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Ontario enlarged loans to unions so they could buy more shares in hot Hydro One Inc IPO

The loans were made because the province believes it “will better align the interests of the members of the unions with the interests of other investors in Hydro One.”

On a day when the overall Canadian equity market fell 0.75 per cent, Thursday proved a rewarding first day in public trading for shareholders in Hydro One Inc., with the beneficiaries of the 5.5 per cent jump including the Power Workers’ Union (PWU) and the Society of Energy Professionals (SEP).

The two unions, whose members work at either Hydro One or Ontario Power Generation, made out particularly well because they were able to buy shares largely with loans received from the province. And at some point before trading began, the province handed over far bigger loans to the unions than its original public plans had stated.

In early October, when Hydro One filed its amended and restated preliminary prospectus, it was stated the Ontario government would advance $87 million in loans to the two unions, of which $75 million would flow to the PWU and $12 million to the SEP.

When Hydro One recently filed its final long-form prospectus, however, the total loan amount had ballooned by nearly 30 per cent, to $111 million. The PWU received its original $75 million loan, but the SEP loan was tripled from the earlier plan, to $36 million.

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