both the U.S. and Canada. This Prospectus
Supplement does not describe these tax consequences. Each Subscriber, in making this investment, has acknowledged that it has consulted, and is relying solely upon the advice of, such Subscriber's tax
advisors with respect to the Canadian and U.S. tax aspects of an investment in the Offered Shares, including with respect to Canadian withholding tax on dividends paid or credited
(or assumed to be paid or credited) on Offered Shares, and we have not made any representation regarding the tax consequences of an investment in the Offered Shares.
LEGAL MATTERS
Certain legal matters relating to this Offering will be passed upon on our behalf by Davies Ward Phillips & Vineberg LLP,
Toronto, Ontario. At the date hereof, partners and associates of Davies Ward Phillips & Vineberg LLP own beneficially, directly or indirectly, less than 1% of any of our securities or
any securities of our associates or affiliates.
EXPERTS
The Annual Financial Statements and the effectiveness of our internal control over financial reporting have been audited by
Deloitte LLP, an independent registered public accounting firm, as stated in their reports, which are incorporated by reference herein. Such consolidated financial statements have been so
incorporated in reliance upon the reports of such firm given upon their authority as experts in accounting and auditing. Deloitte LLP is independent of us within the meaning of the Rules of
Professional Conduct of the Chartered Professional Accountants of Newfoundland and Labrador and within the meaning of the applicable rules and regulations adopted by the Public Company Accounting
Oversight Board (United States) and the SEC.
S-15
Table of Contents
ENFORCEABILITY OF CIVIL LIABILITIES
We are continued under the laws of the Province of Newfoundland and Labrador, Canada. The majority of our directors and officers, and
some of the experts named in this Prospectus Supplement, are residents of Canada, and all or a substantial portion of their assets, and a substantial portion of our assets, are located outside the
U.S. We have appointed an agent for service of process in the U.S., but it may be difficult for holders of Common Shares who reside in the U.S. to effect service within the
U.S. upon those directors, officers and experts who are not residents of the U.S. It may also be difficult for holders of the Common Shares who reside in the U.S. to realize in
the U.S. upon judgments of courts of the U.S. predicated upon our civil liability and the civil liability of our directors and officers and experts under U.S. federal
securities laws.
We
have filed with the SEC an appointment of agent for service of process on Form F-X. Under the Form F-X, we have appointed CT Corporation System, 111 Eighth
Avenue, New York, New York 10011, as our agent for service of process in the U.S. in connection with any investigation or administrative proceeding conducted by the SEC, and any
civil suit or action brought against us in a U.S. court arising out of or related to or concerning the offering of securities under the registration statement of which this Prospectus
Supplement forms a part.
Additionally,
it might be difficult for shareholders to enforce judgments of U.S. courts based solely upon civil liability provisions of the U.S. federal securities laws or
the securities or "blue sky" laws of any state within the U.S. in a Canadian court against us or any of our non-U.S. resident directors, officers or the experts named in this Prospectus
Supplement or to bring an original action in a Canadian court to enforce liabilities based on the U.S. federal or state securities laws against such persons.
Six
of our directors, Mr. Paul J. Bonavia, Mr. Lawrence T. Borgard, Ms. Maura J. Clark, Ms. Margarita K. Dilley,
Ms. Julie A. Dobson and Mr. Joseph L. Welch, reside outside of Canada and each has appointed Fortis Inc., Suite 1100, 5 Springdale Street,
P.O. Box 8837, St. John's, Newfoundland and Labrador A1B 3T2 as agent for service of process. You are advised that it may not be possible to enforce judgments
obtained in Canada against any person that resides outside of Canada, even if such person has appointed an agent for service of process.
AUDITOR, TRANSFER AGENT AND REGISTRAR
Our auditor is Deloitte LLP, 5 Springdale Street, Suite 1000, St. John's, Newfoundland and
Labrador A1E 0E4.
The
transfer agent and registrar in Canada for the Common Shares is Computershare Trust Company of Canada in Montreal and Toronto, 8th Floor, 100 University
Avenue, Toronto, Ontario M5J 2Y1. The co-transfer agent and co-registrar in the United States for the Common Shares is Computershare Trust Company, N.A. in Canton, MA, Jersey
City, NJ and Louisville, KY, P.O. Box 43078, Providence, Rhode Island 02940-3070.
DOCUMENTS FILED AS PART OF THE REGISTRATION STATEMENT
The following documents have been or will be filed with the SEC as part of the registration statement of which this Prospectus
Supplement forms a part: (a) the documents referred to under "Documents Incorporated by Reference"; (b) consent of Deloitte LLP; (c) consent of Davies Ward
Phillips & Vineberg LLP; and (d) powers of attorney from directors and officers of the Corporation.
S-16
Table of Contents
Information has been incorporated by reference in this short form base shelf prospectus from documents filed with securities commissions or similar
authorities in each of the provinces of Canada. Copies of the documents incorporated herein by reference may be obtained on request without charge from the Corporate Secretary
of Fortis at Suite 1100, 5 Springdale Street, P.O. Box 8837, St. John's, Newfoundland and Labrador A1B 3T2 (telephone (709) 737-2800) and are
also available electronically at www.sedar.com.
SHORT FORM BASE SHELF PROSPECTUS
|
|
|
New Issue and/or Secondary Offering
|
|
December 6, 2018
|
FORTIS INC.
$2,500,000,000
COMMON SHARES
FIRST PREFERENCE SHARES
SECOND PREFERENCE SHARES
SUBSCRIPTION RECEIPTS
DEBT SECURITIES
We may from time to time offer and issue common shares, or Common Shares, first preference shares, or First Preference Shares, second preference shares, or Second
Preference Shares, subscription receipts, or Subscription Receipts, and/or unsecured debt securities, or Debt Securities, and together with the Common Shares, First Preference Shares, Second
Preference Shares and Subscription Receipts, the Securities, having an aggregate offering price of up to $2,500,000,000 (or the equivalent in U.S. dollars or other currencies), during
the 25 month period that this short form base shelf prospectus, or the Prospectus, including any amendments hereto, remains valid. Securities may be offered separately or together, in amounts,
at prices and on terms to be determined based on market conditions at the time of sale and set forth in an accompanying prospectus supplement, or a Prospectus Supplement.
We are permitted, under the multi-jurisdictional disclosure system adopted by the United States, or the U.S., and Canada, to prepare this Prospectus in
accordance with Canadian disclosure requirements. You should be aware that such requirements are different from those of the U.S.
Financial statements incorporated by reference herein have been prepared in accordance with U.S. generally accepted accounting principles, or
U.S. GAAP.
Prospective investors should be aware that the acquisition of Securities may subject you to tax consequences in both the U.S. and Canada. This Prospectus may not
describe these tax consequences fully. You should read the tax discussion contained in any applicable Prospectus Supplement.
Your ability to enforce civil liabilities under U.S. federal securities laws may be affected adversely because our company is incorporated under the laws
of the Province of Newfoundland and Labrador, Canada, some of our officers and directors and some of the experts named in this Prospectus are non-U.S. residents, and some of our assets and some
of the assets of those officers, directors and experts may be located outside of the U.S.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE U.S. SECURITIES AND EXCHANGE COMMISSION, OR THE SEC, NOR HAS THE SEC PASSED UPON THE ADEQUACY
OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
No underwriter or dealer has been involved in the preparation of, or has performed any review of, this Prospectus.
The
specific variable terms of any offering of Securities will be set out in the applicable Prospectus Supplement including, where applicable: (a) in the case of Common Shares,
the number of shares offered and the offering price (or the manner of determination thereof if offered on a non-fixed price basis, including sales in transactions that are deemed to be
"at-the-market distributions" as defined in National Instrument 44-102 Shelf Distributions);
(b) in the case of First Preference Shares and Second Preference Shares, the designation of the particular series, the number of shares offered, the offering price (or the manner of
determination thereof if offered on a non-fixed price basis), the currency or currency unit for which such shares may be purchased, any voting rights, any rights to receive dividends, any terms of
redemption, any conversion or exchange rights and any other specific terms; (c) in the case of Subscription Receipts, the offering price (or the manner of determination
thereof if offered on a non-fixed price basis), the procedures for the exchange of Subscription Receipts for Common Shares, First Preference Shares, Second Preference Shares or Debt Securities, as the
case may be, and any other specific terms; and (d) in the case of Debt Securities, the designation of the Debt Securities, the aggregate principal amount of the Debt Securities being offered,
the currency or currency unit in which the Debt Securities may be purchased, authorized denominations, any limit on the aggregate principal amount of the Debt Securities of the series being offered,
the issue and delivery date, the maturity date, the offering price (at par, at a discount or at a premium), the interest rate or method of determining the interest rate, the interest payment
date(s), any conversion or exchange rights that are attached to the Debt Securities, any redemption provisions, any repayment provisions and any other specific terms. A Prospectus Supplement may
include other specific variable terms pertaining to the Securities that are not within the alternatives and parameters described in this Prospectus.
Table of Contents
All
shelf information permitted under applicable laws to be omitted from this Prospectus will be contained in one or more Prospectus Supplements that will be delivered to purchasers
together with this Prospectus. Each Prospectus Supplement will be incorporated by reference into this Prospectus for the purposes of securities legislation as of the date of the Prospectus Supplement
and only for the purposes of the distribution of the Securities to which the Prospectus Supplement pertains.
We
may sell the Securities to or through underwriters or dealers purchasing as principals and may also sell the Securities to one or more purchasers directly subject to obtaining any
required exemptive relief or through agents. The Prospectus Supplement relating to a particular offering of Securities will identify each underwriter, dealer or agent, if any, engaged by us in
connection with the offering and sale of Securities and will set forth the terms of the offering of such Securities, the method of distribution of such Securities including, to the extent applicable,
the proceeds to us, and any fees, discounts or any other compensation payable to underwriters, dealers or agents and any other material terms of the plan of distribution. Securities may be sold from
time to time in one or more transactions at a fixed price or fixed prices, or at non-fixed prices. If offered on a non-fixed price basis, Securities may be offered at market prices prevailing at the
time of sale or at prices to be negotiated with purchasers at the time of sale, which prices may vary between purchasers and during the period of distribution. If Securities are offered on a non-fixed
price basis, the underwriters', dealers' or agents' compensation will be increased or decreased by the amount by which the aggregate price paid for Securities by the purchasers exceeds or is less than
the gross proceeds paid by the underwriters, dealers or agents to us. See "Plan of Distribution".
This
Prospectus also qualifies the distribution of Securities by certain of our securityholders, including one or more of our wholly owned subsidiaries, or each a Selling Securityholder.
One or more Selling Securityholders may sell Securities to or through underwriters or dealers purchasing as principals and may also sell the Securities to one or more purchasers directly, through
statutory exemptions, or through agents designated from time to time. See "Plan of Distribution" and "Selling Securityholders".
Our
Common Shares, First Preference Shares, Series F, First Preference Shares, Series G, First Preference Shares, Series H, First Preference Shares, Series I,
First Preference Shares, Series J, First Preference Shares, Series K and First Preference Shares, Series M are listed on the Toronto Stock Exchange, or TSX, under the
symbols "FTS", "FTS.PR.F", "FTS.PR.G", "FTS.PR.H", "FTS.PR.I", "FTS.PR.J", "FTS.PR.K" and "FTS.PR.M", respectively. Our Common Shares are listed on the New York Stock Exchange, or NYSE, under
the symbol "FTS". There is currently no market through which the First Preference Shares, Second Preference Shares, Subscription Receipts or Debt Securities may be sold and
purchasers may not be able to resell any First Preference Shares, Second Preference Shares, Subscription Receipts or Debt Securities purchased under this Prospectus. This may affect the pricing of
such Securities in the secondary market, the transparency and availability of trading prices, the
liquidity of such Securities and the extent of issuer regulation. See the "Risk Factors" section of the applicable Prospectus Supplement.
This
Prospectus does not qualify for issuance Debt Securities in respect of which the payment of principal and/or interest may be determined, in whole or in part, by reference to one or
more underlying interests including, for example, an equity or debt security, a statistical measure of economic or financial performance including, but not limited to, any currency, consumer price or
mortgage index, or the price or value of one or more commodities, indices or other items, or any other item or formula, or any combination or basket of the foregoing items. For greater certainty, this
Prospectus may qualify for issuance Debt Securities in respect of which the payment of principal and/or interest may be determined, in whole or in part, by reference to published rates of a central
banking authority or one or more financial institutions, such as a prime rate or bankers' acceptance rate, or to recognized market benchmark interest rates such as LIBOR, EURIBOR or a
U.S. federal funds rate.
