Report to/Rapport au :

 

Debenture Committee

Comité sur les débentures

 

 5 July 2011 / le 5 juillet 2011

 

Submitted by/Soumis par : Marian Simulik, City Treasurer/Trésorière municipale

 

Contact Person/Personne ressource : Mona Monkman, Deputy City Treasurer - Corporate Finance/ Trésorière municipale adjointe - Finances municipales

Finance Department/ Service des Finances

613-580-2424 ext./poste 41723, Mona.Monkman@ottawa.ca

 

City Wide/à l'échelle de la Ville

Ref N°: ACS2011-CMR-FIN-0040

 

 

SUBJECT:

DEBENTURE BY-LAWS

 

 

OBJET :

Règlement régissant les obligations non garanties

 

 

REPORT RECOMMENDATION

 

That the Debenture Committee enact  debenture by-laws where the project debt authority has been approved by Council and the Treasurer has proceeded with  debt issues  pursuant to Section 15, Schedule “A” of By-law No. 2011-28 as amended, the Delegation of Authority By-law, by finalizing the terms and conditions of such debt issue:

 

1.      In the form attached as Document 1 to authorize the issuance of sinking fund debentures in the total principal amount of $150,000,000  and;

 

2.      In the form attached as Document 2 to authorize the issuance of debentures to the Ontario Infrastructure and Lands Corporation (OILC) in the total principal amount of $50,000,000.

 

 

RECOMMANDATION DU RAPPORT

 

Que le Comité des débentures adopte des règlements régissant les obligations non garanties dans les cas où l'autorisation d'emprunt pour un projet a été donnée par le Conseil et où la trésorière a procédé à l'émission obligataire en vertu de l'article 15 de l'annexe A du Règlement no 2011-28 sur la délégation de pouvoirs, modifié, en fixant les conditions de ces émissions obligataires :

 

1.      sous la forme du document 1, ci-annexé, pour autoriser l'émission de débentures à fonds d'amortissement d'un capital nominal total de 150 000 000 $;

 

2.      sous la forme du document 2, ci-annexé, pour autoriser l'émission de débentures à la Société ontarienne des infrastructures et de l'immobilier (SOII) d'un capital nominal total de 50 000 000 $.

 

 

BACKGROUND

 

On January 27, 2010 Council delegated authority to the Debenture Committee to enact debenture by-laws to authorize the issuance of debentures where the project debt authority has been approved by Council and the Treasurer has proceeded with the debt issue, in accordance with the Delegation of Authority By-law No. 2011-28 as amended.

 

In accordance with the Delegation of Authority By-Law the Treasurer has proceeded to issue a sinking fund debenture on June 27, 2011 in the total principal amount of $150,000,000 with a 31 year term at an all-in effective yield of 4.651%.  Debt financing has previously been authorized by Council for each of the projects receiving financing from the proceeds from this debenture issue, as detailed on Schedule “A” to the debenture by-law attached as Document 1. The transaction is scheduled to close on July 14, 2011 and a debenture by-law substantially in the form attached as Document 1, is required to be enacted in order to successfully close the transaction.

 

On November 23, 2010 the Debenture Committee enacted a debenture by-law authorizing the issuance of a debenture to Ontario Infrastructure Projects Corporation (OIPC) in the principal amount of $92,000,000 to finance the purchase of buses from New Flyer Industries. The total financing required for this program is $142,000,000 and the debenture authorized by the debenture by-law in the form attached as Document 2 in the amount of $50,000,000 will complete the financing for this program.  This transaction is scheduled to close on July 15, 2011.

 

 

DISCUSSION

 

Debenture by-law  $150,000,000

 

Interest rate forecasts have been calling for interest rates to increase over time as the Canadian and global economies improve.  However financial market sentiment in reaction to events in Europe and mixed economic data from the US, reflect concern that a worldwide economic recovery may be slower to develop than previously anticipated.  As a result, the yield on 30 year Government of Canada bonds which was approximately 3.50% at the beginning of 2011, increased to 3.87% in April and has declined since then. At the time the issue was launched, the yield was 3.39% which provided an attractive opportunity to obtain long term debenture financing.

