Fortis powers ahead with a significant investment in transmission

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On February 9th, Fortis announced a definitive agreement to acquire the largest independent transmission utility in the United States for US$11.8 billion.

“Fortis has grown its business through strategic acquisitions that have contributed to strong organic growth over the past decade. Our performance in 2015 is a clear demonstration of the success of this strategy,” says Mr. Barry Perry, President & CEO. “The acquisition of ITC – a premier pure-play transmission utility – is a continuation of this growth strategy. ITC not only further strengthens and diversifies our business, but it also accelerates our growth.”

ITC HOLDINGS ACQUISITION ANNOUNCEMENT

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ITC HOLDINGS PRESENTATION TO SHAREHOLDERS

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ITC holdings Acquisition webcast

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visit itc holdings website

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Questions and Answers for shareholders of ITC

  • Q: What is Fortis Inc. offering for my shares?
  • A: Fortis is offering to exchange each share in ITC for a combination of US$22.57 in cash plus 0.7520 of a common share of Fortis Inc.
  • Q: What is the Fortis offer worth?
  • A: At the time of the announcement the offer was valued at US$44.90 per ITC share. This value may change over time as a portion of the value depends on the price of Fortis common shares and the foreign exchange rate.
  • Q: When will the exchange take place?
  • A: The acquisition is expected to close (be completed) in late 2016, subject to receipt of a number of regulatory approvals and customary closing additions.
  • Q: What happens to my ITC shares before the acquisition closes?
  • A: Prior to close, your ITC shares will be freely tradeable on the New York Stock Exchange.
  • Q: I will be getting a portion of the offer in Fortis common shares. How can I buy and sell Fortis shares?
  • A: Fortis shares are currently traded on the Toronto Stock Exchange (TSX). The Corporation has applied to list its shares on the New York Stock Exchange (NYSE). Once the shares are listed on the NYSE, you will be able to buy and sell Fortis shares exactly the same way as ITC shares in the past.
  • Q: Do common shareholders of Fortis receive a dividend?
  • A: Yes they do. In fact, Fortis has a track record of 42 consecutive years of increasing dividends to its common shareholders and management is targeting average annual dividend growth of 6% through the year 2020. ITC shareholders will benefit from a meaningful increase in their dividend per share as owners of Fortis common shares.
  • Q: Will ITC continue paying dividends?
  • A: ITC will pay dividends as declared by their Board of Directors of ITC up until closing. After closing, ITC shareholders will receive dividends on their shares of Fortis common stock as declared by the Board of Directors of Fortis.
  • Q: What do I have to do to take advantage of the offer from Fortis Inc.?
  • A: If your shares are held in a brokerage account, you have to notify your broker of your intention to accept the offer. The cash and Fortis shares will be deposited directly into your account.

    If you hold your ITC shares as physical certificates, you will receive a Letter of Transmittal and a Letter of Instruction in the mail. Please follow the steps indicated on the forms.
  • Q: What are the tax implications of this transaction?
  • A: Everybody’s tax situation is unique. We recommend you speak with your accountant or financial advisor to determine how this transaction will impact you.
  • Q: Where can I learn more about investing in Fortis Inc.?
  • A: Please visit www.fortisinc.com/investor-relations for more information.
  • Q: What are the U.S. federal and Canadian federal income tax consequences of the exchange of my common stock of ITC Holdings for common shares of Fortis Inc. in the merger of Fortis and ITC (the "Merger") on October 14, 2016?
  • A: The following information is meant to be a general guide but not meant to be construed as legal or tax advice.  We strongly encourage you to contact your advisors to get an assessment of your particular situation.

    U.S. and Canadian tax disclosure in respect of the disposition of common stock of ITC in the Merger was provided in the Registration Statement filed on March 17, 2016 which can accessed at:https://www.sec.gov/Archives/edgar/data/1666175/000104746916011289/a2227566zf-4.htm.  

    Former Shareholders of ITC who are individual citizens or resident aliens of the United States (“U.S. Holders”)

    The material U.S. federal income tax consequences to U.S. Holders of disposing of common stock of ITC in the Merger can be found starting at page 123 of the Registration Statement under the heading "Certain United States Federal Income Tax Consequences of the Merger" (the "U.S. Tax Disclosure").

    The following is a general description of the intended U.S. federal income tax consequences of the Merger for the former beneficial owners of ITC common stock who are U.S. Holders (as defined above) and that held the ITC common stock as capital assets.  The following is qualified in its entirety by the U.S. Tax Disclosure, including the limitations and assumptions set out therein. 

    Was the transaction a taxable transaction?

    Yes, the Merger was a taxable transaction for U.S. Holders. 

    A U.S. Holder of ITC common stock will have recognized gain or loss in an amount equal to the difference, if any, between (i) the sum of the fair market value of the Fortis common shares (as of the effective time of the Merger) and the cash received by the U.S. Holder in the Merger, and (ii) the U.S. Holder's adjusted tax basis in the ITC common stock exchanged in the Merger.  See comments below in respect of determining the fair market value of the Fortis common shares at the Merger effective time.

    What if I acquired blocks of ITC common stock at different times or at different prices?

    If a U.S. Holder acquired different blocks of ITC common stock at different times or at different prices, any gain or loss would be determined separately with respect to each block of ITC common stock, and the cash and Fortis common shares received in the Merger would be allocated pro rata to each such block of stock.

    What is my tax basis in the Fortis common shares?

    A U.S. Holder's tax basis in Fortis common shares received in the Merger will equal their fair market value as of the effective time of the Merger.  

    What was the fair market value of the Fortis common shares at the Merger Effective Time?