Subject
to applicable laws, in connection with any offering of Securities, other than an "at-the-market distribution", the underwriters, dealers or agents may over-allot or effect
transactions which stabilize or maintain the market price of the Securities at levels other than those which may prevail on the open market. Such transactions, if commenced, may be interrupted or
discontinued at any time. See "Plan of Distribution".
No
underwriter or dealer involved in an "at-the-market distribution", no affiliate of such an underwriter or dealer and no person or company acting jointly or in concert with such an
underwriter or dealer may over-allot Securities in connection with the distribution or may effect any other transactions that are intended to stabilize or maintain the market price of the Securities
in connection with an "at-the-market distribution".
Each
of Mr. Paul J. Bonavia, Mr. Lawrence T. Borgard, Ms. Margarita K. Dilley, Ms. Maura J. Clark, Ms. Julie A. Dobson and Mr. Joseph L. Welch
is a director of Fortis who resides outside of Canada. Each of Mr. Paul J. Bonavia, Mr. Lawrence T. Borgard, Ms. Margarita K. Dilley, Ms. Maura J. Clark, Ms. Julie
A. Dobson and Mr. Joseph L. Welch has appointed Fortis Inc., Suite 1100, 5 Springdale Street, P.O. Box 8837, St. John's, Newfoundland
and Labrador A1B 3T2, as agent for service of process.
Purchasers
are advised that it may not be possible for investors to enforce judgments obtained in Canada against any person who resides outside of Canada, even if the party has appointed
an agent for service of process.
Table of Contents
TABLE OF CONTENTS
Table of Contents
NOTICE TO READERS
Investors should rely only on the information contained in or incorporated by reference in this Prospectus or any applicable Prospectus
Supplement. We have not authorized anyone to provide investors with different or additional information. We are not making an offer of Securities in any jurisdiction where the offer is not permitted
by law. Prospective investors should not assume that the information contained in or incorporated by reference in this Prospectus or any applicable Prospectus Supplement is accurate as of any date
other than the date on the front of the applicable Prospectus Supplement.
Unless
we have indicated otherwise, or the context otherwise requires, references in this Prospectus to "Fortis", "we", "us" and "our" refer to Fortis Inc. and our consolidated
subsidiaries.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Capitalized terms used but not otherwise defined in this "Special Note Regarding Forward-Looking Statements"
have the meanings ascribed thereto under the heading "Glossary".
This
Prospectus, including the documents incorporated herein by reference, contains "forward-looking information" within the meaning of applicable Canadian securities laws and
"forward-looking statements" within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 (collectively referred to herein as
"forward-looking information" or "forward-looking statements"). The forward-looking information reflects our current expectations regarding our future growth, results of operations, performance,
business prospects and opportunities, based on information currently available. These expectations may not be appropriate for other purposes. All forward-looking information is given pursuant to the
"safe harbour" provisions of applicable Canadian securities legislation. The words "anticipates", "assumes", "believes", "budgets", "can", "could", "estimates", "expects", "forecasts", "intends",
"may", "might", "opportunity", "plans", "projects", "seeks", "schedule", "should", "target", "will", "would" and similar expressions are often intended to identify forward-looking information,
although not all forward-looking information contains these identifying words. The forward-looking information reflects management's current beliefs and is based on information currently available
to us.
The
forward-looking information in this Prospectus, including the documents incorporated herein by reference, includes, but is not limited to, statements regarding: our forecast gross
consolidated and segmented capital expenditures for 2018 and the period from 2019 to 2023 and potential funding sources for the capital plan; the expectation that our significant capital expenditure
plan will support continuing growth in earnings and dividends; targeted average annual dividend growth through 2023; the impact of U.S. tax reform on our earnings per share, cash flows at our
U.S. regulated utilities and rate base growth; the expectation that allocated revenues recognized by ITC from Canadian entities reserving transmission over the Ontario or Manitoba interface are
not expected to be material to ITC; the expectation that Tucson Electric Power Company has sufficient generating capacity, together with existing power purchase agreements and expected generation
plant additions, to satisfy the requirements of its customer base and meet future peak demand requirements; the expectation that changes in energy supply costs may increase electricity prices in a
manner that adversely affects Newfoundland Power Inc.'s sales; the expected timing of filing of regulatory applications and receipt and outcome of regulatory decisions; the expected timing of
the commissioning of the 8.75-MW engine at FortisTCI Limited; Tucson Electric Power Company's expected share of mine reclamation costs; expected consolidated fixed-term debt maturities and repayments
in 2018 and over the next five years; the expectation that Fortis and its subsidiaries will continue to have reasonable access to long-term capital in 2018; statements related to Fortis Turks and
Caicos' recovery of lost revenue as a result of the impact of Hurricane Irma and the timing thereof; the nature, timing, benefits, expected costs and potential financing sources of certain capital
projects including, without limitation, the Multi-Value Regional Transmission Projects and 34.5 to 69 kV Transmission Conversion Project, flexible generation resource investment, Gila River
Natural Gas Generating Station Unit 2, the Tilbury liquefied natural gas expansion, Eagle Mountain Woodfibre Gas Line Project, the Lower Intermediate Pressure System Upgrade and Pipeline Integrity
Management Program, the Wataynikaneyap Transmission Power Project, the Southline Transmission Project, the New Mexico Wind Project, and the Inland Gas Upgrades Project and additional
opportunities beyond the base capital expenditure plan including the Lake Erie Connector Project and liquefied natural gas infrastructure investment opportunities in British Columbia; the expectation
that
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Table of Contents
subsidiary
operating expenses and interest costs will be paid out of subsidiary operating cash flows; the expected sources of cash required of subsidiaries and Fortis to complete subsidiary capital
expenditure programs, including the sale of approximately $1 to $2 billion of assets; the expectation that maintaining the targeted capital structure of our regulated operating subsidiaries
will not have an impact on our ability to pay dividends in the foreseeable future; the expectation that Fortis and our subsidiaries will remain compliant with debt covenants throughout 2018; the
intent of management to refinance certain borrowings under our and our subsidiaries' long-term committed credit facilities with long-term permanent financing; the expected timing and impact, if any,
of the adoption of future accounting pronouncements; our forecast rate base for the period 2018 through 2023; statements relating to the addition of renewable capacity at Tucson Electric Power
Company; the expectation that growth at some of our larger utilities may be muted in 2018; the expectation that regulatory deferral mechanisms will capture the financial impacts of changes in usage,
gas costs and material costs incurred beyond the control of FortisBC Energy as a result of the incident affecting Enbridge Inc.'s natural gas transmission pipeline; the expectation that the
Federal Energy Regulatory Commission's order reducing adders for the Midcontinent Independent System Operator regulated operating subsidiaries will not have a material adverse impact on the results of
operations, cash flows or financial position; and the expectation that long-term debt will not be settled prior to maturity.
The
forecasts and projections that make up the forward-looking information included in this Prospectus are based on assumptions which include, but are not limited to: the receipt of
applicable regulatory approvals and requested rate orders, no material adverse regulatory decisions being received, and the expectation of regulatory stability; no material capital project and
financing cost overrun related to any of our capital projects; the realization of additional opportunities; our Board of Directors exercising its discretion to declare dividends, taking into account
our business performance and financial conditions; no significant variability in interest rates; no significant operational disruptions or environmental liability due to a catastrophic event or
environmental upset caused by severe weather, other acts of nature or other major events; the continued ability to maintain the electricity and gas systems to ensure their continued performance; no
severe and prolonged downturn in economic conditions; no significant decline in capital spending; sufficient liquidity and capital resources; the continuation of regulator-approved mechanisms to flow
through the cost of natural gas and energy supply costs in customer rates; the ability to hedge exposures to fluctuations in foreign exchange rates, natural gas prices and electricity prices; no
significant changes in tax laws; no significant counterparty defaults; the continued competitiveness of natural gas pricing when compared with electricity and other alternative sources of energy; the
continued availability of natural gas, fuel, coal and electricity supply; continuation and regulatory approval of power supply and capacity purchase contracts; the ability to fund defined benefit
pension plans, earn the assumed long-term rates of return on the related assets and recover net pension costs in customer rates; no significant changes in government energy plans, environmental laws
and regulations that may have a material negative affect on us and our subsidiaries; maintenance of adequate insurance coverage; the ability to obtain and maintain licences and permits; retention of
existing service areas; the continued tax-deferred treatment of earnings from our foreign operations; continued maintenance of information technology infrastructure and no material breach of
cybersecurity; continued favourable relations with First Nations; favourable labour relations; that we can reasonably assess the merit of and potential liability attributable to ongoing legal
proceedings; and sufficient human resources to deliver service and execute the capital expenditure plan.
The
forward-looking information is subject to risks, uncertainties and other factors that could cause actual results to differ materially from historical results or results anticipated
by the forward-looking information. These factors should be considered carefully and undue reliance should not be placed on the forward-looking information. Factors which could cause results or events
to differ from current expectations include, but are not limited to: uncertainty regarding the outcome of regulatory proceedings at our utilities; the
impact of fluctuations in foreign exchange rates; risks relating to pending and future changes in environmental regulations; interest rate risk; risks associated with the continuation, renewal,
replacement and/or regulatory approval of power supply and capacity purchase contracts; risks relating to energy prices; provincial, state and federal regulatory legislative decisions and actions;
risks relating to any potential downgrade of our credit ratings; risks relating to our ability to access capital markets on favourable terms or at all; the cost of debt and equity capital; risks
associated with changes in economic conditions; changes in regional economic and market conditions which could affect customer growth and energy usage; risks relating to the impact of actual loads,
forecasted loads, regional economic conditions, weather conditions, union strikes, labour shortages, material and
3
Table of Contents
equipment
prices and availability; the performance of the stock market and changing interest rate environment; risks from regulatory approvals for reasons relating to rate construct, environmental,
siting, regional planning, cost recovery or other issues or as a result of legal proceedings; risks arising from variances between estimated and actual costs of construction contracts awarded and the
potential for greater competition; insurance coverage risk; risk of loss of licences and permits; risk of loss of service area; risks relating to derivatives; the continued ability to hedge foreign
exchange risk; counterparty risk; environmental risks; competitiveness of natural gas; natural gas, fuel, coal and electricity supply risk; risks relating to human resources and labour relations; risk
of unexpected outcomes of legal proceedings currently against us; risk of not being able to access First Nations lands; weather and seasonality risk; commodity price risk; capital resources and
liquidity risks; changes in critical accounting estimates; risks related to changes in tax legislation; the ongoing restructuring of the electric industry; changes to long-term contracts; risk of
failure of information technology infrastructure and cyber-attacks or challenges to our information security; the impact of the Tax Cuts and Jobs Act on our future results of operations and cash
flows; risk associated with the impacts of less favourable economic conditions on our results of operations; risk associated with our ability to continue to comply with Section 404(a) of the
Sarbanes-Oxley Act of 2002 and the related rules of the SEC and the Public Company Accounting Oversight Board; risk associated with the completion of our 2018 capital expenditure plan, including
completion of major capital projects in the timelines anticipated and at the expected amounts; uncertainty in the timing and access to capital markets to arrange sufficient and cost-effective
financing to finance, among other things, capital expenditures and the repayment of maturing debt; and certain presently unknown or unforeseen risks, including, but not limited to, acts of terrorism.
For additional information with respect to our risk factors, reference should be made to the section of this Prospectus entitled "Risk Factors", to the documents incorporated herein by reference and
to our continuous disclosure materials filed from time to time with Canadian and U.S. securities regulatory authorities.
All
forward-looking information in this Prospectus and in the documents incorporated herein by reference is qualified in its entirety by the above cautionary statements and, except as
required by law, we undertake no obligation to revise or update any forward-looking information as a result of new information, future events or otherwise.
DOCUMENTS FILED AS PART OF THE REGISTRATION STATEMENT
The following documents have been filed with the SEC as part of our registration statement: the documents referred to under the heading
"Documents Incorporated by Reference"; the consent of Deloitte LLP; the consent of Ernst & Young LLP; the consent of Davies Ward Phillips & Vineberg LLP; the power
of attorney of the directors and officers of Fortis; and the Statement of Eligibility on Form T-1 under the U.S. Trust Indenture Act of
1939 of The Bank of New York Mellon.