 

The all-in effective yield for this debenture issue of 4.651% compares favourably with the 20 year combination issues the City completed in 2010 ( 4.986% for the $80 million debenture in April and 4.804%  on the $125 million issue in August 2010) as well as with recent municipal issues for the same term (the City of Toronto issued $350 million, 30 year debenture at 4.727% on June 2, 2011 and Translink issued a $200 million, 30 year debenture at 4.656%  on June 15, 2011). 

 

In part, as a result of City staff recent activities to attract new investors, the issue was distributed across Canada with Quebec based investors taking 65% of the issue.  The issue was distributed mostly to institutional investors including insurance companies (38%) investment managers (26%) and pension funds (16%).  The size of a debt issue is an important factor to investors when they consider making an investment.  Investors perceive larger issues as more liquid or easier to find potential buyers if the original investor decides to sell its holdings.  In order to address this factor, the maturity date for this debenture was set at July 14, 2042 which allows the City to reopen or issue additional debentures maturing on the same date with the same interest coupon (the yield or cost to the City would change based on interest rates prevailing at that time) over the next 18 months if the City has additional requirements to issue debt on this term. 

 

Debenture by-law  $50,000,000

 

On April 28, 2010 Council approved the purchase of 226 buses for transit service.  The total cost of this purchase was $155.7 million and $142 million in debt financing was authorized to support the purchase of these more fuel efficient vehicles.  Motion 88/8 which was also carried by Council at the same meeting, authorized the Treasurer to apply to Ontario Infrastructure Projects Corporation for a loan to finance all or part of the debt required for this transaction.  On June 6, 2011 legislation was enacted amalgamating the Ontario Realty Corporation, Ontario Infrastructure Projects Corporation and the Stadium Corporation of Ontario Limited under the name Ontario Infrastructure and Lands Corporation (OILC).

 

Following the enactment of By-law No. 210-370 by the Debenture Committee on November 23, 2010 the City completed the financing for the first tranche for this bus purchase program on December 1, 2010 in the amount of $92 million on 15 year terms with interest at 3.92%.

 

The interest rate available from OILC for the final $50 million tranche is 4.01% for a 15 year term.  Enacting the Debenture By-law in the form attached as Document 2 will complete the financing required for this program.  The 15 year term offered by OILC is consistent with the service life of the vehicles.

 

 

RURAL IMPLICATIONS

 

There are no rural implications to enacting the By-laws recommended in this Report.

 

CONSULTATION

 

This report is administrative in nature.

 

 

LEGAL/RISK MANAGEMENT IMPLICATIONS

 

Section 401 of the Municipal Act, 2001, as amended, provides that a municipality may incur debt for municipal purposes whether by borrowing money or in any other way and may issue debentures in relation to the debt.  On January, 2010, Council delegated to the Debenture Committee the authority to enact by-laws related to issuing debentures as appended to this report.  The borrowing for projects has been previously approved by Council and the Treasurer has delegated authority pursuant to By-law 2011-28, Schedule “A”, Section 15 to finalize debt issues.

 

 

FINANCIAL IMPLICATIONS

 

The debenture issues do not involve any new debenture authority but provides the financing authorized by Council at the time the various capital works were approved.

 

 

SUPPORTING DOCUMENTATION

 

Document 1 the debenture by-law authorizing the issue of $150,000,000 sinking fund debentures.

 

Document 2 the debenture by-law authorizing the issue of $50,000,000 amortizing debentures to Ontario Infrastructure and Lands Corporation.

 

 

DISPOSITION

 

Once both debenture issues are closed this report will be provided to Council for its information as required by the terms of the delegated authority given to the Debenture Committee by Council.

 

 


Document 1

 

BY-LAW NO. 2011-

 

            A by-law of the City of Ottawa to authorize the borrowing upon sinking fund debentures in the principal amount of $150,000,000.00 towards the cost of certain capital works of the City of Ottawa

              WHEREAS subsection 401(1) of the Municipal Act, 2001, as amended (the “Act”) provides that a municipality may incur a debt for municipal purposes, whether by borrowing money or in any other way, and may issue debentures and prescribed financial instruments and enter prescribed financial agreements for or in relation to the debt;

              AND WHEREAS subsection 408 (2.1) of the Act provides that a municipality may issue a debenture or other financial instrument for long-term borrowing only to provide financing for a capital work;

