Fort Capital advises BC Hydro

Mergers, Acquisitions & Divestitures
Transaction Details

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On Tuesday, August 1st, the BC Hydro and Power Authority and Teck Resources Limited announced that BC Hydro has exercised its right of first offer (or “ROFO”) to purchase a two-third ownership interest in the Waneta Dam and Generating Station in Trail, B.C. (the “Waneta Interest”) from Teck for a purchase price of $1.2 billion (the “Transaction”).  When combined with the one-third interest that BC Hydro purchased from Teck in 2010, BC Hydro will 100% of the Waneta Dam.

The Transaction includes Teck and BC Hydro entering into certain related arrangements, including a 20-year agreement whereby Teck will lease back the Waneta Interest to continue to supply power to its zinc smelter in Trail, with an option to extend the lease by a further 10 years.  Because the Waneta Interest will continue to serve the Trail smelter load going forward, the acquisition of the Waneta interest will have no near- to mid-term impact on BC Hydro’s energy supply and demand balance, however the Transaction is forecast to have a beneficial financial impact each year, helping to keep rates affordable for BC Hydro’s customers.

Teck first announced in May of this year that it intended to sell the Waneta Interest and certain transmission assets to Fortis Inc. for $1.2 billion.  The Fortis transaction was subject to BC Hydro not exercising its ROFO, which it acquired when purchasing the initial one-third interest.

BC Hydro conducted an extended, in-depth review of the opportunity to exercise its ROFO option to purchase the Waneta Interest.  Government performed its own due diligence and endorses the decision.  Completion of the Transaction, expected for the first quarter of 2018, is subject to a number of conditions including the approval of the British Columbia Utilities Commission.

Fort Capital Partners is acting as financial advisor to BC Hydro on the Transaction.

About Fort Capital – Fort Capital Partners is an investment banking advisory firm that works with public and private companies in Canada. The firm draws from collective capital markets experience to provide its clients with proven, accessible and independent investment banking advice and transaction execution.  For more information, visit www.fortcapital.ca.