DOCUMENTS INCORPORATED BY REFERENCE
Information has been incorporated by reference in this Prospectus from documents filed by us with securities
commissions or similar authorities in Canada. Our disclosure documents listed below and filed with the appropriate securities commissions or similar regulatory authorities in
each of the provinces of Canada are specifically incorporated by reference into and form an integral part of this Prospectus:
-
(a)
-
our
Annual Information Form dated February 14, 2018, for the fiscal year ended December 31, 2017;
-
(b)
-
our
audited consolidated financial statements as at December 31, 2017 and December 31, 2016 and for the fiscal years then ended, together with
the notes thereto, and the auditor's report thereon of Deloitte LLP dated February 14, 2018 and the auditor's report thereon of Ernst & Young LLP, our former auditor, dated
February 15, 2017, except as to Note 31 which is dated as of February 14, 2018;
-
(c)
-
our
Management Discussion and Analysis of financial condition and results of operations dated February 14, 2018 for the fiscal year ended
December 31, 2017, or the Annual MD&A;
-
(d)
-
our
Management Information Circular dated March 16, 2018 prepared in connection with our annual meeting of shareholders held on May 3, 2018,
or the Management Information Circular;
4
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-
(e)
-
our
unaudited comparative interim condensed consolidated financial statements as at September 30, 2018 and for the three and nine months ended
September 30, 2018 and 2017, together with the notes thereto; and
-
(f)
-
our
Management Discussion and Analysis of financial condition and results of operations for the three and nine months ended September 30, 2018, or
the Interim MD&A.
Any
document of the type referred to above, including any material change report (other than any confidential material change report), any business acquisition report, any Prospectus
Supplements disclosing additional or updated information, and any "template version" of "marketing materials" (each as defined in National
Instrument 41-101 General Prospectus Requirements) subsequently filed by us with such securities
commissions or regulatory authorities in Canada after the date of this Prospectus, and prior to the termination of the distribution under this Prospectus, shall be deemed to be incorporated by
reference into this Prospectus.
Documents
filed by us with the SEC or similar authorities in Canada which are in our current reports on Form 6-K or annual reports on Form 40-F under the U.S. Securities Exchange Act of 1934,
as amended, or the Exchange Act, in each case after the date of this Prospectus, shall be deemed to be
incorporated by reference as exhibits to the registration statement of which this Prospectus forms a part and, in addition, any other report on Form 6-K and the exhibits thereto
shall be deemed to be incorporated by reference into this Prospectus or as exhibits to the registration statement, if and to the extent expressly provided in such reports. Our current reports on
Form 6-K and our annual reports on Form 40-F are available on the SEC's Electronic Data Gathering and Retrieval, or EDGAR, website
at www.sec.gov.
Any statement contained in a document incorporated or deemed to be incorporated by reference in this Prospectus shall be deemed to be modified or superseded for
purposes of this Prospectus to the extent that a statement contained herein, or in any other subsequently filed document which also is incorporated or is deemed to be incorporated by reference herein,
modifies or supersedes such statement. The modifying or superseding statement need not state that it has modified or superseded a prior statement or include any other information set forth in the
document that it modifies or supersedes. The making of a modifying or superseding statement will not be deemed an admission for any purpose that the modified or superseded statement, when made,
constituted a misrepresentation, an untrue statement of a material fact or an omission to state a material fact that is required to be stated or that is necessary to make a statement not misleading in
light of the circumstances in which it was made. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this
Prospectus.
When
we file a new annual information form and audited consolidated financial statements and related management discussion and analysis with, and where required, they are accepted
by, the applicable securities regulatory authorities during the time that this Prospectus is valid, the previous annual information form, the previous audited consolidated financial statements and
related management discussion and analysis and all unaudited interim condensed consolidated financial statements and related management discussion and analysis for such periods, all material change
reports and any information circular and business acquisition report filed prior to the commencement of our financial year in which the new annual information form is filed will be deemed no longer to
be incorporated by reference in this Prospectus for purposes of future offers and sales of Securities under this Prospectus. Upon new unaudited interim condensed consolidated financial statements and
the accompanying management discussion and analysis being filed by us with the applicable securities regulatory authorities during the term of this Prospectus, all unaudited interim condensed
consolidated financial statements and accompanying management's discussion and analysis filed prior to the filing of the new unaudited interim condensed consolidated financial statements shall be
deemed no longer to be incorporated by reference into this Prospectus for purposes of future offers and sales of Securities hereunder.
Copies
of the documents incorporated herein by reference may be obtained on request without charge from our Corporate Secretary at Suite 1100, 5 Springdale Street,
P.O. Box 8837, St. John's, Newfoundland and Labrador A1B 3T2 (telephone (709) 737-2800). These documents are also available through the Internet on our
website at www.fortisinc.com or on SEDAR, which can be accessed at www.sedar.com. The information contained on, or accessible through, any of
these websites is not incorporated by reference into this Prospectus and is not, and should not be considered to be, a part of this Prospectus, unless it is explicitly so incorporated.
5
Table of Contents
WHERE YOU CAN FIND ADDITIONAL INFORMATION
In addition to our continuous disclosure obligations under the securities laws of the provinces of Canada, we are subject to the
informational requirements of the Exchange Act and in accordance therewith file reports and other information with the SEC. Under the multi-jurisdictional disclosure system adopted by the U.S., or
MJDS, such reports and other information may be prepared in accordance with the disclosure requirements of Canada, which requirements are different from those of the U.S. Any information filed
with the SEC can be read and copied at prescribed rates at the SEC's Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. Information on the operation of the Public
Reference Room may be obtained by calling the SEC at 1-800-SEC-0330 or by accessing its website at www.sec.gov. Some of the documents that we file with or furnish to the
SEC are electronically available from EDGAR, and may be accessed at www.sec.gov.
We
have filed with the SEC a registration statement on Form F-10, or the Registration Statement, under the U.S. Securities Act of
1933, as amended, with respect to the Securities offered by this Prospectus as
supplemented by a Prospectus Supplement. This Prospectus, which forms a part of the registration statement, does not contain all of the information set forth in the registration statement,
certain parts of which have been omitted in accordance with the rules and regulations of the SEC. For further information with respect to us and the Securities offered in this Prospectus, reference is
made to the registration statement and to the schedules and exhibits filed therewith. Statements contained in this Prospectus as to the contents of certain documents are not necessarily complete and,
in each instance, reference is made to the copy of the document filed as an exhibit to the registration statement. Each such statement is qualified in its entirety by such reference.
PRESENTATION OF FINANCIAL INFORMATION
Financial statements incorporated by reference herein have been prepared in accordance with U.S. GAAP. Certain calculations
included in tables and other figures in this Prospectus have been rounded for clarity of presentation.
CURRENCY AND EXCHANGE RATE INFORMATION
This Prospectus contains references to U.S. dollars and Canadian dollars. All dollar amounts referenced, unless otherwise
indicated, are expressed in Canadian dollars. References to "$" or "C$" are to Canadian dollars and references to "US$" are to U.S. dollars. The following table shows, for the years and dates
indicated, certain information regarding the Canadian dollar/U.S. dollar exchange rate. Except as indicated below, the information is based on the average daily exchange rate as reported by the
Bank of Canada. Such exchange rate on December 4, 2018 was C$1.3219 = US$1.00.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Period End
|
|
Average(1)
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|
Low
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|
High
|
|
|
|
|
|
(C$ per US$)
|
|
|
|
Year ended December 31,
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|
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|
|
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|
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|
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2017
|
|
|
1.2545
|
|
|
1.2986
|
|
|
1.2128
|
|
|
1.3743
|
|
2016(2)
|
|
|
1.3427
|
|
|
1.3248
|
|
|
1.2544
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|
|
1.4589
|
|
Quarter ended,
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|
|
|
|
|
|
|
|
September 30, 2018
|
|
|
|
|
|
|
|
|
1.2905
|
|
|
1.3255
|
|
June 30, 2018
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|
|
|
|
|
|
|
|
1.2552
|
|
|
1.3310
|
|
March 31, 2018
|
|
|
|
|
|
|
|
|
1.2288
|
|
|
1.3088
|
|
-
(1)
-
The
average of the noon buying rates and daily average rates, as applicable, during the relevant period.
-
(2)
-
2016
exchange rates are based on the noon buying rate as reported by the Bank of Canada.
6
Table of Contents
FORTIS
We are a North American electric and gas utility holding company, with total assets of approximately $50 billion as at
September 30, 2018, and revenue totaling approximately $8.3 billion and $6.2 billion for the year ended December 31, 2017 and the nine months ended September 30,
2018, respectively. In 2017, our electricity distribution systems met a combined peak demand of 32,134 megawatts, or MW, and our gas distribution systems met a peak day demand of
1,585 terajoules, or TJ. For the nine months ended September 30, 2018, our electricity distribution systems met a combined peak demand of 33,458 MW and our gas distribution system
met a peak day demand of 1,599 TJ. Our 8,500 employees serve customers at utility operations in five Canadian provinces, nine U.S. states and three Caribbean countries.
Our
business segments are:
-
(a)
-
Regulated
Independent Transmission United States: consisting of the electric transmission operations of ITC,
which is our indirect subsidiary, with Eiffel Investment Pte Ltd (an affiliate of GIC Pte Ltd., or GIC) owning a 19.9% interest in ITC. ITC's business consists primarily of the
electric transmission operations of ITC's regulated operating subsidiaries, which include International Transmission Company, Michigan Electric Transmission Company, LLC, ITC
Midwest LLC, ITC Great Plains, LLC and ITC Interconnection LLC. ITC owns and operates high-voltage transmission systems in Michigan's Lower Peninsula and portions of Iowa,
Minnesota, Illinois, Missouri, Kansas and Oklahoma that transmit electricity from generating stations to local distribution facilities connected to ITC's systems;
-
(b)
-
Regulated
Electric & Gas Utilities United States: consisting of vertically integrated electrical and
gas utilities in the state of Arizona: Tucson Electric Power Company, UNS Electric, Inc. and UNS Gas, Inc., each a subsidiary of UNS Energy Corporation; together with Central Hudson
Gas & Electric Corporation, a regulated transmission and distribution utility located in New York State's Mid-Hudson River Valley;
-
(c)
-
Regulated
Electric & Gas Utilities Canadian and Caribbean: consisting of: (i) FortisBC Energy, the
largest distributor of natural gas in British Columbia, serving residential, commercial and industrial and transportation customers in more than 135 communities;
(ii) FortisAlberta Inc., a regulated electric distribution utility serving a substantial portion of southern and central Alberta; (iii) FortisBC Inc., an integrated,
regulated electric utility serving the southern interior of British Columbia; (iv) Newfoundland Power Inc., a regulated electric utility that operates throughout the island portion of
the Province of Newfoundland and Labrador; (v) Maritime Electric Company, Limited, a regulated electric utility on Prince Edward Island; (vi) FortisOntario Inc., which provides
regulated, integrated electric utility service in Fort Erie, Cornwall, Gananoque, Port Colborne and the District of Algoma in Ontario; (vii) a 49% equity investment in the Wataynikaneyap Power
Limited Partnership, a power project in Ontario in the development stage; (viii) an indirect approximate 60% controlling ownership interest in Caribbean Utilities Company, Ltd., an
integrated electric utility in Grand Cayman, Cayman Islands, the Class A Ordinary Shares of which are listed on the TSX under the symbol CUP.U; (ix) Fortis Turks and Caicos, integrated
electric utilities on the Turks and Caicos Islands; and (x) an approximate 33% equity investment in Belize Electricity Limited, an integrated electric utility in Belize;
-
(d)
-
Non-Regulated Energy
Infrastructure: consisting of: (i) our 51% controlling ownership interest in the Waneta
expansion hydroelectric generating facility in British Columbia; (ii) the Aitken Creek natural gas storage facility in British Columbia; and (iii) the 25-MW Mollejon, 7-MW Chalillo and
19-MW Vaca hydroelectric generating facilities in Belize; and
-
(e)
-
Non-Regulated Corporate
and Other: captures expense and revenue items not specifically related to any reportable
segment and those business operations that are below the required threshold for reporting as separate segments.
7
Table of Contents
RECENT DEVELOPMENTS
At-the-Market Offering
On March 26, 2018, we filed a prospectus supplement under our base shelf prospectus for an at-the-market distribution of up to
$500,000,000 (or the equivalent in U.S. dollars) in Common Shares. This at-the-market common equity program terminated on filing of the preliminary Prospectus.
