Toronto: Toronto Hydro Corporation announced June 28 that it had received an equity investment of $250 million from the City of Toronto and had issued to the City an additional 200 common shares.
The City continues to be the sole shareholder of Toronto Hydro, with a total of 1,200 common shares outstanding. The book value of shareholder equity in the consolidated financial statements of Toronto Hydro as at March 31, 2017 was $1,462.2 million.
In December 2016, Toronto City Council approved making such investment in order to provide support for Toronto Hydro's credit rating and balance sheet, and to restore and enhance its capacity to pay dividends to the City.
In connection with the receipt of this investment, Toronto Hydro's Board of Directors also declared certain dividends payable to the City and approved amendments to Toronto Hydro's Dividend Policy, which is summarized as follows:
(a) In respect of fiscal 2017, an aggregate amount of $75 million shall be paid to the City, consisting of two previously declared installments of $6.25 million (one of which had been paid on March 31, 2017 and the other payable on June 30, 2017), and $62.5 million payable within 10 days of Toronto Hydro's receipt of the above-noted investment (by July 8, 2017)
(b) In respect of fiscal 2018 and subsequent fiscal years, 60% of Toronto Hydro's immediately previous fiscal year's annual consolidated net income shall be payable to the City in four equal installments on the last business day of each fiscal quarter
The revised Dividend Policy will be set out in further detail including that any dividends will be subject to restrictions imposed by law and the Shareholder Direction through an amendment of the City of Toronto's Shareholder Direction to Toronto Hydro, which includes the company's former Dividend Policy. These changes also supersede Toronto Hydro's decision announced in November 2016 that it would reduce dividend payments to the City to $25 million per year until further notice.