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Home / Business / Ontario Prime Minister Doug Ford was uninteresting about his role in the demise of Avista-Hydro One

Ontario Prime Minister Doug Ford was uninteresting about his role in the demise of Avista-Hydro One



Avista Corp. remains a probable takeover target, even though the plan of a Spokane utility company to be acquired by a Canadian company appears to be dead, a financial analyst said Thursday.

Avista is unlikely to remain a "stand-alone company," wrote Shahriar Pourreza, an analyst with Guggenheim Securities, in a research report. "We could eventually see another White Knight, so we do not exclude the possibility that (Avista) could be a potential candidate for withdrawal in the future."

In business, a white knight refers to a company that was recruited for a friendly business acquisition. Avista announced last year that it would probe and hold bids from four companies before hiring 5.3 billion USD of Hydro One Ltd. accepted from Toronto.

Despite its large presence in the Spokane region, Avista is relatively small for a publicly traded utility. It ranks 46th out of 50 publicly traded utilities in the US.

The Washington Utilities and Transportation Commission rescinded the sale on Wednesday with approval. The three commissioners said the deal was too risky, as the province of Ontario intervened in the affairs of Hydro One for political reasons. The planned sale did not meet the state's demand to better serve Avista customers, they said.

Although Avista and Hydro One may oppose the decision of the Washington Commission, "we believe the bar is too high," Pourreza said.

] Canadian analyst Jeremy Rosenfield of iA Securities also said an appeal was unproductive.

"We expect the proposed transaction to be quickly unraveled," he wrote in a research report.

A US firm could "probably close that deal," Pourreza said. The Commission's objections to Hydro One as a merger partner centered on Ontario's 47% stake in the utility and the province's ability to influence Hydro One for political purposes.

The provincial government persecuted them with "careless disregard" Hydro One's board and CEO last summer cost utilities millions of dollars in lost value and led to credit downgrades, according to the Washington Commission. Further government intervention could be detrimental to Hydro One's revenues and the utility's ability to attract talented leaders

"All of this raises fundamental concerns over the suitability of Hydro One as a merger partner and owner of Avista," the commission said finally.

The man at the center of finger pointing about the failed deal remained unrepentant on Thursday.

Ontario Prime Minister Doug Ford insisted that he was not to blame for the decision of the US regulator to refuse to sell what will cost Hydro One million dollars in termination fees.

Ford said he is implementing campaign promises to change the utility's leadership and lower electricity rates for Hydro One customers.

"While some critics believe that the concerns of Ontario families, seniors, and businesses should lag behind overseas regulators, our government remains focused on the people of Ontario to lower water rates and provide reliable energy," Ford said in a statement.

A few days after taking office, Ford's government demanded the resignation of Hydro One's board of directors and the resignation of CEO Mayo Schmidt.

The July 1

1 action had both Avista and Hydro One also suffered significant damage, the Washington Commission said in its ruling.

Avista's shares fell 4.5 percent after news of the bankruptcy and Hydro One's shareholding fell 8 percent.

During a hearing in October about the planned sale, the Washington commissioners asked those responsible if the sudden R cktritte were in the best interests of both companies.

Tom Woods, the new CEO of Hydro One, said no. Scott Morris, Chairman and CEO of Avista, also did not respond.

"The value of the Province's own Hydro One shares fell by hundreds of millions of dollars", after the three commissioners suddenly lost the leadership of Hydro One's decision.

Hydro One will have to pay Avista $ 103 million in termination fees if the sale fails due to lack of regulatory approval, analysts said.

Avista and Hydro One made a brief joint statement Wednesday afternoon in which they said they would consider their options.

Pourreza said he expects Idaho to be the "Achilles' cure of the transaction" because the opposition there more and more voiced concerns from the staff of the Idaho Public Utilities Commission. Instead, "regulators in Washington" seemingly put the nail in the casket "for sale, he said.

Financial markets reacted like Thursday when the deal was dead, and Avista's stock prices dropped to the level of announcements.

19659002] Avista's share price fell nearly 14 percent on Thursday when the New York Stock Exchange opened, and Avista's share price was $ 43.97 at 6:45 pm, compared to $ 51.50 on Tuesday, the last day , where markets were open before Wednesday closed to former President George HW Bush's funeral.

Avista's stock rose slightly to $ 44.68 a share on Thursday.

In Idaho and Oregon Commissions for public utilities are still awaiting sale decisions, and Pourreza expects these requests to be withdrawn by companies since the sale was denied in Washington. [19659002] For another company that wants to buy Avista, the approval of five states where Avista operates is a risk, Pourreza said. 19659002] It is unlikely that Hydro One will conduct mergers or acquisitions outside of Ontario for a while, said iA Securities analyst Rosenfield.

"Political overhangs" will affect the attractiveness of the company.

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