It
is our current intention to re-establish our at-the-market common equity program, or ATM Program, to permit sales in at-the-market distributions on the TSX, the NYSE or on any other
trading market for the Common Shares in Canada or the United States following the issuance of a receipt by the Ontario Securities Commission for the Prospectus. On November 30, 2018, we
received the requisite exemptive relief under Canadian securities laws with respect to the re-establishment of our ATM Program. The re-establishment of our ATM Program will be further conditional upon
our Registration Statement on Form F-10 filed with the SEC becoming effective, the filing with securities regulatory authorities in each of the provinces of Canada and with the SEC of a
Prospectus Supplement under our Prospectus and Registration Statement and the entering into of an equity distribution agreement with agents providing for the sale of Common Shares in at-the-market
distributions. The specific terms and conditions of any such offering will be described in the applicable Prospectus Supplement.
SHARE CAPITAL OF FORTIS
Our authorized share capital consists of an unlimited number of Common Shares, an unlimited number of First Preference Shares issuable
in series and an unlimited number of Second Preference Shares issuable in series, in each case without nominal or par value. As at December 4, 2018, 428,428,474 Common Shares,
5,000,000 Cumulative Redeemable First Preference Shares, Series F, or the First Preference Shares, Series F, 9,200,000 Cumulative Redeemable Five-Year Fixed Rate Reset
First Preference Shares, Series G, or the First Preference Shares, Series G, 7,024,846 Cumulative Redeemable Five-Year Fixed Rate Reset First Preference Shares, Series H,
or the First Preference Shares, Series H, 2,975,154 Cumulative Redeemable Floating Rate First Preference Shares, Series I, or the First Preference Shares, Series I,
8,000,000 Cumulative Redeemable First Preference Shares, Series J, or the First Preference Shares, Series J, 10,000,000 Cumulative Redeemable Fixed Rate Reset First
Preference Shares, Series K, or the First Preference Shares, Series K, and 24,000,000 Cumulative Redeemable Fixed Rate Reset First Preference Shares, Series M, or the First
Preference Shares, Series M, were issued and outstanding. Our Common Shares, First Preference Shares, Series F, First Preference Shares, Series G, First Preference Shares,
Series H, First Preference Shares, Series I, First Preference Shares, Series J, First Preference Shares, Series K and First Preference Shares, Series M are
listed on the TSX under the symbols "FTS", "FTS.PR.F", "FTS.PR.G", "FTS.PR.H", "FTS.PR.I", "FTS.PR.J", "FTS.PR.K" and "FTS.PR.M", respectively. Our Common Shares are also listed on the NYSE under the
symbol "FTS".
EARNINGS COVERAGE RATIOS
In accordance with the requirements of the Canadian securities regulatory authorities, the consolidated earnings coverage ratios set
out below have been calculated for the 12-month periods ended September 30, 2018 and December 31, 2017. Our interest requirements on all of our outstanding long-term debt amounted to
$1,016 million and $1,003 million for the 12 months ended September 30, 2018 and the 12 months ended December 31, 2017, respectively. Our dividend
requirements on all of our First Preference Shares for the 12 months ended September 30, 2018 and the 12 months ended December 31, 2017, adjusted to a before-tax
equivalent, amounted to $88 million using an effective income tax rate of 27% and $99 million using an effective income tax rate of 34%, respectively. Our earnings before borrowing costs
and income tax for the 12 months ended September 30, 2018 and the 12 months ended December 31, 2017 were $2,333 million and $2,456 million, respectively,
which is 2.11 times and 2.23 times, respectively, our aggregate interest and dividend requirements for the periods.
These
earnings coverage ratios do not purport to be indicative of earnings coverage ratios for any future periods. The earnings coverage ratios and dividend and interest requirements do
not give effect to the issuance of any Securities that may be issued pursuant to this Prospectus and any Prospectus Supplement, since the
8
Table of Contents
aggregate
principal amounts and the terms of such Securities are not currently known. If we offer First Preference Shares, Second Preference Shares or Debt Securities having a term to maturity in
excess of one year under this Prospectus, the applicable Prospectus Supplement will include earnings coverage ratios giving effect to the issuance of such Securities.
DIVIDEND POLICY
Dividends on the Common Shares are declared at the discretion of our board of directors, or the Board of Directors. We declared and
paid cumulative cash dividends on our Common Shares of $1.65 in 2017, $1.55 in 2016 and $1.43 in 2015. On December 7, 2017, our Board of Directors declared a first quarter dividend of $0.425
per Common Share, which was paid on March 1, 2018 to holders of record on February 15, 2018. On February 14, 2018, our Board of Directors declared a second quarter dividend of
$0.425 per Common Share, which was paid on June 1, 2018 to holders of record on May 18, 2018. On July 25, 2018, our Board of Directors declared a third quarter dividend of $0.425
per Common Share, which was paid on September 1, 2018 to holders of record on August 21, 2018. On October 15, 2018, our Board of Directors declared a fourth quarter dividend of
$0.45 per Common Share, which was paid on December 3, 2018 to holders of record on November 20, 2018. On November 28, 2018, our Board of Directors
declared a first quarter dividend for 2019 of $0.45 per Common Share, which will be paid on March 1, 2019 to holders of record on February 15, 2019. We have increased our annual
Common Share dividend payment for 45 consecutive years.
During
the third quarter of 2018, we provided updated dividend guidance targeting average annual dividend growth of 6% through 2023. This guidance takes into account many factors,
including the continued good performance of our utilities, growth in our service territories, the expectation of reasonable outcomes for regulatory proceedings, and the successful execution of our
five-year capital investment plan.
Regular
quarterly dividends at the prescribed annual rate have been paid on all of the First Preference Shares, Series F; First Preference Shares, Series G; First
Preference Shares, Series H; First Preference Shares, Series I; First Preference Shares, Series J; First Preference Shares, Series K; and First Preference Shares,
Series M, or the Outstanding First Preference Shares, respectively. Our Board of Directors declared a first quarter dividend on the Outstanding First Preference Shares on December 7,
2017, in each case in accordance with the applicable prescribed annual rate or floating rate, as the case may be, which was paid on March 1, 2018 to holders of record on February 15,
2018. On February 14, 2018, our Board of Directors declared a second quarter dividend on the Outstanding First Preference Shares, in accordance with the applicable prescribed annual rate or
floating rate, as the case may be, in each case which was paid on June 1, 2018 to holders of record on May 18, 2018. On July 25, 2018, our Board of Directors declared a third
quarter dividend on the Outstanding First Preference Shares, in accordance with the applicable prescribed annual rate or floating rate, as the case may be, in each case which was paid on
September 1, 2018 to holders of record on August 21, 2018. On October 15, 2018, our Board of Directors declared a fourth quarter dividend on the Outstanding First Preference
Shares, in accordance with the applicable prescribed annual rate or floating rate, as the case may be, in each case which was paid on December 3, 2018 to holders of record on
November 20, 2018. On November 28, 2018, our Board of Directors declared a first quarter dividend for 2019 on the Outstanding First Preference Shares, in accordance with the
applicable prescribed annual rate or floating rate, as the case may be, in each case to be paid on March 1, 2019 to holders of record on February 15, 2019.
DESCRIPTION OF SECURITIES OFFERED
Common Shares
Common Shares may be offered separately or together with First Preference Shares, Second Preference Shares, Subscription Receipts or
Debt Securities under this Prospectus. Common Shares may also be issuable on conversion or exchange of certain Debt Securities and Subscription Receipts qualified for issuance under this Prospectus.
Each
Common Share offered hereunder will have the terms described below.
9
Table of Contents
Dividends
Dividends on Common Shares are declared at the discretion of our Board of Directors. Holders of Common Shares are entitled to dividends
on a pro rata basis if, as and when declared by our Board of Directors. Subject to the rights of the holders of the First Preference Shares and
Second Preference Shares and any of our other classes of shares entitled to receive dividends in priority to or rateably with the holders of the Common Shares, our Board of Directors may declare
dividends on the Common Shares to the exclusion of any of our other classes of shares.
Liquidation, Dissolution or Winding-Up
On our liquidation, dissolution or winding-up, holders of Common Shares are entitled to participate rateably in any distribution of our
assets, subject to the rights of holders of First Preference Shares and Second Preference Shares and any of our other classes of shares entitled to receive our assets on such a distribution in
priority to or rateably with the holders of the Common Shares.
Voting Rights
Holders of the Common Shares are entitled to receive notice of and to attend all annual and special meetings of our shareholders, other
than separate meetings of holders of any other class or series of shares, and to one vote in respect of each Common Share held at such meetings.
First Preference Shares
The following is a summary of the material rights, privileges, conditions and restrictions attached to the First Preference Shares as a
class. The specific terms of the First Preference Shares, including the currency in which First Preference Shares may be purchased and redeemed and the currency in which any dividend is payable, if
other than Canadian dollars, and the extent to which the general terms described in this section apply to those First Preference Shares, will be set forth in the applicable Prospectus Supplement. One
or more series of First Preference Shares may be sold separately or together with Common Shares, Second Preference Shares, Subscription Receipts or Debt Securities under this Prospectus.
Issuance in Series
Our Board of Directors may from time to time issue First Preference Shares in one or more series. Prior to issuing shares in a series,
our Board of Directors is required to fix the number of shares in the series and determine the designation, rights, privileges, restrictions and conditions attaching to that series of First Preference
Shares.
Priority
The shares of each series of First Preference Shares rank on a parity with the First Preference Shares of every other series and in
priority to all of our other shares, including the Second Preference Shares, as to the payment of dividends, return of capital and the distribution of our assets in the event of a liquidation,
dissolution or winding-up, whether voluntary or involuntary, or any other distribution of our assets among our shareholders for the purpose of winding-up our affairs. Each series of First Preference
Shares participates rateably with every other series of First Preference Shares in respect of accumulated cumulative dividends and returns of capital if any amount of cumulative dividends, whether or
not declared, or amount payable on the return of capital in respect of a series of First Preference Shares, is not paid in full.
Voting
The holders of the First Preference Shares are not entitled to any voting rights as a class except to the extent that voting rights may
from time to time be attached to any series of First Preference Shares, and except as provided by law or as described below under
" Modification". At any meeting of the holders of First Preference Shares, each holder shall have one vote in respect of each First Preference Share held.
10
Table of Contents
Redemption
Subject to the provisions of the Corporations Act (Newfoundland and Labrador) and any
provisions relating to any particular series, we, upon giving proper notice, may redeem out of capital or otherwise at any time, or from time to time, the whole or any part of the then outstanding
First Preference Shares of any one or more series on payment for each such First Preference Share of such price or prices as may be applicable to such series. Subject to the foregoing, if only a part
of the then outstanding First Preference Shares of any particular series is at any time redeemed, the shares to be redeemed will be selected by lot in such manner as our Board of Directors or the
transfer agent for the First Preference Shares, if any, decide, or if our Board of Directors so determine, may be redeemed pro rata disregarding
fractions.
Modification
The class provisions attached to the First Preference Shares may only be amended with the prior approval of the holders of the First
Preference Shares in addition to any other approvals required by the Corporations Act (Newfoundland and Labrador) or any other statutory provisions of
like or similar effect in force from time to time. The approval of the holders of the First Preference Shares with respect to any and all matters may be given by at least two-thirds of the votes cast
at a meeting of the holders of the First Preference Shares duly called for that purpose.
Second Preference Shares
The rights, privileges, conditions and restrictions attaching to the Second Preference Shares are substantially identical to those
attaching to the First Preference Shares, except that the Second Preference Shares are junior to the First Preference Shares with respect to the payment of dividends, repayment of capital and the
distribution of our assets in the event of a liquidation, dissolution or winding up.
The
specific terms of the Second Preference Shares, including the currency in which Second Preference Shares may be purchased and redeemed and the currency in which any dividend is
payable, if other than Canadian dollars, and the extent to which the general terms described in this Prospectus apply to those Second Preference Shares, will be set forth in the applicable Prospectus
Supplement. One or more series of Second Preference Shares may be sold separately or together with Common Shares, First Preference Shares, Subscription Receipts or Debt Securities under this
Prospectus.
Subscription Receipts
Subscription Receipts may be offered separately or together with Common Shares, First Preference Shares, Second Preference Shares or
Debt Securities, as the case may be. Subscription Receipts will be issued under a subscription receipt agreement, or the Subscription Receipt Agreement, that will be entered into between us and the
escrow agent, or the Escrow Agent, at the time of issuance of the Subscription Receipts. Each Escrow Agent will be a financial institution authorized to carry on business as a trustee. If underwriters
or agents are used in the sale of any Subscription Receipts, one or more of such underwriters or agents may also be a party to the Subscription Receipt Agreement governing the Subscription Receipts
sold to or through such underwriter or agent.
