EPCOR Utilities will continue to provide regulated power transmission and distribution, water, and wastewater services to more than one million customers in Western Canada, including Edmonton.
EPCOR Utilities may eventually sell all or a substantial portion of its ownership interest, subject to market conditions, its requirements for capital and other circumstances that may arise in the future, with proceeds from share sales to be reinvested in EPCOR Utilities’s growing utility infrastructure businesses, including water, wastewater, power transmission and power distribution.
As a first step, EPCOR Utilities is planning an Initial Public Offering of common shares of Capital Power representing approximately 25% of the power generation business. A preliminary prospectus for the offering is expected to be filed with securities regulators in Canada.
“This is great news. We are here today as a result of our success in power generation and water development. Over the past ten years, EPCOR has grown from operating five power and water plants to more than 50, and both lines of business are continuing to develop growth opportunities that require significant capital,” said Don Lowry, who will remain EPCOR Utilities’s president & chief executive officer following the transaction.
“The launch of Capital Power will create an independent power generation business headquartered in Edmonton,” Lowry continued. “It also enables us to focus on EPCOR Utilities’s growth as a leading developer and operator of regulated water, wastewater and wires infrastructure. This initiative is a natural evolution that creates two strong stand alone businesses and allows both to continue to grow and generate shareholder value.”
On April 17, 2009, EPCOR Utilities’s sole shareholder, the City of Edmonton, delegated to EPCOR Utilities’s board of directors the authority to establish Capital Power. As a result of this decision, Edmonton will have another head office and become home to two significant enterprises, providing the citizens of Edmonton with enhanced long-term employment opportunities.
EPCOR Utilities’s regulated power and water customers will see no changes in service or costs as a result of this restructuring, and the City of Edmonton’s access to electricity remains secured by long-term contracts.
EPCOR Utilities Executive Vice President and Chief Operating Officer Brian Vaasjo will be named president and chief executive officer of Capital Power. He will be joined at Capital Power by around 1,000 of EPCOR’s 3,000 employees. Capital Power will be governed by a majority independent Board of Directors.
“We are committed to building one of North America’s most respected, reliable and competitive power generators,” said Vaasjo. “Capital Power will have an experienced management and operating team, and a track record of operating a diverse portfolio of power technologies, including coal, natural gas, and renewables.”
EPCOR anticipates that the closing of the initial public offering of Capital Power shares will be completed in mid-2009, and has engaged TD Securities Inc. and Goldman Sachs Canada Inc. to act as joint-bookrunners. Employees will move to Capital Power at closing, with transition arrangements in place between the companies to ensure continuity of operations and services.
