The Missouri Public Service Commission (PSC), in an order that was issued on Sept. 14 and has an effective date of Sept. 24, approved a stipulation and agreement between Fortis, ITC Holdings (NYSE:ITC), ITC Midwest and PSC staff involving the proposed merger of Fortis and ITC, and authorized the companies to complete the merger transactions.
As TransmissionHub reported, Fortis President and CEO Barry Perry said on July 29 during Fortis’ 2Q16 earnings call that significant progress has been made towards completing the acquisition of ITC Holdings, which remains on track to close by year-end.
As noted in the PSC’s order, the PSC in 2007 granted ITC Midwest a certificate of convenience and necessity that authorizes its ownership and operation of about 9.5 miles of a 161-kV transmission line in Clark County, Mo. ITC Midwest, which is a member of the Midcontinent ISO (MISO), owns about 6,600 circuit miles of transmission lines and facilities in Iowa, Minnesota, Illinois and Missouri, the PSC said. While it owns 9.5 miles of transmission line within Missouri, ITC Midwest does not serve retail customers in the state, and as a member of MISO, ITC Midwest turned over functional control of its transmission assets to MISO.
ITC Holdings, Fortis and ITC Midwest – referred to as the joint applicants – in May filed their application for approval of the merger with the PSC, and requested PSC approval of the merger agreement that was signed in February and agreed to by FortisUS, Element, Fortis and ITC Holdings. The PSC added that after the proposed merger, ITC Holdings will become a wholly owned subsidiary of ITC Investment, which will in turn be a majority owned subsidiary of FortisUS, thereby causing each of ITC Holdings’ subsidiaries to be majority owned by Fortis.
The joint applicants and PSC staff in August submitted the stipulation and agreement for the PSC’s approval, stating that that document is a comprehensive settlement of all relevant issues concerning the joint application.
According to the stipulation and agreement, the signatories agree that, post-merger, Fortis and Finn Investment Pte. Ltd., which is an indirect wholly owned subsidiary of GIC (Ventures) Pte. Ltd., will indirectly own 80.1% and 19.9%, respectively, of ITC Midwest. GIC Ventures is wholly owned by the Government of Singapore through the Minister of Finance, the document noted.
Fortis has total assets of about $23.2bn, and fiscal 2015 revenues of about $5.4bn, the PSC said in its order, adding that the stipulation and agreement noted that after the transaction, ITC Midwest will be supported by Fortis in accessing capital and “resources of the much larger and diversified Fortis family.” However, the PSC added, ITC Midwest will still control management of its operations, credit facilities, and senior long-term debt instruments.
The signatories agree that Fortis’ acquisition of ITC Holdings will not adversely impact the financial or technical ability of ITC Midwest to continue to own, operate, and maintain the 9.5 miles of 161-kV transmission line in Clark County, the PSC said. In the stipulation and agreement, the signatories also agree that the PSC’s authorization of the transaction will not affect ITC Midwest’s certificate of convenience and necessity or the variances granted to ITC Midwest in Case No. EO-2007-0485.
The PSC added that since no objections to the stipulation and agreement were filed, the commission will treat that document as unanimous.
“Having reviewed the joint application for approval of merger and the unanimous stipulation and agreement, the commission finds and concludes that the transaction will not be detrimental to the public and should be authorized,” the PSC said.
Fortis and ITC, in a Sept. 15 statement, said that their shareholders approved the acquisition at shareholder meetings held on May 5 and June 22, respectively. Approval required from the Committee on Foreign Investment in the United States was received on July 8, the companies said, adding that approvals from the Oklahoma Corporation Commission and the Illinois Commerce Commission were received on Aug. 16 and Aug. 23, respectively. The closing of the acquisition of ITC remains subject to receipt of other regulatory authorizations, including FERC and remaining state approvals, the companies said.