The
Subscription Receipt Agreement will provide each initial purchaser of Subscription Receipts with a non-assignable contractual right of rescission following the issuance of any Common
Shares, First Preference Shares, Second Preference Shares or Debt Securities, as applicable, to such purchaser upon the exchange of the Subscription Receipts if this Prospectus, the Prospectus
Supplement under which the Subscription Receipts are offered, or any amendment hereto or thereto contains a misrepresentation, as such term is defined in the Securities
Act (Ontario). This contractual right of rescission will entitle such initial purchaser to receive the amount paid for the Subscription Receipts upon surrender of the
Securities issued in exchange therefor, provided that such remedy for rescission is exercised in the time stipulated in the Subscription Receipt Agreement. This right of rescission will not extend to
any holders of Subscription Receipts who acquire such Subscription Receipts from an initial purchaser on the open market or otherwise.
11
Table of Contents
The
applicable Prospectus Supplement will include details of the Subscription Receipt Agreement covering the Subscription Receipts being offered. The specific terms of the Subscription
Receipts, and the extent to which the general terms described in this section apply to those Subscription Receipts, will be set forth in the applicable Prospectus Supplement. A copy of the
Subscription Receipt Agreement will be filed by us with securities regulatory authorities after it has been entered into by us and will be available on our SEDAR profile at
www.sedar.com.
This
section describes the general terms that will apply to any Subscription Receipts being offered. The terms and provisions of any Subscription Receipts offered under a Prospectus
Supplement may differ from the terms described below, and may not be subject to or contain any or all of such terms. The particular terms of each issue of Subscription Receipts that will be described
in the related Prospectus Supplement will include, where applicable:
-
(a)
-
the
number of Subscription Receipts;
-
(b)
-
the
price at which the Subscription Receipts will be offered;
-
(c)
-
conditions,
or the Release Conditions, for the exchange of Subscription Receipts into Common Shares, First Preference Shares, Second Preference Shares or
Debt Securities, as the case may be, and the consequences of such conditions not being satisfied;
-
(d)
-
the
procedures for the exchange of the Subscription Receipts into Common Shares, First Preference Shares, Second Preference Shares or Debt Securities;
-
(e)
-
the
number of Common Shares, First Preference Shares, Second Preference Shares or Debt Securities to be exchanged for each Subscription Receipt;
-
(f)
-
the
aggregate principal amount, currency or currencies, denominations and terms of the series of Common Shares, First Preference Shares, Second Preference
Shares or Debt Securities that may be exchanged upon exercise of each Subscription Receipt;
-
(g)
-
the
designation and terms of any other Securities with which the Subscription Receipts will be offered, if any, and the number of Subscription Receipts that
will be offered with each Security;
-
(h)
-
the
dates or periods during which the Subscription Receipts may be exchanged into Common Shares, First Preference Shares, Second Preference Shares or Debt
Securities;
-
(i)
-
the
identity of the Escrow Agent;
-
(j)
-
the
terms and conditions under which the Escrow Agent will hold all or a portion of the gross proceeds from the sale of such Subscription Receipts, together
with interest and income earned thereon, or collectively, the Escrowed Funds, pending satisfaction of the Release Conditions;
-
(k)
-
the
terms and conditions under which the Escrow Agent will release all or a portion of the Escrowed Funds to us upon satisfaction of the Release Conditions
and if the Subscription Receipts are sold to or through underwriters or agents, the terms and conditions under which the Escrow Agent will release a portion of the Escrowed Funds to such underwriters
or agents in payment of all or a portion of their fees or commissions in connection with the sale of the Subscription Receipts;
-
(l)
-
procedures
for the payment by the Escrow Agent to holders of such Subscription Receipts of an amount equal to all or a portion of the subscription price of
their Subscription Receipts, plus any additional amounts provided for in the Subscription Receipt Agreement, if the Release Conditions are not satisfied;
-
(m)
-
any
contractual right of rescission to be granted to initial purchasers of such Subscription Receipts in the event that this Prospectus, the Prospectus
Supplement under which Subscription Receipts are issued or any amendment hereto or thereto contains a misrepresentation;
-
(n)
-
material
U.S. and Canadian federal income tax consequences of owning the Subscription Receipts; and
-
(o)
-
any
other material terms and conditions of the Subscription Receipts.
12
Table of Contents
Prior
to the exchange of their Subscription Receipts, holders of Subscription Receipts will not have any of the rights of holders of the securities to be received on the exchange of the
Subscription Receipts.
Escrow
The Subscription Receipt Agreement will provide that the Escrowed Funds will be held in escrow by the Escrow Agent, and such Escrowed
Funds will be released to us (and, if the Subscription Receipts are sold to or through underwriters or agents, a portion of the Escrowed Funds may be released to such underwriters or agents in payment
of all or a portion of their fees in connection with the sale of the Subscription Receipts) at the time and under the terms specified by the Subscription Receipt Agreement. If the Release Conditions
are not satisfied, holders of Subscription Receipts will receive payment of an amount equal to all or a portion of the subscription price for their Subscription Receipts, plus any additional amounts
provided for in the Subscription Receipt Agreement, in accordance with the terms of the Subscription Receipt Agreement.
Modifications
The Subscription Receipt Agreement will specify the terms upon which modifications and alterations to the Subscription Receipts issued
thereunder may be made by way of a resolution of holders of Subscription Receipts at a meeting of such holders or by way of consent in writing from such holders. The number of holders of Subscription
Receipts required to pass such a resolution or execute such a written consent will be specified in the Subscription Receipt Agreement. The Subscription Receipt Agreement will also specify that we may
amend the Subscription Receipt Agreement and the Subscription Receipts, without the consent of the holders of the Subscription Receipts, to cure any ambiguity, to cure, correct or supplement any
defective or inconsistent provision, or in any other manner that will not materially and adversely affect the interests of the holder of outstanding Subscription Receipts or as otherwise specified in
the Subscription Receipt Agreement.
Debt Securities
Debt Securities, which will be our direct senior or subordinated obligations, may be offered separately or together with Common Shares,
First Preference Shares, Second Preference Shares or Subscription Receipts under this Prospectus, or on conversion or exchange of any such Securities. The particular terms and provisions of a series
of Debt Securities offered pursuant to an accompanying Prospectus Supplement, and the extent to which the general terms and provisions described below may apply to such Debt Securities, will be
described in the applicable Prospectus Supplement.
Debt
Securities may be issued under a trust indenture dated as of October 4, 2016 between us, The Bank of New York Mellon, as the U.S. trustee, and BNY Trust Company
of Canada, as the Canadian co-trustee, or the U.S. Indenture, or under a trust indenture dated as of December 12, 2016 between us and Computershare Trust Company of Canada, or the
Canadian Indenture, a copy of each of which has been filed on our SEDAR profile at www.sedar.com, as supplemented from time to time. Debt Securities issued under the
Canadian Indenture will not be offered or sold to persons in the U.S. pursuant to this Prospectus. Debt Securities may also be issued under new indentures between us and a trustee or trustees
as will be described in a Prospectus Supplement for such Debt Securities, or collectively, with the U.S. Indenture and the Canadian Indenture, the Indentures. A copy of any Indenture or
supplement thereto entered into by us will be filed with securities regulatory authorities and will be available on our SEDAR profile at www.sedar.com.
This
Prospectus does not qualify for issuance Debt Securities in respect of which the payment of principal and/or interest may be determined, in whole or in part, by reference to one or
more underlying interests including, for example, an equity or debt security, a statistical measure of economic or financial performance including, but not limited to, any currency, consumer price or
mortgage index, or the price or value of one or more commodities, indices or other items, or any other item or formula, or any combination or basket of the foregoing items. For greater certainty, this
Prospectus may qualify for issuance Debt Securities in respect of which the payment of principal and/or interest may be determined, in whole or in part, by reference to published rates of a central
banking authority or one or more financial institutions, such as a prime rate or bankers' acceptance rate, or to recognized market benchmark interest rates such as LIBOR, EURIBOR or a
U.S. federal funds rate.
13
Table of Contents
We
conduct our business primarily through our subsidiaries. Accordingly, our ability to meet our obligations under the Debt Securities is dependent primarily on the earnings and cash
flows of those subsidiaries and the ability of those subsidiaries to pay dividends or to advance or repay funds to us. Our subsidiaries are separate legal entities and have no independent obligation
to pay dividends to us. Prior to paying dividends to us, the subsidiaries have financial obligations that must be satisfied, including among others, their operating expenses and obligations to
creditors. Furthermore, our regulated utilities are required by regulation to maintain a minimum equity-to-total capital ratio that may restrict their ability to pay dividends to us or may require
that we contribute capital. The future enactment of laws or regulations may prohibit or further restrict the ability of our subsidiaries to pay upstream dividends or to repay intercorporate
indebtedness. In addition, the rights that we and our creditors would have to participate in the assets of any such subsidiary upon the subsidiary's liquidation or recapitalization will be subject to
the prior claims of the subsidiary's creditors. Certain of our subsidiaries have incurred substantial amounts of debt in the operations and expansion of their businesses, and we anticipate that
certain of our subsidiaries will continue to do so in the future.
Holders
of Debt Securities will generally have a junior position to claims of creditors of our subsidiaries, including trade creditors, debt holders, secured creditors, taxing
authorities, guarantee holders and any holders of preference or preferred shares. In addition to trade debt, certain of our operating subsidiaries have ongoing corporate debt programs used to finance
their business activities. The Debt Securities will be effectively subordinated to any of our existing and future secured obligations to the extent of the value of the
collateral securing such obligations. The Debt Securities will be structurally subordinated to all liabilities and any preference or preferred shares of our subsidiaries.
As
of December 4, 2018, on a consolidated basis (including securities due within one year), we and our operating subsidiaries had approximately $24.2 billion of outstanding
debt, of which approximately $18.9 billion was subsidiary debt. Unless otherwise specified in a Prospectus Supplement, the Indentures do not limit, and future Indentures will not limit, the
amount of indebtedness or preference or preferred shares issuable by our subsidiaries.
The
following description of the Debt Securities is only a summary and is not intended to be comprehensive. For additional information you should refer to the Indenture under which such
Debt Securities are issued.
General
The Indentures will not limit the amount of Debt Securities that we may issue thereunder. We may issue Debt Securities from time to
time under an Indenture in one or more series by entering into supplemental indentures or by our Board of Directors or a duly authorized committee authorizing the issuance. The Debt Securities of a
series need not be issued at the same time, bear interest at the same rate or mature on the same date.
The
Prospectus Supplement for a particular series of Debt Securities will disclose the specific terms of such Debt Securities, including the price or prices at which the Debt Securities
to be offered will be issued. Those terms may include some or all of the following:
-
(a)
-
the
title of the series;
-
(b)
-
the
total principal amount of the Debt Securities of the series;
-
(c)
-
the
date or dates on which principal is payable or the method for determining the date or dates, and any right that we have to change the date on which
principal is payable;
-
(d)
-
the
interest rate or rates, if any, or the method for determining the rate or rates, and the date or dates from which interest will accrue;
-
(e)
-
any
interest payment dates and the regular record date for the interest payable on each interest payment date, if any;
-
(f)
-
whether
we may extend the interest payment periods and, if so, the terms of the extension;
-
(g)
-
the
place or places where payments will be made;
14
Table of Contents
-
(h)
-
whether
we have the option to redeem the Debt Securities and, if so, the terms of such redemption option;
-
(i)
-
any
obligation that we have to redeem the Debt Securities through a sinking fund or to purchase the Debt Securities through a purchase fund or at the option
of the holder;
-
(j)
-
any
conversion or exchange right granted to holders, the terms and conditions thereof and the number and designation of the securities to be received by
holders on any such conversion or exchange;
-
(k)
-
the
currency in which the Debt Securities may be purchased and in which the principal and any interest is payable;
-
(l)
-
if
payments may be made, at our election or at the holder's election, in a currency other than that in which the Debt Securities are stated to be payable,
then the currency in which those payments may be made, the terms and conditions of the election and the manner of determining those amounts;
-
(m)
-
the
portion of the principal payable upon acceleration of maturity, if other than the entire principal;
-
(n)
-
whether
the Debt Securities will be issuable as global securities and, if so, the securities depositary;
-
(o)
-
the
events of default or covenants with respect to the Debt Securities;
-
(p)
-
any
index or formula used for determining principal, premium or interest;
-
(q)
-
the
terms of the subordination of any series of subordinated debt;
-
(r)
-
if
the principal payable on the maturity date will not be determinable on one or more dates prior to the maturity date, the amount which will be deemed to
be such principal amount or the manner of determining it;
-
(s)
-
the
person to whom any interest shall be payable if other than the person in whose name the Debt Security is registered on the regular record date for such
interest payment; and
-
(t)
-
any
other terms.
