The subscription receipts were acquired on March 25, 2011 in connection with the previous announcement by Algonquin that Liberty Energy Utilities Co., Algonquin's regulated utility subsidiary, had entered into agreements to acquire all issued and outstanding shares of Granite State Electric Company, a regulated electric utility, and Energy North Natural Gas Inc., a regulated natural gas utility from National Grid USA for total consideration of US$285.
Algonquin will use the proceeds from the subscription receipt conversion to partially fund this acquisition, which is expected to be completed during the second quarter of 2012.
In addition to the 12 million common shares acquired recently, Emera owns 8.523 million previously acquired common shares of Algonquin, representing a current ownership position of 20.523 million common shares or approximately 13 percent of Algonquin's issued and outstanding shares. In addition to the common shares Emera currently holds, Emera holds 8.211 million subscription receipts the "Calpeco Subscription Receipts" which are exchangeable for common shares in connection with the previously announced sale to Algonquin of the 49.999 percent interest held by Emera in California Pacific Electric Company, LLC.
The Calpeco Subscription Receipts are exchangeable for common shares of Algonquin on a one-for-one basis in two tranches as follows: a 4.790 million common shares following regulatory approval of the ownership transfer which is expected to be received in 2012 and b the balance following completion of Calpeco's first rate case which is expected to be completed in 2013.
Emera expects to acquire, on a private placement basis, an additional 17.433 million subscription receipts of Algonquin exchangeable into common shares. The 2012 Subscription Receipts are expected to be issued in two tranches: i 6.977 million subscription receipts at a purchase price of $6.45 per receipt, in connection with the previously announced acquisition by Algonquin's regulated utility subsidiary of certain gas distribution assets in the U.S. Midwest and ii 10.456 million subscription receipts at a purchase price of $5.74 per receipt, in connection with the previously announced acquisition by Algonquin's power generation subsidiary of a 51 percent interest in a 480 MW U.S. wind power portfolio.
The acquisition of the 2012 Subscription Receipts is subject to applicable regulatory approvals. Algonquin and Emera are finalizing agreements in respect of the 2012 Subscription Receipts.
In the event that all of the 17.433 million common shares that may be issued pursuant to the 2012 Subscription Receipts and the 8.211 million common shares issuable pursuant to the Calpeco Subscription Receipts are issued, the common shares so issued, together with the 20.523 million common shares currently held by Emera, would represent approximately 25 percent of Algonquin's issued and outstanding shares.
The common shares acquired today have been acquired for investment purposes only and the 2012 Subscription Receipts will be acquired for investment purposes only. Emera has no intention of acquiring control of Algonquin.
Depending upon relevant economic, market or business conditions prevailing from time to time, Emera may determine to acquire or to dispose of common shares of Algonquin in TSX traded or privately negotiated transactions or otherwise.
Under certain agreements previously entered into with Algonquin, Emera has agreed not to acquire any additional securities of Algonquin except in accordance with such agreements.