Fortis Completes Public Offering

On January 29, 2004, Fortis Inc. completed a public offering of eight million first preference units, each consisting of one series D first preference share and one series E first preference share purchase warrant, at $6.25 per unit, for gross proceeds of $50 million. If Fortis closes its acquisition of all the outstanding shares of Aquila Networks Canada (Alberta) Ltd. and Aquila Networks Canada (British Columbia) Ltd. by June 30, the holder of a series D share will have the right to convert on July 15, September 1, or December 1, such series D share into 0.25 of a series E first preference share, provided such holder concurrently exercises one warrant. Each warrant will entitle the holder to acquire 0.75 of a series E first preference share upon payment of $18.75 per warrant. Consequently, each unit will entitle the holder to obtain one series E first preference share in the event the acquisition closes by June 30. The series D shares and the series E shares, if issued, will initially yield 4.9 per cent per annum. The gross proceeds will be used by Fortis for general corporate purposes. Provided the acquisition closes by June 30, upon conversion of all the series D shares, together with the concurrent exercise of all the series E share purchase warrants and the additional cash payment associated therewith, Fortis will receive additional gross proceeds of $150 million, which will be used to repay certain short-term indebtedness incurred by Fortis on the acquisition closing.

The offering was made through a syndicate of underwriters led by Scotia Capital Inc., and included BMO Nesbitt Burns Inc., CIBC World Markets Inc., National Bank Financial, RBC Dominion Securities Inc., TD Securities Inc. and Beacon Securities Ltd.

Fortis was represented by in-house counsel Ron McCabe; by Davies Ward Phillips & Vineberg LLP, with a team that included Arthur Shiff and Kerry O’Reilly (corporate and securities) and John Zinn (tax); and Aubrey Bonnell, Q.C., and Regan O’Dea of Curtis, Dawe acted as Newfoundland and Labrador counsel. The underwriters were represented by Stikeman Elliott LLP, with a team that included Joel Binder, Greg Hogan and Nir Katzour (corporate and securities), Glenn Zacher (regulatory) and Lianne Miller (tax).