Emera Inc. Announces $1.9 Billion Bought Deal Offering of Convertible Debentures Represented by Instalment Receipts


HALIFAX, NOVA SCOTIA--(Marketwired - Sept. 8, 2015) -

NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES.

Emera Inc. ("Emera" or the "Company") (TSX:EMA) announced today that its direct wholly-owned subsidiary, Emera Holdings NS Company (the "Selling Debentureholder"), has agreed to sell $1,900,000,000 aggregate principal amount of 4.00% convertible unsecured subordinated debentures ("Debentures") of Emera in a secondary offering on a "bought deal" basis (the "Offering"). In connection with the Offering, the underwriters have also been granted an over-allotment option to purchase up to an additional $285,000,000 aggregate principal amount of Debentures at the offering price, within 30 days from the date of the closing of the Offering solely to cover over-allotments, if any, and for market stabilization purposes.

All Debentures are being sold on an instalment basis at a price of $1,000 per Debenture, of which $333 is payable on the closing of the Offering and the remaining $667 is payable on a date (the "Final Instalment Date") to be fixed by the Company following satisfaction of all conditions precedent to the closing of Emera's acquisition of TECO Energy, Inc. (NYSE:TE).

On September 4, 2015 Emera announced that it had entered into an agreement and plan of merger pursuant to which it will indirectly acquire TECO Energy, Inc. ("TECO Energy"), a Florida and New Mexico regulated electric and gas utilities holding company, for an aggregate purchase price of approximately US$10.4 billion including the assumption of approximately US$3.9 billion of debt.

"As previously announced, we are very excited about the acquisition of TECO Energy, a pure-play regulated utility transaction that advances our strategic objectives and that we expect to be accretive to our earnings per share by approximately 5% in the first full year of operations (2017)1, growing to more than 10% by the third full year (2019)1," said Chris Huskilson, President and CEO of Emera. "With the successful completion of the Offering, the Company expects to have fulfilled its common equity requirement for the closing of the transaction. The balance of long term financing will focus on preferred share and debt financing initiatives in USD$ and CAD$, as well as from continued focus on internal cash generation and capital efficiency initiatives, with most of the preferred share and debt financing targeted in USD$, providing a significant natural currency hedge."

Prior to the Final Instalment Date, the Debentures will be represented by instalment receipts. Application will be made to list the instalment receipts on the Toronto Stock Exchange. The Debentures will not be listed. Completion of the Offering will be subject to the acceptance and approval of the Toronto Stock Exchange.

1 Excludes one-time acquisition related expenses. Current management estimate based on certain assumptions, including, among others, a stable currency exchange environment; see "Forward Looking Information" below.

The Debentures will mature on September 29, 2025 and will bear interest at an annual rate of 4.00% per $1,000 principal amount of Debentures (an effective annual yield of 12.00% based on a first instalment of $333) until and including the Final Instalment Date, after which the interest rate will be 0%. Interest will be payable quarterly in arrears in equal instalments on the 15th day of February, May, August and November of each year (or the next business day if the 15th falls on a weekend or holiday). The first interest payment will be made on November 16, 2015 in the amount of $5.2603 per $1,000 principal amount of Debentures and will include interest payable from and including the closing of the Offering.

If the Final Instalment Date occurs on a day that is prior to the first anniversary of the closing of the Offering, holders of Debentures who have paid the final instalment on or before the Final Instalment Date will be entitled to receive, on the business day following the Final Instalment Date, in addition to the payment of accrued and unpaid interest to and including the Final Instalment Date, an amount equal to the interest that would have accrued from the day following the Final Instalment Date to and including the first anniversary of the closing of the Offering had the Debentures remained outstanding and continued to accrue interest until and including such date (the "Make-Whole Payment"). No Make-Whole Payment will be payable if the Final Instalment Date occurs on or after the first anniversary of the closing of the Offering.

At the option of holders and provided that payment of the final instalment has been made, each Debenture will be convertible into common shares of Emera ("Common Shares") at any time on or after the Final Instalment Date, but prior to the earlier of maturity or redemption by the Company, at a conversion price of $41.85 per Common Share, being a conversion rate of 23.8949 Common Shares per $1,000 principal amount of Debentures, subject to adjustment in certain events. A notice to holders of the instalment receipts will set the Final Instalment Date, which shall be not less than 15 days nor more than 90 days following the date of such notice.

Prior to the Final Instalment Date, the Debentures may not be redeemed by the Company, except that Debentures will be redeemed by the Company at a price equal to their principal amount plus accrued and unpaid interest following the earlier of: (i) notification to holders that the conditions necessary to approve the acquisition of TECO Energy will not be satisfied; (ii) termination of the acquisition agreement; and (iii) April 24, 2017 if notice of the Final Instalment Date has not been given to holders on or before April 21, 2017. Upon any such redemption, the Company will pay for each Debenture: (i) $333 plus accrued and unpaid interest to the holder of the instalment receipt; and (ii) $667 to the Selling Debentureholder on behalf of the holder of the instalment receipt in satisfaction of the final instalment. In addition, after the Final Instalment Date, any Debentures not converted may be redeemed by Emera at a price equal to their principal amount plus any unpaid interest, which accrued prior to and including the Final Instalment Date.

At maturity, Emera will have the right to pay the principal amount due in Common Shares, which will be valued at 95% of their weighted average trading price on the Toronto Stock Exchange for the 20 consecutive trading days ending five trading days preceding the maturity date.

