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PSP Investment and ATRF to take AltaGas Canada private for $1.7B

Public Sector Pension Investment Board (PSP Investments) and the Alberta Teachers’ Retirement Fund Board (ATRF) have entered into a definitive
the arrangement agreement to acquire all of the issued and outstanding common shares of AltaGas Canada Inc. (TSX: ACI) in an all-cash transaction for $33.50 per share, for an enterprise value of approximately $1.7 billion.

Calgary based AltaGas Canada is a Canadian company with natural gas distribution utilities and renewable power generation assets.

AltaGas Canada has two business segments: 1) Utilities, which owns and operates utility assets that deliver natural gas to end-users in Alberta, British Columbia, and Nova Scotia. ACI also owns a one-third equity interest in the utility that delivers natural gas to end-users in Inuvik, Northwest Territories. In aggregate, the utilities have approximately $886 million of rate base as at December 31, 2018, and serve approximately 130,000 customers across Canada; and 2) Renewable Energy, which includes the Bear Mountain Wind Park and an approximately 10 percent indirect interest in the entities that own the Northwest Hydro Facilities.

Formerly known as AltaGas Utility Holdings (Pacific) Inc., operating as a wholly-owned subsidiary of AltaGas Ltd. (TSX: ALA), AltaGas Canada Inc. completed its initial public offering (IPO) on October 25, 2018, raising $239.3 million in gross proceeds through the issuance of 16,500,000 common shares priced at $14.50 per share.

AltaGas Ltd. remains the single largest shareholder controlling 11,025,000 ACI shares (36.8%). RBC Global Asset Management Inc. is the second-largest shareholder, on behalf of several of its funds, controlling 2,990,820 ACI shares (9.97%).

photo credit: AltaGas Canada

News Release


Calgary and Edmonton, Alberta; Montréal, Québec (October 21, 2019) – AltaGas Canada Inc. (“ACI”) (TSX: ACI), the Public Sector Pension Investment Board (“PSP Investments”), and the Alberta Teachers’ Retirement Fund Board (“ATRF”) announced today that PSP Investments and ATRF (together, the “Consortium”) and ACI have concluded a definitive arrangement agreement (the “Arrangement Agreement”) whereby the Consortium will indirectly acquire all of the issued and outstanding common shares of ACI (the “Common Shares”) in an all-cash transaction for $33.50 per Common Share (the “Arrangement”).

 The cash consideration of $33.50 per Common Share (the “Purchase Price”) represents a premium of approximately 31% to the closing price of the Common Share on the TSX on October 18, 2019, or a premium of approximately 33% to the 20-day volume-weighted average price
 The Arrangement implies an enterprise value for ACI of approximately $1.7 billion
 All-cash consideration provides immediate liquidity and certainty of value for holders of Common Shares upon closing
 The Consortium intends to govern and finance ACI in a manner consistent with historical practice
 The Consortium will support ACI as it continues to foster strong stakeholder relations and provide safe, reliable and affordable service to its customers
 ACI will continue to declare quarterly dividends until the close of the Arrangement, subject to approval by the Board of Directors of ACI (the “Board”)

Mr. Jared Green, ACI’s President, and Chief Executive Officer, commented:
“This premium all-cash offer is strong recognition of the significant value ACI has created for its shareholders since inception. This transaction and the premium it places on our Common Shares is an excellent outcome for our shareholders. We are excited about ACI’s future with the Consortium, having the mandate to continue delivering the same safe, reliable and affordable service to our customers. We will be a stronger company which will afford us new and exciting opportunities in addition to the fantastic growth plans we already have in place. As we go forward we will continue to execute on those plans and maintain the strong relationships we have built with our regulators.”

Mr. Patrick Samson, Managing Director and Head of Infrastructure at PSP Investments, commented:

“We are very pleased to have entered into an agreement to acquire ACI in partnership with ATRF. ACI’s business comprises a diversified portfolio of high-quality regulated natural gas utilities and long-dated contracted renewable power assets that are well aligned with our long-term investment strategy. We look forward to supporting the company, its management team, and all of its stakeholders as ACI continues to grow and succeed.”

Mr. Jason Munsch, Head of Infrastructure at ATRF, commented:
“We are very happy to be partnering with PSP Investments to acquire ACI. This is a high-quality investment for ATRF that aligns well with our long-term goals. We are looking forward to seeing ACI thrive through this venture, and fully support its mandate to continue delivering safe, reliable and affordable services to its customers now and into the future.”

The Arrangement:
The Board, after receiving the unanimous recommendation of an independent committee of the Board formed to review and consider various strategic and financial options available to ACI and in consultation with its financial and legal advisors, has unanimously determined that the Arrangement is in the best interests of ACI and fair to the holders of Common Shares and is therefore unanimously recommending that holder of Common Shares vote in favour of the Arrangement. The Arrangement will be carried out under the Canada Business Corporations Act and its completion will be subject to customary closing conditions including, approval by 66 2/3% of the Common Shares voted in person or by proxy at a special meeting of holders of Common Shares to be called to approve the Arrangement (the “Special Meeting”).

In addition to shareholder approval, the closing of the Arrangement is also subject to the approval by the Court of Queen’s Bench of Alberta and to certain regulatory approvals, including approval under the Competition Act (Canada), approval from the Alberta Utilities Commission and approval from the British Columbia Utilities Commission. The parties expect to close the Arrangement in the first half of 2020.

The aggregate Purchase Price payable in the Arrangement will not be financed with any incremental ACI debt. It is the Consortium’s intention to govern and finance ACI in a manner consistent with historical practice.

The Arrangement Agreement includes customary provisions relating to non-solicitation, a “fiduciary-out” permitting the Board to respond to any unsolicited superior alternate proposals and the Consortium’s right to match any such proposals. The Arrangement Agreement also provides for the payment by ACI of a $38 million termination fee if the Arrangement Agreement is terminated in certain specified circumstances and for the payment by the Consortium of a $38 million termination fee if the Arrangement Agreement is terminated in certain specified circumstances.

Further information regarding the Arrangement will be contained in the information circular that ACI will file and mail in due course to holders of Common Shares in connection with the Special Meeting. All holders of Common Shares are urged to read the information circular, once available, as it will contain additional important information concerning the Arrangement. A copy of the Arrangement Agreement will be filed on SEDAR at and on ACI’s website

Source: Private Capital Journal