First Nations in Ontario have acquired more than 14 million shares of Hydro One in a deal with the province aimed at creating wealth and promoting economic development in communities.
The transaction worth nearly $260 million was finalized on Dec. 29 and officially announced on Jan. 2.
Ontario Regional Chief Isadore Day with the Chiefs of Ontario said he‘s “quite thrilled” with the agreement, which “allows us to have a seat at the table with Hydro One.”
Hydro One is Ontario‘s electricity transmission and distribution service provider. It was partially privatized in 2015.
Through the transaction, 129 First Nations in Ontario now own 14,391,012 common shares of Hydro One — 2.4 per cent of the outstanding common shares. The Province of Ontario now owns 47.4 per cent of the common shares.
At a purchase price of $18 a share, the sale amounts to $259,038,216, which was made possible through a loan from the provincial government.
“We negotiated a low-interest loan from the Ontario government that did not see First Nations having to contribute anything,” said Day.
“Essentially we just needed to navigate ourselves through some of the governance pieces, establishing the proper corporate vehicles, so on and so forth. But we needed a level of unanimity among the chiefs.”
The province will also provide $29 million in seed capital to the First Nations to promote wealth creation.
‘This is an opportunity of long-term investment‘
Negotiations began after an all-chiefs meeting in 2015 and resulted in an agreement-in-principle in July 2016, according to Day, who called this “a very significant policy shift in Ontario.”
He wouldn‘t say how the shares may be divided up among the First Nations or what communities may chose to do with them, because a mechanism in the agreement makes them untouchable for five years.
“We‘ve locked in a mechanism that says ‘let‘s get the governance. Let‘s make sure that we‘re not in a position to turn around and sell these shares right away.‘ This wouldn‘t be a good business practice,” he said.
A news release from Ontario‘s Ministry of Energy called the sale “one of many steps on Ontario‘s journey of healing and reconciliation with Indigenous Peoples.”
“This is an opportunity of long-term investment,” added Day.
“And it will allow us now to be up there in terms of the types of investment capacity and buying power that we need that generally big multinationals have when they go to the markets. That‘s where we‘re at now.”
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