    U.S. federal income tax law does not specifically identify how one determines the fair market value of the Fortis common shares that you received in the Merger.  Alternative methods to determine fair market value include using, among others, the trading prices on the day immediately prior to the Merger, the trading prices on the day of the Merger (October 14, 2016) or a weighted average of the trading prices over a number of days.  Since the Fortis common shares only began trading on the NYSE on October 14, 2016, U.S. Holders may determine to use the trading prices of the Fortis common shares on this day or the average of the trading prices over a number of days beginning with October 14, 2016 to determine the fair market value of the Fortis common shares at the time of the Merger.

    For purposes of broker reporting, it is expected that the exchange agent will use the average of the high and low trading prices of the Fortis common shares on the NYSE on October 14, 2016 (being USD $31.515). 

    Former shareholders of ITC who are residents in Canada (“Canadian Holders”)

    The material Canadian federal income tax consequences to Canadian Holders of disposing of ITC common stock in the Merger can be found starting at page 129 of the Registration Statement under the heading "Certain Canadian Federal Income Tax Consequences of the Merger" (the "Canadian Tax Disclosure"). 

    The following is a general description of the intended Canadian federal income tax consequences of the Merger for the former beneficial owners of ITC common stock who are Canadian Holders (as defined above) and that held the ITC common stock as capital property.  The following is qualified in its entirety by the Canadian Tax Disclosure, including the limitations and assumptions set out therein. 

    Was the Merger a taxable transaction to Canadian Holders?

    Yes, the Merger was a taxable transaction to Canadian Holders.

    Canadian Holders generally realized a capital gain (or capital loss) on the disposition of their ITC common stock equal to the amount, if any, by which the sum of the fair market value of the Fortis common shares and the cash received in exchange for such Canadian Holders’ ITC common stock, net of any reasonable costs of disposition, exceed (or are less than) the tax cost to such Canadian Holders of their ITC common stock immediately before the disposition. See comments below in respect of determining the fair market value of the Fortis common shares at the Merger effective time.

    What is my tax cost of the Fortis common shares?

    The cost to a Canadian Holder of the Fortis common shares received by that Canadian Holder in the Merger is equal to their fair market value at the time they were acquired by such Canadian Holder. For purposes of determining the adjusted cost base to a Canadian Holder of the Fortis common shares, the cost of the Fortis common shares received must be averaged with the adjusted cost base of all other Fortis common shares held by the Canadian Holder as capital property.

    What was the fair market value of the Fortis common shares at the Merger Effective Time?

    The Canada Revenue Agency has no published guidance that would be of assistance in determining the fair market value of the Fortis common shares in this context.  As such, a reasonable estimate of the fair market value of each Fortis common share could be made by reference to their trading price on the Toronto Stock Exchange.   Alternative methods to determine fair market value include using, among others, the trading prices on the day immediately prior to the Merger, the trading prices on the day of the Merger (October 14, 2016) or a weighted average of the trading prices over a number of days.

     

  • Additional Information and Where to Find It
  • Fortis filed with the United States Securities and Exchange Commission (the “SEC”) on March 17, 2016 a registration statement on Form F-4, including a proxy statement of ITC Holdings Corp. (“ITC”) and a prospectus of Fortis, and other documents in connection with the acquisition by Fortis of ITC which was declared effective by the SEC on May 16, 2016. The definitive proxy statement/prospectus is being sent to the shareholders of ITC. SHAREHOLDERS OF ITC ARE URGED TO READ THE PROXY STATEMENT/PROSPECTUS AND ANY OTHER FILINGS THAT MAY BE MADE WITH THE SEC IN CONNECTION WITH THE ACQUISITION WHEN THEY BECOME AVAILABLE, AS THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE ACQUISITION. The registration statement and proxy statement/prospectus are available, and other documents filed by Fortis and ITC with the SEC will be available, when filed, free of charge at the SEC’s website at www.sec.gov, on Fortis’ website at www.fortisinc.com; or upon written request to Fortis’ Investor Relations department, P.O. Box 8837, St. John’s, NL A1B 3T2 or by calling (709) 737-2800; and upon written request to ITC, Investor Relations, 27175 Energy Way, Novi, MI 48377 or by calling (248) 946-3000. You may also read and copy any reports, statements and other information filed by Fortis and ITC with the SEC at the SEC public reference room at 100 F Street N.E., Room 1580, Washington, D.C. 20549. Please call the SEC at (800) 732-0330 or visit the SEC’s website for further information on its public reference room. The communications on this page and in the documents made available to the public on this page shall not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to appropriate registration or qualification under the securities laws of such jurisdiction. No offering of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the U.S. Securities Act of 1933, as amended.

    The communications on this page and in the documents made available to the public on this page are not a solicitation of proxies in connection with the acquisition by Fortis Inc. However, ITC, Fortis, certain of their respective directors and executive officers and certain other members of management and employees, under SEC rules, may be deemed to be participants in the solicitation of proxies in connection with the acquisition. Information about ITC’s directors, executive officers and other members of management and employees may be found in its 2015 Annual Report on Form 10-K filed with the SEC on February 26, 2016, and definitive proxy statement relating to its 2016 Annual Meeting of Shareholders filed with the SEC on April 8, 2016. Information about Fortis’ directors and executive officers may be found in its Management Information Circular dated March 18, 2016 available on this website and on its issuer profile at www.sedar.com. Additional information regarding the interests of such potential participants in the solicitation of proxies in connection with the acquisition will be included in the proxy statement/prospectus and other relevant materials filed with the SEC when they become available.

CONTACT US

Mailing Address
PO Box 8837
St. John’s, NL A1B 3T2

Street Address
Fortis Place, Suite 1100,
5 Springdale Street
St. John’s, NL A1E 0E4

Phone and Fax
T: 709.737.2800
F: 709.737.5307

Email
Investor Relations
investorrelations@fortisinc.com

Media Relations
media@fortisinc.com

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