City reaps windfall from sale of its stake in energy corporation

The city of Toronto has reaped a larger-than-expected windfall from the sale of its stake in Enwave Energy Corporation, the deep-lake water cooling company.

Brookfield Asset Management, which has agreed to buy all of Enwave, will pay the municipality $168-million for its 43-per cent stake, about $100-million more than the city’s investment in the company.

“I’m really, really proud of council,” Mayor Rob Ford said after his colleagues voted 38-6 in favour of the sale. “It’s a huge victory for the taxpayers.”

Brookfield will pay $480-million for the entire company, including its debts, according to Cam Weldon, the city’s chief financial officer.

The rest of Enwave was owned by Borealis Infrastructure, an arm of OMERS, the retired municipal employees pension fund.

The deal is expected to close by the end of the month.

Mr. Weldon said finance staff estimated the city’s stake would fetch anywhere from $120-million to $170-million.

“There were multiple bids, which was great. Brookfield was at the top end, [with] the fewest conditions. It’s a good company, it’s in Toronto. [We] couldn’t ask for better,” Mr. Weldon said.

Councillors learned the proposed sale price during an in-camera session Tuesday morning, prompting a nearly day-long debate about how to spend the unexpectedly large windfall.

Mr. Ford argued strongly in favour of putting all the proceeds towards the bill for 204 replacement streetcars, a purchase council voted to debt-finance in 2009.

At the time, the municipality’s share of the streetcar bill was $834-million.

Mr. Weldon said the city has paid about $300-million toward the new streetcars, the first of which recently arrived in Toronto for testing.

The province is supposed to kick in just over $400-million, but the details of when that money will flow are still being hammered out.

“Every single dime must go to the streetcars,” Mr. Ford said on the floor of council. “I know other councillors might have ideas of taking bits and pieces and putting it here and there. Folks, we have to pay for the streetcars.”

Some councillors argued portions of the Enwave proceeds should go to basement flooding programs; others argued in favour of directing some of it to the Toronto Community Housing Corporation’s repair backlog.

Council voted 28-16 in favour of sending those issues to budget committee.

Original Article
Source: the globe and mail
Author: Kelly Grant