New company will result from proposed merger of Enersource, Horizon
Utilities and PowerStream, and joint purchase of Hydro One Brampton
TORONTO, July 26, 2016 /CNW/ - A holding company CEO and two affiliate company Presidents have been selected to lead a proposed new electric utility that will result from the merger of Enersource, Horizon Utilities and PowerStream, and the merger's subsequent purchase of Hydro One Brampton. The new company will be called "MergeCo" until a name is chosen.
Pending Ontario Energy Board (OEB) approval, the four utilities would consolidate to form the second largest municipally-owned electric utility company in North America based on number of customers behind Los Angeles Water and Power. It would serve close to one million customers in Ontario's Greater Golden Horseshoe Area with a service territory of 1,800 square kilometres.
Current President and CEO of PowerStream, Brian Bentz, was appointed President and CEO (designate) of the MergeCo Holdings Company, which will be based at the current Enersource headquarters in Mississauga. The decision was made by a Transitional Committee representing transaction shareholders on a proportionate holdings basis. These include representatives of the cities of Barrie, Hamilton, Markham, Mississauga, St. Catharines and Vaughan, and Borealis, an investment management arm of the Ontario Municipal Employees Retirement System.
Bentz played a pivotal role in growing PowerStream from its creation in 2004 to its current status as a leading energy company that provides power and related services to more than 375,000 customers in communities located immediately north of Toronto and in Central Ontario.
Horizon Utilities President and CEO Max Cananzi was appointed President (designate) of the MergeCo Local Distribution Company, which will be headquartered at the existing Horizon Utilities corporate office in Hamilton. Throughout his career, Cananzi has been instrumental in facilitating utility mergers and building high-performing competitive energy services businesses.
Enersource President and CEO Peter Gregg was appointed President designate of the MergeCo Innovation, Growth and Corporate Services Company. This business will be located at the current PowerStream headquarters in Vaughan. A catalyst for the merger transaction, Peter assumed leadership at Enersource in 2014 and previously served as Chief Operating Officer at Hydro One Networks. He has significantly strengthened the operational and financial performance of Enersource during his tenure.
Hydro One Brampton President and CEO, Paul Tremblay, has played a key role in the success of Hydro One Brampton and remains an integral part of the decision-making process as the merger transaction progresses. Tremblay will retire once the new company is officially established, but will continue to support the organization in a senior advisory role until the transaction is complete.
Regulatory approval by the OEB is expected to occur in the fall of 2016.
Bentz, Cananzi and Gregg will officially assume their responsibilities once OEB approval is complete. When the transaction is complete, a new name and brand for the company will be announced.
The Transitional Committee is Chaired by Norm Loberg, current Board Chair for Enersource.
Overview of Proposed Consolidation of leading Ontario Utilities
In April, 2015, Enersource, Horizon Utilities, Hydro One Brampton and PowerStream announced their intention to work together to form a new utility that would serve almost a million customers in York Region, Simcoe County, Peel Region, Hamilton and St. Catharines.
Shortly thereafter, it was determined that Enersource, Horizon Utilities and PowerStream would pursue a merger and jointly purchase the assets of Hydro One Brampton from the Ontario Government.
Since 1998, various governments in Ontario have sought to increase efficiencies in the electricity distribution sector. The 2012 Ontario Distribution Sector Review Panel and the 2015 Premier's Advisory Committee on Government Assets made recommendations that encouraged consolidation of the province's electricity distribution sector.
Legal agreements associated with the transaction were signed in March, 2016, signalling the completion of negotiations between the shareholders of Enersource (City of Mississauga and Borealis), Horizon Utilities (cities of Hamilton and St. Catharines) and PowerStream (cities of Barrie, Markham and Vaughan).
In April, 2016, shareholders submitted a Mergers, Acquisitions, Amalgamations and Divestitures (MAADs) application to the Ontario Energy Board (OEB) for regulatory approval for both the merger and acquisition. This approval process is estimated to take approximately six months, with a decision expected by late fall, 2016.
The transaction will create one large utility company that is able to better serve customers for both regulated and unregulated services. This includes a corporate holding company and head office, based in Mississauga (at what is now the Enersource Derry Rd. location), a regulated local distribution company based in Hamilton (at what is now the Horizon Utilities John St. location) and an innovation, growth and corporate services company based in Vaughan (at what is now the PowerStream Cityview Blvd. location). The regulated company will also retain utility operations centres in Barrie, Brampton, Hamilton, Markham, Mississauga and St. Catharines.
The appointment of the board of directors, the locations of job functions and other key developments will be announced in the coming months. The as-yet unnamed company's new corporate identity and brand will be announced pending OEB approval of the deal.
There would be no single controlling interest among the shareholders, ensuring all local interests are served.
Benefits to Customers
- Distribution rates will be lower over the long-term due to a lower revenue requirement needed for one, larger company (customers save an estimated $1.1 billion over 25 years).
- Better customer service through enhanced and shared systems.
- Broader range of products than is currently available.