The net proceeds of the first instalment payment of the Offering are expected to be, in aggregate $594,700,000 (assuming no exercise of the Offering's over-allotment option), and will be held and invested in short-term U.S. Dollar investment grade securities. The net proceeds of the final instalment payment of the Offering are expected to be, in aggregate, $1,229,300,000 (assuming no exercise of the Offering's over-allotment option), and will be used, together with the net proceeds of the first instalment payment, to finance, directly or indirectly, the acquisition of TECO Energy and other acquisition-related expenses.

The Offering is subject to the receipt of all necessary regulatory and stock exchange approvals. Closing of the Offering is expected to occur on or about September 28, 2015.

The syndicate of underwriters for the Offering is being co-led by Scotiabank, RBC Capital Markets and J.P. Morgan, and includes CIBC, TD Securities Inc., BMO Capital Markets, National Bank Financial Inc., Barclays Capital Canada Inc. and Credit Suisse Securities (Canada) Inc.

Updated presentation slides including information about the Offering can be found on SEDAR at www.sedar.com and Emera's website at www.emera.com.

The Offering is only being made by short form prospectus. Copies of the short form prospectus may be obtained from any of the underwriters referred to above. Investors should read the short form prospectus before making an investment decision. There will not be any sale of the securities being offered until a receipt for the final short form prospectus has been issued. The description of the Debentures and the instalment receipts representing the Debentures set forth above is qualified in its entirety by the trust indenture and instalment receipt and pledge agreement, respectively, and the summary thereof contained in the short form prospectus.

The securities offered have not been registered under the U.S. Securities Act of 1933, as amended. This media release is not an offer of securities for sale in the United States and the securities may not be offered or sold in the United States.

Forward Looking Information

This news release contains forward-looking information within the meaning of applicable securities laws with respect to, among other things, the timing and completion of each of the acquisition of TECO Energy and the closing of the Offering; the use of the net proceeds from the Offering; expected earnings per share and cash accretions as a result of the acquisition; common and preferred equity, debt and other financings and cash flows; the listing of securities on and approval of the Toronto Stock Exchange; the timing of payment of each of the first instalment and final instalment payments; and the timeliness to obtain regulatory approvals and other conditions precedent to completing the acquisition. Important factors that could cause actual results, performance and results to differ materially from those indicated by any such forward-looking statements include risks and uncertainties relating to the following: (i) the risk that TECO Energy may be unable to obtain shareholder approval for the proposed acquisition or that Emera or TECO Energy may be unable to obtain governmental and regulatory approvals required for the proposed acquisition, or required governmental and regulatory approvals may delay the proposed acquisition; (ii) the risk that other conditions to the closing of the proposed acquisition may not be satisfied; (iii) the timing to consummate the proposed Offering and acquisition; (iv) disruption from the proposed acquisition making it more difficult to maintain relationships with customers, employees, regulators or suppliers; (v) the diversion of management time and attention on the acquisition; (vi) general worldwide economic conditions and related uncertainties; (vii) the effect and timing of changes in laws or in governmental regulations (including environmental laws and regulations); (viii) the timing and extent of changes in interest rates, commodity prices and demand and market prices for electricity; and (ix) other factors discussed or referred to in the "Risk Factors" section of Emera's most recent Annual Information Form filed with securities regulators in Canada and will be set out in the risk factors described in the short form prospectus to be filed with securities regulators in Canada in connection with the Offering. There can be no assurance that the proposed acquisition will be completed, or if it is completed, that it will close within the anticipated time period or that the expected benefits of the proposed acquisition will be realized. These factors should be considered carefully and undue reliance should not be placed on the forward-looking statements.
By its nature, forward-looking information requires Emera to make assumptions and is subject to inherent risks and uncertainties. These statements reflect Emera management's current beliefs and are based on information currently available to Emera management. There is risk that predictions, forecasts, conclusions and projections that constitute forward-looking information will not prove to be accurate, that Emera's assumptions may not be correct and that actual results may differ materially from such forward-looking information. Additional detailed information about these assumptions, risks and uncertainties is included in Emera's securities regulatory filings, including under the heading "Business Risks and Risk Management" in Emera's annual Management Discussion and Analysis, and under the heading "Principal Risks and Uncertainties" in the notes to Emera's annual and interim financial statements which can be found on SEDAR at www.sedar.com. Except as required by law, Emera disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

About Emera

Emera is a geographically diverse energy and services company headquartered in Halifax, Nova Scotia with approximately $10 billion in assets and 2014 revenues of $2.97 billion. The Company invests in electricity generation, transmission and distribution, as well as gas transmission and utility energy, utility services, energy marketing and trading services and other energy-related management services. Emera provides regional energy solutions by connecting its assets, markets and partners in Canada, northeastern United States and the Caribbean. Emera common and preferred shares are listed on the Toronto Stock Exchange and trade under the symbols EMA, EMA.PR.A, EMA.PR.B, EMA.PR.C, EMA.PR.E, and EMA.PR.F. Additional Information can be accessed at www.sedar.com.

About TECO Energy, Inc.

TECO Energy, Inc. (NYSE:TE) is an energy-related holding company with regulated electric and gas utilities in Florida and New Mexico. Tampa Electric serves more than 700,000 customers in West Central Florida; Peoples Gas System serves more than 350,000 customers across Florida; and New Mexico Gas Co. serves more than 510,000 customers across New Mexico. Other TECO Energy subsidiaries include TECO Coal, which owns and operates coal-production facilities in Kentucky, Tennessee and Virginia. Divestiture of TECO Coal is expected prior to the completion of the acquisition of TECO Energy, Inc.

Contact Information:

Investor Relations:
Scott LaFleur
902-428-6375
Scott.lafleur@emera.com

Media:
Neera Ritcey
902-223-2272
neera.ritcey@emera.com
www.emera.com

Company ProfileEmera Incorporated