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Pickering and Ajax – two of ten municipal shareholders in Elexicon Power, Ontario’s fourth-largest utility – have determined the “time is right” to discover the sale of its shares and have retained a Toronto regulation agency to get the due diligence course of began.
Three years in the past Pickering thought of promoting its shares in Elexicon to assist pay for its Metropolis Centre venture, however after huge price overruns through the pandemic pressured the Metropolis to defer the venture (it’s again on, minus the performing arts centre element), the choice was made to carry off on any sale of its Elexicon shares.
At the moment that potential sale is again on the desk and Pickering was joined within the announcement by the City of Ajax, with each communities needing to maximise worth for taxpayers.
“As the electricity landscape continues to evolve and transform, we believe the time is right to assess our role in the sector and explore the financial value of our investment in a competitive manner,” the 2 municipalities declared in a joint information launch. “This is a responsible step to ensure we secure optimum value of our investment for our long-term financial objectives and needs.”
Pickering and Ajax have employed Borden Ladner Gervais LLP to undertake a confidential and non-binding Request for Proposal to discover the sale of their Elexicon holdings.
Ajax Communications Director Christie McLardie mentioned there isn’t a assure the City will promote its 21.8 per cent share within the utility – valued at $75 million or so – and expects the method will assist decide that call.
“We just know that the landscape is changing and we want to assess the financial value and see what that number will be,” she mentioned. “At the end of the process, if the market says it’s time to sell, it will be time to sell. But that will be a decision for Council.”
McLardie mentioned the due diligence ought to take between eight and fourteen months. “It’s not an overnight process.”
As soon as the request for proposal is full, she added, each municipalities will present updates on any subsequent steps.
Potential consumers may embody personal fairness companies, different utility firms and even different Elexicon municipal shareholders such because the City of Whitby (which owns 32 per cent of the utility) or the Municipality of Clarington, which has a 9.2 per cent share.
Elexicon paid simply over $6 million in dividends final yr, with the City of Ajax realizing about $1.3 million.
Pickering first made the choice to analyze promoting its 27.9 per cent share in Elexicon within the fall of 2021 to assist finance its downtown revitalization venture, which at the moment had ballooned to extra $300 million.
The venture was imagined to be funded by means of on line casino funds (delayed by the pandemic) and from improvement charges and reserves, leaving $94 million in debt for the Metropolis to cowl, which Council was instructed ought to simply be coated by the sale of its Elexicon shares, with some funds left over for future tasks as properly.
That prompted Clarington to rent a guide to find out the ‘En Bloc Truthful Market Worth” of its fairness of Elexicon as properly however in the long run each municipalities put the concept on the again burner.
Now, for Pickering and Ajax at the least, it’s heating up as soon as once more.
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