Investment Adds to Fortis’s Appeal

Article Excerpt

FORTIS INC. $28 (Toronto symbol FTS; Conservative Growth Portfolio, Utilities sector; SI Rating: Above average) has raised its stake in Caribbean Utilities Company, Ltd., from 37.4% to 54%. This business is the sole provider of electrical power on Grand Cayman Island. This investment cost Fortis $48.9 million U.S., or about half of the $113.3 million (Canadian) or $1.05 a share that it earned in the first nine months of 2006. But controlling this business will make it easier for Fortis to improve efficiency. It also cuts Fortis’s exposure to Atlantic Canada. A hurricane damaged much of Caribbean Utilities’ operations two years ago. Insurance and higher power rates helped it recover most of the costs. Thanks to Fortis’s expertise, generating capacity is almost back to pre-hurricane levels. Caribbean Utilities plans to install a new $22.2 million U.S. generator in 2007, which will increase its capacity by 20%. That should help it profit from rising tourism, which accounts for 70% of the Cayman economy. Fortis is…

You are trying to access subscriber-only content.

To read this article, you may subscribe or sign in.
If you are already a subscriber, log in here.

If you wish to become a subscriber, click here. Or you may enjoy access to all our publications when you become a Member of Pat McKeough's Inner Circle Pro.