The
Debt Securities offered pursuant to this Prospectus and any Prospectus Supplement may be represented by instalment receipts, the particular terms and provisions of which will be
described in the applicable Prospectus Supplement and set out in an instalment receipt and pledge agreement. Any such instalment receipt will evidence, among other things, (a) the fact that a
first instalment payment has been made in respect of the Debt Securities represented thereby and (b) the beneficial ownership of the Debt Securities represented by the instalment receipt,
subject to a pledge of such Debt Securities securing the obligation to pay the balance outstanding under such Debt Securities on or prior to a certain date. A copy of any such instalment receipt and
pledge agreement will be filed by us with securities regulatory authorities after it has been entered into and will be available on our SEDAR profile at www.sedar.com.
CHANGES IN SHARE AND LOAN CAPITAL STRUCTURE
The following describes the changes in our share and loan capital structure since
September 30, 2018:
-
(a)
-
During
the period from October 1, 2018 up to and including December 4, 2018, we issued an aggregate of 80,052 Common Shares in
connection with the exercise of options granted pursuant to our 2012 Stock Option Plan.
-
(b)
-
During
the period from October 1, 2018 up to and including December 4, 2018, our consolidated long-term debt, capital lease and finance
obligations, including current portions and committed credit facility borrowing classified as long-term debt increased by approximately $1.0 billion, principally due to changes in foreign
exchange rates over the period, the issuance of US$555 million of long-term debt, the repayment of US$130 million of long-term debt, and the net increase in committed credit facility
borrowings.
15
Table of Contents
PRIOR SALES
We have not sold or issued any First Preference Shares, Second Preference Shares, Subscription Receipts or Debt Securities or
securities convertible into First Preference Shares, Second Preference Shares or Debt Securities during the 12 months prior to the date hereof. The following table summarizes our issuances of
Common Shares and securities convertible into Common Shares during the 12 months prior to the date of this Prospectus:
|
|
|
|
|
|
|
|
|
|
Date
|
|
Security
|
|
Weighted Average
Issue Price or
Exercise Price per
Security, as
applicable
|
|
Number of
Securities
|
|
November 2017
|
|
Common Exercise of Stock Options(1)
|
|
|
$33.37
|
|
|
51,656
|
|
December 1, 2017
|
|
Common DRIP(2)
|
|
|
$46.78
|
|
|
1,452,118
|
|
December 1, 2017
|
|
Common ESPP(3)
|
|
|
$47.72
|
|
|
79,446
|
|
December 2017
|
|
Common Exercise of Stock Options(1)
|
|
|
$37.35
|
|
|
5,829
|
|
January 2018
|
|
Common Exercise of Stock Options(1)
|
|
|
$32.95
|
|
|
10,892
|
|
February 2018
|
|
Common Exercise of Stock Options(1)
|
|
|
$33.24
|
|
|
102,556
|
|
March 1, 2018
|
|
Common DRIP(2)
|
|
|
$41.08
|
|
|
1,543,414
|
|
March 1, 2018
|
|
Common ESPP(3)
|
|
|
$41.91
|
|
|
195,214
|
|
March 2018
|
|
Common Exercise of Stock Options(1)
|
|
|
$33.37
|
|
|
58,305
|
|
May 2018
|
|
Common Exercise of Stock Options(1)
|
|
|
$30.73
|
|
|
1,000
|
|
June 1, 2018
|
|
Common DRIP(2)
|
|
|
$40.86
|
|
|
1,641,083
|
|
June 1, 2018
|
|
Common ESPP(3)
|
|
|
$41.69
|
|
|
103,060
|
|
June 2018
|
|
Common Exercise of Stock Options(1)
|
|
|
$30.73
|
|
|
33,950
|
|
July 2018
|
|
Common Exercise of Stock Options(1)
|
|
|
$33.28
|
|
|
5,405
|
|
August 2018
|
|
Common Exercise of Stock Options(1)
|
|
|
$38.08
|
|
|
5,027
|
|
September 4, 2018
|
|
Common DRIP(2)
|
|
|
$41.62
|
|
|
1,704,236
|
|
September 4, 2018
|
|
Common ESPP(3)
|
|
|
$42.47
|
|
|
84,929
|
|
September 2018
|
|
Common Exercise of Stock Options(1)
|
|
|
$34.80
|
|
|
27,947
|
|
November 2018
|
|
Common Exercise of Stock Options(1)
|
|
|
$33.58
|
|
|
67,356
|
|
December 3, 2018
|
|
Common DRIP(2)
|
|
|
$45.04
|
|
|
1,618,001
|
|
December 3, 2018
|
|
Common ESPP(3)
|
|
|
$45.95
|
|
|
75,984
|
|
December 2018
|
|
Common Exercise of Stock Options(1)
|
|
|
$34.27
|
|
|
12,696
|
|
-
(1)
-
Issued
on the exercise of options granted pursuant to our 2006 Stock Option Plan or our 2012 Stock Option Plan.
-
(2)
-
Issued
pursuant to our Dividend Reinvestment Plan, or DRIP.
-
(3)
-
Issued
pursuant to our Employee Share Purchase Plan, or ESPP.
16
Table of Contents
TRADING PRICES AND VOLUMES
The following tables set forth, for the periods indicated, the reported high and low daily trading prices and the aggregate volume of
trading of our Common Shares on the TSX and NYSE and of our Outstanding First Preference Shares on the TSX.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trading of
Common Shares
|
|
Trading of
Common Shares
|
|
|
|
TSX
|
|
NYSE
|
|
|
|
High
|
|
Low
|
|
Volume
|
|
High
|
|
Low
|
|
Volume
|
|
|
|
($)
|
|
($)
|
|
(#)
|
|
(US$)
|
|
(US$)
|
|
(#)
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
November
|
|
|
48.73
|
|
|
46.53
|
|
|
14,498,699
|
|
|
38.24
|
|
|
36.13
|
|
|
1,993,741
|
|
December
|
|
|
47.96
|
|
|
45.69
|
|
|
15,184,454
|
|
|
37.60
|
|
|
35.77
|
|
|
1,581,609
|
|
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
January
|
|
|
46.00
|
|
|
42.56
|
|
|
23,833,658
|
|
|
36.63
|
|
|
34.49
|
|
|
2,164,264
|
|
February
|
|
|
43.48
|
|
|
39.38
|
|
|
27,141,195
|
|
|
35.35
|
|
|
31.41
|
|
|
2,299,440
|
|
March
|
|
|
43.83
|
|
|
41.52
|
|
|
26,194,320
|
|
|
34.03
|
|
|
32.29
|
|
|
1,889,339
|
|
April
|
|
|
43.83
|
|
|
41.76
|
|
|
15,120,177
|
|
|
34.19
|
|
|
32.83
|
|
|
1,267,252
|
|
May
|
|
|
43.60
|
|
|
41.31
|
|
|
17,886,103
|
|
|
33.78
|
|
|
31.84
|
|
|
940,059
|
|
June
|
|
|
42.41
|
|
|
40.21
|
|
|
18,718,490
|
|
|
32.00
|
|
|
30.88
|
|
|
2,235,938
|
|
July
|
|
|
43.18
|
|
|
41.71
|
|
|
15,867,578
|
|
|
33.00
|
|
|
31.57
|
|
|
2,281,643
|
|
August
|
|
|
43.65
|
|
|
42.05
|
|
|
17,701,954
|
|
|
33.41
|
|
|
32.11
|
|
|
1,276,184
|
|
September
|
|
|
43.14
|
|
|
41.67
|
|
|
17,025,568
|
|
|
33.00
|
|
|
32.09
|
|
|
1,269,752
|
|
October
|
|
|
44.04
|
|
|
40.71
|
|
|
33,041,713
|
|
|
33.84
|
|
|
31.37
|
|
|
3,126,161
|
|
November
|
|
|
47.06
|
|
|
42.60
|
|
|
28,786,806
|
|
|
35.81
|
|
|
32.48
|
|
|
2,421,948
|
|
December 1 to 4
|
|
|
47.35
|
|
|
45.98
|
|
|
2,590,459
|
|
|
35.86
|
|
|
34.92
|
|
|
200,202
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trading of First
Preference Shares, Series F
|
|
Trading of First
Preference Shares, Series G
|
|
|
|
TSX
|
|
TSX
|
|
|
|
High
|
|
Low
|
|
Volume
|
|
High
|
|
Low
|
|
Volume
|
|
|
|
($)
|
|
($)
|
|
(#)
|
|
($)
|
|
($)
|
|
(#)
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
November
|
|
|
24.70
|
|
|
24.01
|
|
|
52,990
|
|
|
21.75
|
|
|
21.35
|
|
|
125,343
|
|
December
|
|
|
24.34
|
|
|
23.66
|
|
|
49,842
|
|
|
21.85
|
|
|
21.25
|
|
|
144,539
|
|
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
January
|
|
|
24.56
|
|
|
23.90
|
|
|
52,581
|
|
|
23.46
|
|
|
21.80
|
|
|
314,574
|
|
February
|
|
|
24.01
|
|
|
23.14
|
|
|
116,545
|
|
|
23.49
|
|
|
22.65
|
|
|
481,057
|
|
March
|
|
|
23.40
|
|
|
23.04
|
|
|
26,613
|
|
|
22.89
|
|
|
21.69
|
|
|
164,323
|
|
April
|
|
|
23.37
|
|
|
22.88
|
|
|
49,779
|
|
|
21.86
|
|
|
21.35
|
|
|
360,277
|
|
May
|
|
|
23.35
|
|
|
22.62
|
|
|
22,564
|
|
|
22.75
|
|
|
21.41
|
|
|
263,086
|
|
June
|
|
|
23.00
|
|
|
22.56
|
|
|
44,988
|
|
|
22.00
|
|
|
21.69
|
|
|
131,944
|
|
July
|
|
|
23.05
|
|
|
22.74
|
|
|
91,350
|
|
|
22.46
|
|
|
21.59
|
|
|
99,568
|
|
August
|
|
|
23.09
|
|
|
22.67
|
|
|
117,689
|
|
|
22.45
|
|
|
21.81
|
|
|
71,417
|
|
September
|
|
|
22.90
|
|
|
22.68
|
|
|
38,973
|
|
|
22.21
|
|
|
21.55
|
|
|
108,121
|
|
October
|
|
|
22.78
|
|
|
21.53
|
|
|
78,511
|
|
|
21.94
|
|
|
19.76
|
|
|
347,351
|
|
November
|
|
|
22.42
|
|
|
21.21
|
|
|
76,509
|
|
|
20.96
|
|
|
18.01
|
|
|
93,717
|
|
December 1 to 4
|
|
|
21.74
|
|
|
21.60
|
|
|
1,351
|
|
|
18.57
|
|
|
17.80
|
|
|
173,783
|
|
17
Table of Contents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trading of First
Preference Shares, Series H
|
|
Trading of First
Preference Shares, Series I
|
|
|
|
TSX
|
|
TSX
|
|
|
|
High
|
|
Low
|
|
Volume
|
|
High
|
|
Low
|
|
Volume
|
|
|
|
($)
|
|
($)
|
|
(#)
|
|
($)
|
|
($)
|
|
(#)
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
November
|
|
|
17.28
|
|
|
17.00
|
|
|
319,303
|
|
|
16.98
|
|
|
16.50
|
|
|
21,350
|
|
December
|
|
|
18.17
|
|
|
17.01
|
|
|
340,006
|
|
|
17.19
|
|
|
16.46
|
|
|
39,581
|
|
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
January
|
|
|
19.27
|
|
|
17.95
|
|
|
448,894
|
|
|
19.41
|
|
|
17.10
|
|
|
149,365
|
|
February
|
|
|
18.95
|
|
|
18.39
|
|
|
58,465
|
|
|
19.00
|
|
|
18.22
|
|
|
60,571
|
|
March
|
|
|
18.55
|
|
|
17.72
|
|
|
117,162
|
|
|
18.69
|
|
|
17.69
|
|
|
11,052
|
|
April
|
|
|
18.04
|
|
|
17.46
|
|
|
48,388
|
|
|
17.90
|
|
|
17.53
|
|
|
13,728
|
|
May
|
|
|
18.96
|
|
|
17.83
|
|
|
47,539
|
|
|
18.84
|
|
|
17.85
|
|
|
52,500
|
|
June
|
|
|
18.81
|
|
|
18.29
|
|
|
138,802
|
|
|
18.65
|
|
|
18.07
|
|
|
106,500
|
|
July
|
|
|
18.80
|
|
|
18.20
|
|
|
57,802
|
|
|
18.85
|
|
|
18.21
|
|
|
22,735
|
|
August
|
|
|
18.76
|
|
|
18.30
|
|
|
153,861
|
|
|
19.05
|
|
|
18.50
|
|
|
16,689
|
|
September
|
|
|
18.58
|
|
|
18.21
|
|
|
26,453
|
|
|
18.90
|
|
|
18.42
|
|
|
15,800
|
|
October
|
|
|
18.51
|
|
|
17.09
|
|
|
292,217
|
|
|
19.33
|
|
|
17.42
|
|
|
67,159
|
|
November
|
|
|
17.94
|
|
|
15.61
|
|
|
68,366
|
|
|
18.33
|
|
|
16.26
|
|
|
19,705
|
|
December 1 to 4
|
|
|
16.18
|
|
|
15.61
|
|
|
2,746
|
|
|
16.65
|
|
|
16.65
|
|
|
100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trading of First
Preference Shares, Series J
|
|
Trading of First
Preference Shares, Series K
|
|
|
|
TSX
|
|
TSX
|
|
|
|
High
|
|
Low
|
|
Volume
|
|
High
|
|
Low
|
|
Volume
|
|
|
|
($)
|
|
($)
|
|
(#)
|
|
($)
|
|
($)
|
|
(#)
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
November
|
|
|
24.00
|
|
|
23.27
|
|
|
83,380
|
|
|
21.82
|
|
|
21.30
|
|
|
131,077
|
|
December
|
|
|
23.60
|
|
|
22.75
|
|
|
131,274
|
|
|
21.80
|
|
|
21.08
|
|
|
171,761
|
|
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
January
|
|
|
23.48
|
|
|
22.77
|
|
|
88,753
|
|
|
22.98
|
|
|
21.61
|
|
|
157,367
|
|
February
|
|
|
23.20
|
|
|
22.10
|
|
|
73,891
|
|
|
23.00
|
|
|
22.35
|
|
|
60,197
|
|
March
|
|
|
22.66
|
|
|
22.23
|
|
|
64,898
|
|
|
22.60
|
|
|
21.52
|
|
|
232,405
|
|
April
|
|
|
22.80
|
|
|
22.12
|
|
|
71,416
|
|
|
21.72
|
|
|
21.28
|
|
|
75,323
|
|
May
|
|
|
22.60
|
|
|
21.89
|
|
|
126,261
|
|
|
22.70
|
|
|
21.58
|
|
|
108,200
|
|
June
|
|
|
22.28
|
|
|
21.90
|
|
|
153,957
|
|
|
21.99
|
|
|