               AND WHEREAS the City of Ottawa Act, 1999, as amended (the “Ottawa Act”), being Schedule E of the Fewer Municipal Politicians Act, 1999, as amended, created the new City of Ottawa, effective January 1, 2001, by amalgamating The Regional Municipality of Ottawa-Carleton and each of its eleven area municipalities, The Corporation of the City of Cumberland, The Corporation of the City of Gloucester, The Corporation of the Township of Goulbourn, The Corporation of the City of Kanata, The Corporation of the City of Nepean, The Corporation of the Township of Osgoode, The Corporation of the City of Ottawa, The Corporation of the Township of Rideau, The Corporation of the Village of Rockcliffe Park, The Corporation of the City of Vanier and The Corporation of the Township of West Carleton.  The twelve municipalities are hereinafter referred to collectively as the “old municipalities” or individually as an “old municipality”;

  AND WHEREAS in accordance with subsection 5(2) of the Ottawa Act, the new City of Ottawa stands in the place of the old municipalities for all purposes;

  AND WHEREAS in accordance with clause 5(3)(b) of the Ottawa Act, all the assets and liabilities on December 31, 2000 including all rights, interests, approvals, status, registrations, entitlements and contractual benefits and obligations of the old municipalities were, on January 1, 2001, vested in and became assets and liabilities of the new City of Ottawa;

            AND WHEREAS in accordance with subsection 5(6) of the Ottawa Act, every by-law or resolution of the old municipalities which was in force immediately before the dissolution of all such old municipalities under subsection 5(1) of the Ottawa Act was deemed to be a by-law or resolution of the Council of the new City of Ottawa;

            AND WHEREAS in respect of the purpose of the old municipality known as The Regional Municipality of Ottawa-Carleton (the “Regional Corporation”) set out in Column 1 of Schedule “A” attached hereto and forming part of this By-law (“Schedule “A””) which was authorized before January 1, 2001, the Regional Municipalities Act, as it then was (the “Regional Act”), provided that, subject to the limitations contained in the Regional Act or in any other Act, the Council of the Regional Corporation could borrow money or incur debt for municipal purposes and could issue debentures for the money borrowed or for the debt on the credit of the Regional Corporation.  In this connection “municipal purposes” was defined in the Regional Act to include the purposes of the Regional Corporation, the purposes of an area municipality and the joint purposes of two or more area municipalities;

            AND WHEREAS in respect of the purpose of the Regional Corporation set out in Column 1 of Schedule “A” which was authorized before January 1, 2001 on the basis of debentures being issued therefor by the relevant By-law enumerated in Column 2 of Schedule “A”, and in respect of any additional cost amounts and the additional debenture authorities in respect thereof approved by the relevant By-laws enumerated in Column 2 of Schedule “A”, the Council of the Regional Corporation has authorized such purpose and thereafter the Council of the City of Ottawa has authorized each such additional cost amount and each such additional debenture authority.  Before authorizing such purpose, each such additional cost amount and each such additional debenture authority, the Council of the Regional Corporation or the Council of the City of Ottawa (as the case may be) had its Treasurer calculate an updated limit in respect of its most recent annual debt and financial obligation limit received from the Ministry of Municipal Affairs and Housing in accordance with the applicable regulation and, prior to the Council of the Regional Corporation or the Council of the City of Ottawa (as the case may be) authorizing such purpose, each such additional cost amount and each such additional debenture authority, the relevant Treasurer determined that the estimated annual amount payable in respect of such purpose, each such additional cost amount and each such additional debenture authority would not cause the Regional Corporation or the City of Ottawa (as the case may be) to exceed the updated limit and that the approval of such purpose, each such additional cost amount and each such additional debenture authority by the Ontario Municipal Board pursuant to such regulation was not required;