- Merged resources will facilitate greater access to innovative technologies.
Benefits to Shareholders
- Increase in shareholder value expected to be greater than $270 million (based on higher net income).
- Steady and growing dividend stream for shareholders.
- Increased access to capital for investment in new business opportunities and to continuously improve community economic development.
- Greater ability to shape government policy and regulatory energy policy for the benefit of customers and shareholders.
- Stronger platform for growth due to larger geographical footprint, more diversification, greater capital resources and opportunity for financial expansion.
Norm Loberg, Chair, Transitional Committee: "The Transitional Committee carefully weighed these selections with the objective of forging from the existing utilities a new and stronger company. Our strength lies in the fact we have been a unified team since we first announced our intention to bring these companies together, in April, 2015. I am confident that with such exemplary, seasoned executive leadership our company, our customers – and indeed our future, are in good hands."
Brian Bentz, President and CEO (designate) of MergeCo Holding Company.: "Our greatest strength is our partnership and shared philosophy toward building a united company. Collectively, we have the talent and vision to realize our goal of becoming a model in consolidation in everything we do as a new company. Our customers, communities and shareholders will be the ultimate beneficiaries of this exciting initiative."
Max Cananzi President (designate), Local Distribution Company: "I'm confident that our collective track record as industry leading companies in delivering exceptional customer service, high service reliability, and enhanced services will allow us to come together to create a world- class utility that our customers will value."
Peter Gregg, President (designate), Innovation, Growth and Corporate Services: "Our combined cultures and resources provide the expertise, the capacity, but most importantly the vision to create an innovative energy solutions leader."
Paul Tremblay, President and CEO of Hydro One Brampton: "I have no doubt; these four leading utilities will be successful in creating tomorrow's industry leader in energy solutions. It has been very exciting for me to be contributing to the formation of this new company."
Brian Bentz, President & CEO (designate) of the MergeCo Holding Company
Brian Bentz is currently the Chair of the Independent Electricity System Operator (IESO) Stakeholder Advisory Committee, Chair of the Electrical Safety Authority Board of Directors, a member of the Board of Directors of the Canadian Electricity Association, the Electricity Distributors Association and Collus PowerStream. In 2015, Brian was named one of 'Canada's Clean50' champions in recognition of his leadership in advancing the cause of sustainability in Canada and was presented by the Canadian Solar Industries Association with a 'Game Changer Award' as a 'Solar Industry Leader'. The previous year, Electricity Human Resources Canada named him 'Leader of the Year' and the Electricity Distributors Association presented him with the 'Chair's Citation' for his many contributions to the industry. Brian has an MBA (McMaster) and a honourary Bachelor of Applied Arts degree (Georgian College). He is also a Chartered Accountant as well as a Certified Engineering Technologist (Electrical/Electronics).
Max Cananzi President (designate) of the MergeCo Local Distribution Company
Max Cananzi serves on the Boards of the Ontario Energy Association, Electricity Distributors Association, MEARIE, the Canadian Electricity Association, and the Ontario Energy Network. Under his leadership, Horizon Utilities received CEA's first Sustainable Electricity Company™ designation, was ranked first in Corporate Knights Future40 responsible corporate leaders, earned the CSA Z1000 safety management certification, and won a Canadian Urban Institute award for its utility smart growth strategy. In a career of more than 25 years in the sector, Max's experience has been instrumental in facilitating three of Ontario's largest utility mergers – Toronto Hydro, Horizon and MergeCo – and building one of Ontario's most successful energy retailers – Toronto Hydro Energy Services. As individual recognition for his sustainability and utility performance record, Max was named a Clean50 award recipient in 2013. Max is a licensed Professional Engineer with an Electrical Engineering degree from the University of Toronto and an MBA in Finance from York University's Schulich School of Business.
Peter Gregg, President (designate) of the MergeCo Innovation, Growth and Corporate Services Company
Peter Gregg serves on the Boards of the Electrical Safety Authority, The Electricity Distributors Association (EDA), MEARIE and the Ontario Energy Network (OEN). He was the recipient of the Ontario Energy Association's (OEA) Leader of the Year award in 2015. Under Peter's leadership, Enersource was awarded the 2014 LDC Performance Excellence Award by the Electrical Distributors Association. Peter has previously held various senior-executive roles at Hydro One, and at Canada's largest airport, the Greater Toronto Airports Authority during its major infrastructure development phase. He is currently a Board Member of the Electrical Safety Authority and Workplace Safety and Prevention Services. Peter holds a Master's of Business Administration from the Richard Ivey School of Business at the University of Western Ontario and the ICD.D designation from the Institute of Corporate Directors.
SOURCE Enersource Corporation
For further information: Enersource: Laura Blondeau, 905.821.5702, [email protected]; Horizon Utilities: Neil Freeman, 905.317-4780, [email protected]; John Friesen, 905.521.4908, [email protected]; Hydro One Brampton: Scott Miller, 905.452.5504, [email protected]; PowerStream: Eric Fagen, 905.532.4400, [email protected]