21.50
|
|
|
52,196
|
|
July
|
|
|
22.45
|
|
|
21.10
|
|
|
80,266
|
|
|
21.88
|
|
|
21.37
|
|
|
65,424
|
|
August
|
|
|
22.45
|
|
|
21.92
|
|
|
182,692
|
|
|
22.06
|
|
|
21.58
|
|
|
346,042
|
|
September
|
|
|
22.08
|
|
|
21.87
|
|
|
108,890
|
|
|
21.87
|
|
|
21.47
|
|
|
112,970
|
|
October
|
|
|
22.03
|
|
|
20.77
|
|
|
153,462
|
|
|
21.94
|
|
|
20.05
|
|
|
237,944
|
|
November
|
|
|
21.71
|
|
|
20.45
|
|
|
93,375
|
|
|
21.11
|
|
|
18.05
|
|
|
163,491
|
|
December 1 to 4
|
|
|
20.99
|
|
|
20.79
|
|
|
10,987
|
|
|
18.41
|
|
|
17.05
|
|
|
23,029
|
|
18
Table of Contents
|
|
|
|
|
|
|
|
|
|
|
|
|
Trading of First
Preference Shares, Series M
|
|
|
|
TSX
|
|
|
|
High
|
|
Low
|
|
Volume
|
|
|
|
($)
|
|
($)
|
|
(#)
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
November
|
|
|
23.95
|
|
|
23.51
|
|
|
379,051
|
|
December
|
|
|
23.82
|
|
|
23.18
|
|
|
186,468
|
|
2018
|
|
|
|
|
|
|
|
|
|
|
January
|
|
|
24.41
|
|
|
23.65
|
|
|
921,049
|
|
February
|
|
|
24.45
|
|
|
23.67
|
|
|
218,630
|
|
March
|
|
|
23.96
|
|
|
23.28
|
|
|
158,451
|
|
April
|
|
|
23.66
|
|
|
23.26
|
|
|
175,864
|
|
May
|
|
|
24.07
|
|
|
23.35
|
|
|
1,231,722
|
|
June
|
|
|
25.00
|
|
|
23.40
|
|
|
412,482
|
|
July
|
|
|
23.98
|
|
|
23.24
|
|
|
195,966
|
|
August
|
|
|
24.22
|
|
|
23.71
|
|
|
75,810
|
|
September
|
|
|
24.20
|
|
|
23.64
|
|
|
178,167
|
|
October
|
|
|
24.07
|
|
|
22.15
|
|
|
203,354
|
|
November
|
|
|
23.23
|
|
|
19.56
|
|
|
208,333
|
|
December 1 to 4
|
|
|
19.80
|
|
|
19.10
|
|
|
36,532
|
|
USE OF PROCEEDS
We intend to use the net proceeds from the sale of Securities to repay indebtedness, to directly or indirectly finance future growth
opportunities and/or for general corporate purposes. Specific information about the use of net proceeds of any offering of Securities under this Prospectus will be set forth in the applicable
Prospectus Supplement. We may invest funds which we do not immediately use. Such investments may include short-term marketable investment grade securities denominated in Canadian dollars,
U.S. dollars or other currencies. We may, from time to time, issue securities other than pursuant to this Prospectus.
PLAN OF DISTRIBUTION
We and any Selling Securityholder may sell the Securities, separately or together, to or through one or more underwriters or dealers,
purchasing as principals for public offering and sale by them, and may also sell Securities to one or more other purchasers directly or through agents. Securities sold to the public pursuant to this
Prospectus may be offered and sold exclusively in Canada or the U.S., or in both jurisdictions. The Prospectus Supplement relating to an offering of Securities will indicate the jurisdiction or
jurisdictions in which such offering is being made to the public. Each Prospectus Supplement will set out the terms of the offering, including the name or names of any underwriters, dealers or agents,
the purchase price or prices of the Securities (or the manner of determination thereof if offered on a non-fixed price basis, including sales in transactions that are deemed to be
"at-the-market distributions" as defined in National Instrument 44-102 Shelf Distributions),
and the proceeds to us or the applicable Selling Securityholder from the sale of the Securities. Only underwriters, dealers or agents so named in the Prospectus Supplement are deemed to be
underwriters, dealers or agents, as the case may be, in connection with the Securities offered thereby.
The
Securities may be sold, from time to time in one or more transactions at a fixed price or prices which may be changed or at market prices prevailing at the time of sale, at prices
related to such prevailing market prices or at negotiated prices. The prices at which the Securities may be offered may vary between purchasers and during the period of distribution. If, in connection
with the offering of Securities at a fixed price or prices, the underwriters have made a bona fide effort to sell all of the Securities at the
initial offering price fixed in the applicable Prospectus Supplement, the public offering price may be decreased and thereafter further changed, from time to time, to an amount not greater than the
initial public offering price fixed in such Prospectus Supplement, in which case the compensation realized by the underwriters, dealers or agents will be decreased by
19
Table of Contents
the
amount that the aggregate price paid by purchasers for the Securities is less than the gross proceeds paid by the underwriters, dealers or agents to us or the applicable Selling Securityholder.
If
underwriters or dealers purchase Securities as principals, the Securities will be acquired by the underwriters or dealers for their own account and may be resold from time to time in
one or more transactions, including negotiated transactions, at a fixed public offering price or at varying prices determined at the time of sale. The obligations of the underwriters or dealers to
purchase those Securities will be subject to certain conditions precedent, and the underwriters or dealers will be obligated to purchase all the Securities offered by the Prospectus Supplement if any
of such Securities are purchased. Any public offering price and any discounts or concessions allowed or re-allowed or paid may be changed from time to time.
The
Securities may also be sold directly by us or any Selling Securityholder in accordance with applicable securities laws at prices and upon terms agreed to by the purchaser and us or
the Selling Securityholder, as applicable, or through agents designated by us or the Selling Securityholder, as applicable, from time to time. Any agent involved in the offering and sale of Securities
pursuant to a particular Prospectus Supplement will be named, and any commissions payable by us or the Selling Securityholder, as applicable, to that agent will be set forth, in such Prospectus
Supplement. Unless otherwise indicated in the Prospectus Supplement, any agent would be acting on a best efforts basis for the period of its appointment.
In
connection with the sale of the Securities, underwriters, dealers or agents may receive compensation from us or the Selling Securityholder, as applicable, in the form of commissions,
concessions and discounts. Any such commissions may be paid out of our or the Selling Securityholder's general funds, as applicable, or the proceeds of the sale of Securities. Underwriters, dealers
and agents who participate in the distribution of the Securities may be entitled under agreement to be entered into with the us or the Selling Securityholder, as applicable, to indemnification by us
or the Selling Securityholder, as applicable, against certain liabilities, including liabilities under Canadian securities legislation, or to contribution with respect to payments which such
underwriters, dealers or agents may be required to make in respect thereof. Such underwriters, dealers and agents may engage in transactions with, or perform services for, us in the ordinary course
of business.
Sales
of Common Shares under an ATM Program, if any, will be made pursuant to an accompanying Prospectus Supplement, and the specific terms and conditions of any such offering will be
described in the applicable Prospectus Supplement. Sales of Common Shares under any ATM Program will be made in transactions that are deemed to be "at-the-market distributions" as defined in National
Instrument 44-102 Shelf Distributions. The volume and timing of any "at-the-market distributions" will be
determined at our sole discretion. See "Recent Developments At-the-Market Offering".
In
connection with any offering of Securities, other than an "at-the-market distribution", the applicable Prospectus Supplement will set forth any intention by the underwriters, dealers
or agents to offer, allot or effect transactions which stabilize or maintain the market price of the Securities offered at a level above that which might otherwise prevail in the open market. Such
transactions, if commenced, may be interrupted or discontinued at any time.
No
underwriter or dealer involved in an "at-the-market distribution", no affiliate of such an underwriter or dealer and no person or company acting jointly or in concert with such an
underwriter or dealer may over-allot Securities in connection with the distribution or may effect any other transactions that are intended to stabilize or maintain the market price of the Securities
in connection with an "at-the-market distribution".
SELLING SECURITYHOLDERS
This Prospectus may also, from time to time, relate to the offering of Securities by way of a secondary offering by certain Selling
Securityholders. The terms under which the Securities may be offered by Selling Securityholders will be described in the applicable Prospectus Supplement. The Prospectus Supplement for or including
any offering of Securities by Selling Securityholders will include, without limitation, where applicable: (a) the names of the Selling Securityholders; (b) the number and type of
Securities owned, controlled or directed by each of the Selling Securityholders; (c) the number of Securities being distributed for the account of each Selling Securityholder; (d) the
number of Securities to be owned, controlled or directed by the Selling Securityholders after the distribution and the percentage that number or amount represents out of the total
20
Table of Contents
number
of outstanding Securities of the relevant class; (e) whether the Securities are owned by the Selling Securityholders, both of record and beneficially, of record only or beneficially
only; (f) if the Selling Securityholder purchased any of the Securities held by it in the 24 months preceding the date of the Prospectus Supplement, the date or dates on which the
Selling Securityholders acquired the Securities; and (g) if the Selling Securityholder acquired the Securities held by it in the 12 months preceding the date of the Prospectus
Supplement, the cost thereof to the Selling Securityholder in the aggregate and on a per security basis.
CERTAIN INCOME TAX CONSIDERATIONS
The applicable Prospectus Supplement will describe certain material Canadian federal income tax consequences to an investor of the
acquisition, ownership and disposition of any Securities offered thereunder. The applicable Prospectus Supplement may also describe certain U.S. federal income tax considerations generally
applicable to the acquisition, ownership and disposition of any Securities offered thereunder by an investor who is a U.S. person.
RISK FACTORS
An investment in the Securities involves certain risks. A prospective purchaser of Securities should carefully consider the risk
factors described under:
-
(a)
-
the
heading "Business Risk Management" found on pages 36 to 47 of the Annual MD&A; and
-
(b)
-
the
heading "Business Risk Management" found on pages 11-12, 16-17 and 21 of the Interim MD&A,
each
of which is incorporated by reference herein. In addition, prospective purchasers of Securities should carefully consider, in light of their own financial circumstances, the risk factors set out
below, as well as the other information contained in this Prospectus (including the documents incorporated by reference herein) and in all subsequently filed documents incorporated by reference and
those described in a Prospectus Supplement relating to a specific offering of Securities, before making an investment decision.
As a foreign private issuer, we are permitted to follow certain home country corporate governance practices instead of otherwise applicable SEC and NYSE requirements.
As a foreign private issuer, in reliance on NYSE rules that permit a foreign private issuer to follow the corporate governance
practices of its home country, we will be permitted to follow certain Canadian corporate governance practices instead of those otherwise required under the corporate governance standards for
U.S. domestic issuers. We expect to follow Canadian home country practices with regard to obtaining shareholder approval for certain dilutive events. We may in the future elect to follow
Canadian home country practices with regard to other matters such as the formation and composition of our Board of Directors, our audit, human resources and governance and nominating committees and
separate sessions of independent directors. Accordingly, our investors may not be afforded the same protection as provided under NYSE corporate governance rules. Following Canadian home country
governance practices as opposed to the requirements that would otherwise apply to a U.S. company listed on the NYSE may provide less protection than is accorded to investors in
U.S. domestic issuers.
As a foreign private issuer, we will not be subject to the provisions of Regulation FD or U.S. proxy rules and will be exempt from filing certain
Exchange Act reports, which could result in the Securities being less attractive to investors.
As a foreign private issuer, we will be exempt from a number of requirements under U.S. securities laws that apply to public
companies that are not foreign private issuers. In particular, we will be exempt from the rules and regulations under the Exchange Act related to the furnishing and content of proxy statements, and
our officers, directors and principal shareholders will be exempt from the insider reporting and short-swing profit recovery provisions contained in Section 16 of the Exchange Act. In addition,
we will not be required under the Exchange Act to file annual and current reports and financial statements with the SEC as frequently or as promptly as U.S. domestic companies whose securities
are registered under the Exchange Act and we will generally be exempt from filing quarterly reports with the SEC under the Exchange Act. We will also be exempt
21
Table of Contents
from
the provisions of Regulation FD, which prohibits the selective disclosure of material non-public information to, among others, broker-dealers and holders of a company's securities under
circumstances in which it is reasonably foreseeable that the holder will trade in the company's securities on the basis of the information. Even though we intend to comply voluntarily with
Regulation FD, these exemptions and leniencies will reduce the frequency and scope of information and protections to which you are entitled as an investor.
We
will lose our foreign private issuer status if a majority of our shares are held by U.S. persons and a majority of our directors or executive officers are U.S. citizens
or residents or we fail to meet additional requirements necessary to avoid loss of foreign private issuer status. Although we have elected to comply with certain U.S. regulatory provisions,
loss of foreign private issuer status would make compliance with such provisions mandatory. The regulatory and compliance costs to us under U.S. securities laws as a U.S. domestic issuer
may be significantly higher than the costs we incur as a Canadian foreign private issuer eligible to use MJDS.
If
we cease to be a foreign private issuer, we would not be eligible to use MJDS or other foreign issuer forms and will be required to file periodic and current reports and registration
statements on U.S. domestic issuer forms with the SEC, which are more detailed and extensive than the forms available to a foreign private issuer. We may also be required to modify certain of
our policies to comply with the governance obligations of U.S. domestic issuers. Such modifications will involve additional costs. In addition, we would lose our ability to rely upon exemptions
from certain corporate governance requirements that are available to foreign private issuers with securities listed on the NYSE.
AUDITORS
Our auditors are Deloitte LLP, 5 Springdale Street, Suite 1000, St. John's, Newfoundland and Labrador
A1E 0E4. Deloitte LLP is independent of us in accordance with the Rules of Professional Conduct of the Association of Chartered Professional Accountants of Newfoundland and Labrador and
in accordance with the applicable rules and regulations of the SEC and the Public Company Accounting Oversight Board.
Ernst &
Young LLP, Chartered Professional Accountants, Fortis Place, 5 Springdale Street, Suite 800, St. John's, Newfoundland and Labrador
A1E 0E4, have audited our comparative consolidated financial statements as at December 31, 2016 and for the fiscal year then ended, which have been incorporated by reference into this
Prospectus. As of February 14, 2017, and throughout 2016, Ernst & Young LLP was independent of Fortis within the meaning of the Rules of Professional Conduct of the
Association of Chartered Professional Accountants of Newfoundland and Labrador.
LEGAL MATTERS
Unless otherwise specified in a Prospectus Supplement relating to a specific offering of Securities, certain legal matters relating to
the offering of Securities will be passed upon on our behalf by Davies Ward Phillips & Vineberg LLP, Toronto. At the date hereof, partners and associates of Davies Ward Phillips &
Vineberg LLP own beneficially, directly or indirectly, less than 1% of any of our securities or any of our associates or affiliates.
ENFORCEABILITY OF CIVIL LIABILITIES
We are incorporated under the laws of the Province of Newfoundland and Labrador, Canada. The majority of our directors and officers,
and some of the experts named in this Prospectus, are residents of Canada, and all or a substantial portion of their assets, and a substantial portion of our assets, are located outside the
U.S. We have appointed an agent for service of process in the U.S., but it may be difficult for holders of Securities who reside in the U.S. to effect service within the U.S. upon
those directors, officers and experts who are not residents of the U.S. It may also be difficult for holders of the Securities who reside in the U.S. to realize in the U.S. upon
judgments of courts of the U.S. predicated upon our civil liability and the civil liability of our directors and officers and experts under U.S. federal securities laws.
We
have filed with the SEC, concurrently with the registration statement on Form F-10, an appointment of agent for service of process on Form F-X. Under the
Form F-X, we have appointed CT Corporation System, 111 Eighth Avenue, New York, New York 10011, as our agent for service of process in the U.S. in connection
22
Table of Contents
with
any investigation or administrative proceeding conducted by the SEC, and any civil suit or action brought against us in a U.S. court arising out of or related to or concerning the offering
of the Securities under the registration statement.
Additionally,
it might be difficult for shareholders to enforce judgments of U.S. courts based solely upon civil liability provisions of the U.S. federal securities laws or
the securities or "blue sky" laws of any state within the U.S. in a Canadian court against us or any of our non-U.S. resident directors, officers or the experts named in this Prospectus
or to bring an original action in a Canadian court to enforce liabilities based on the U.S. federal or state securities laws against such persons.
Six
of our directors, Mr. Paul J. Bonavia, Mr. Lawrence T. Borgard, Ms. Margarita K. Dilley, Ms. Maura J. Clark, Ms. Julie A. Dobson and
Mr. Joseph L. Welch, reside outside of Canada and each has appointed Fortis Inc., Suite 1100, 5 Springdale Street, P.O. Box 8837, St. John's,
Newfoundland and Labrador A1B 3T2 as agent for service of process. Investors are advised that it may not be possible to enforce judgments obtained in Canada against any person that
resides outside of Canada, even if such person has appointed an agent for service of process.
23
Table of Contents
GLOSSARY
Unless
we have indicated otherwise, or the context otherwise requires, references in this Prospectus to "Fortis", "we", "us" and "our" refer to Fortis Inc. and our consolidated
subsidiaries.
"Annual MD&A" refers to our Management Discussion and Analysis of financial condition and results of operations dated February 14, 2018 for the
fiscal year ended December 31, 2017.
"ATM Program" has the meaning set forth in the section entitled "Recent Developments".
"Board of Directors" refers to our board of directors.
"Canadian Co-trustee" refers to BNY Trust Company of Canada, in its capacity as Canadian co-trustee under the U.S. Indenture.
"Canadian Indenture" refers to the trust indenture dated December 12, 2016, between us and Computershare Trust Company of Canada.
"Common Shares" refers to our common shares.
"Debt Securities" refers to unsecured debt securities that may be issued by us under a Prospectus Supplement.
"Escrow Agent" refers to the financial institution authorized to carry on business as a trustee that will enter into a Subscription Receipt Agreement in
connection with any issuance of Subscription Receipts.
"Escrowed Funds" refers to the gross proceeds from the sale of the Subscription Receipts, together with interest and income earned thereon.
"Exchange Act" refers to the U.S. Securities Exchange Act of 1934, as amended.
"First Preference Shares" refers to our first preference shares.
"First Preference Shares, Series F" refers to our Cumulative Redeemable First Preference Shares, Series F.
"First Preference Shares, Series G" refers to our Cumulative Redeemable Five-Year Fixed Rate Reset First Preference Shares, Series G.
"First Preference Shares, Series H" refers to our Cumulative Redeemable Five-Year Fixed Rate Reset First Preference Shares, Series H.
"First Preference Shares, Series I" refers to our Cumulative Redeemable Floating Rate First Preference Shares, Series I.
"First Preference Shares, Series J" refers to our Cumulative Redeemable First Preference Shares, Series J.
"First Preference Shares, Series K" refers to our Cumulative Redeemable Fixed Rate Reset First Preference Shares, Series K.
"First Preference Shares, Series M" refers to our Cumulative Redeemable Fixed Rate Reset First Preference Shares, Series M.
"FortisBC Energy" refers to FortisBC Energy Inc.
"Fortis Turks and Caicos" refers, collectively, to FortisTCI Limited and Turks and Caicos Utilities Limited.
"GIC" refers to GIC Pte Ltd.
"Indentures" has the meaning set forth in the section entitled "Description of Securities Offered Debt
Securities".
"Interim MD&A" refers to our Management Discussion and Analysis of financial condition and results of operations for the three and nine months ended
September 30, 2018.
"ITC" refers to ITC Holdings Corp.
"Management Information Circular" refers to our Management Information Circular dated March 16, 2018 prepared in connection with our annual
meeting of shareholders held on May 3, 2018.
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Table of Contents
"Outstanding First Preference Shares" refers to, collectively, our First Preference Shares, Series F; First Preference Shares, Series G;
First Preference Shares, Series H; First Preference Shares, Series I; First Preference Shares, Series J; First Preference Shares, Series K; and First Preference
Shares, Series M.
"Prospectus" refers to this short form base shelf prospectus, as amended or supplemented from time to time.
"Prospectus Supplement" refers to a prospectus supplement relating to an offering of Securities accompanying and incorporated by reference into this
Prospectus.
"Release Conditions" refers to conditions for the exchange of Subscription Receipts into Common Shares, First Preference Shares, Second Preference
Shares or Debt Securities, as applicable.
"Second Preference Shares" refers to our second preference shares.
"Securities" refers to, collectively, Common Shares, First Preference Shares, Second Preference Shares, Subscription Receipts and/or Debt Securities.
"Selling Securityholder" refers to any of our securityholders that distributes Securities under this Prospectus and an accompanying Prospectus
Supplement, which may include one or more of our wholly owned subsidiaries.
"Subscription Receipt Agreement" refers to the subscription receipt agreement to be entered into among us, one or more underwriters and the Escrow Agent
providing for the issuance of Subscription Receipts.
"Subscription Receipts" refers to subscription receipts that may be issued by us under a Prospectus Supplement.
"U.S. Indenture" refers to the trust indenture dated as of October 4, 2016 among us, the U.S. Trustee and the Canadian Co-trustee.
"U.S. Trustee" refers to The Bank of New York Mellon.
Further,
as used in this Prospectus, the abbreviations contained herein have the meanings set forth below.
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DRIP
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our Dividend Reinvestment Plan, as amended from time to time
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EDGAR
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Electronic Document Gathering and Retrieval System
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ESPP
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our Employee Share Purchase Plan, as amended from time to time
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MJDS
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Multi-Jurisdictional Disclosure System of the U.S. and Canada
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MW
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megawatt(s)
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NYSE
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New York Stock Exchange
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SEC
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U.S. Securities and Exchange Commission
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SEDAR
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Canadian System for Electronic Document Analysis and Retrieval
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TJ
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terajoules
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TSX
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Toronto Stock Exchange
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U.S.
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United States of America
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U.S. GAAP
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U.S. generally accepted accounting principles
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25
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