            AND WHEREAS in respect of each of the purposes of the City of Ottawa set out in Column 1 of Schedule “A” which was authorized on or after January 1, 2001 on the basis of debentures being issued therefor by the relevant By-laws enumerated in Column 2 of Schedule “A”, and in respect of each of such purposes for which an additional cost amount and additional debenture authority was approved by the relevant By-laws enumerated in Column 2 of Schedule “A”, if any, the Council of the City of Ottawa has authorized each such purpose, each such additional cost amount and each such additional debenture authority in the respective amounts shown in Column 3 of Schedule “A”.  Before authorizing each such purpose, each such additional cost amount and each such additional debenture authority the Council of the City of Ottawa had its Treasurer calculate an updated limit in respect of its most recent annual debt and financial obligation limit received from the Ministry of Municipal Affairs and Housing in accordance with the applicable regulation and, prior to the Council of the City of Ottawa authorizing each such purpose, each such additional cost amount and each such additional debenture authority, the Treasurer determined that the estimated annual amount payable in respect of each such purpose, each such additional cost amount and each such additional debenture authority would not cause the City of Ottawa to exceed the updated limit and that the approval of each such purpose, each such additional cost amount and each such additional debenture authority by the Ontario Municipal Board pursuant to such regulation was not required;

            AND WHEREAS on April 11, 2007 the City of Ottawa adopted a Debt and Financing Policy which was subsequently amended (the “Policy”) and which provides the administrative framework and guidelines for issuing short and long-term debt;

            AND WHEREAS, in accordance with the Policy and the Act, it is expedient to borrow money by the issue and sale of sinking fund debentures in the principal amount of $150,000,000.00, on the credit of the City of Ottawa in order to provide the respective amounts set out in Column 5 of Schedule “A”, payable at the times and bearing interest at the rates hereinafter set forth, as agreed to on June 27, 2011 by the City of Ottawa pursuant to Section 15 of Schedule “A” of By-law No. 2011-28, as amended.

            THEREFORE the Debenture Committee of the City of Ottawa enacts as follows:

1.         For the purposes set out in Column 1 of Schedule “A” (the “Capital Works”), the borrowing upon the credit of the City of Ottawa of the principal amount of $150,000,000.00 and the issue of sinking fund debentures therefor in minimum denominations of $1,000.00, as hereinafter set forth, are hereby authorized.

2.         The Mayor and the Treasurer of the City of Ottawa are hereby authorized to cause any number of sinking fund debentures in the principal amount of $150,000,000.00, as described in section 1 above, (the “Debentures”) payable on July 14, 2042 to be issued for such amounts of money as may be required for the Capital Works in global and definitive forms, not exceeding in total the said principal amount of $150,000,000.00.  The Debentures shall bear the City of Ottawa’s municipal seal and the signatures of the Mayor and of the Treasurer of the City, all in accordance with the provisions of the Act.  The municipal seal of the City of Ottawa and the signatures referred to in this section may be printed, lithographed, engraved or otherwise mechanically reproduced.  The Debentures are sufficiently signed if they bear the required signatures and each person signing has the authority to do so on the date he or she signs.  The Debentures shall initially be issued in global fully registered form as three certificates, each in the principal amount of $50,000,000.00 (in the aggregate principal amount of $150,000,000.00), each substantially in the form attached as Schedule “B” hereto and forming part of this By-law (the “Global Debentures”).   The Global Debentures shall initially be issued in the name of CDS & CO. as nominee of CDS Clearing and Depository Services Inc. (“CDS”), and each shall provide for payment of principal and interest electronically in final and irrevocable same-day funds in accordance with the applicable requirements of CDS, so long as the Global Debentures are held by CDS.

3.         (1)        The Debentures shall all be dated the 14th day of July, 2011, and as to both principal and interest shall be expressed and be payable in lawful money of Canada. The Debentures shall be issued for a term of 31 years bearing interest at the rate of 4.60% per annum and shall be payable on the 14th day of July, 2042.  In each year during such period, the amount of $6,900,000.00 shall be payable for interest on the Debentures ($3,450,000.00 on each of January 14 and July 14, commencing on January 14, 2012) and the amount of $2,755,859.97 shall be deposited on or before July 14 (commencing on July 14, 2012) by the Treasurer of the City of Ottawa, or an authorized official of the City of Ottawa, into a sinking fund (the “Sinking Fund”), which amount, with interest compounded annually, will be sufficient to pay at maturity (July 14, 2042) the principal of the Debentures, in accordance with the provisions of the Act.

            (2)        Payments in respect of contributions to the Sinking Fund as well as principal of and interest on the Debentures shall be made only on a day on which banking institutions in Toronto, Ontario and Ottawa, Ontario, are not authorized or obligated by law or executive order to be closed (a “Business Day”) and if any date for payment is not a Business Day, payment shall be made on the next following Business Day and no further interest shall be paid in respect of the delay in such payment.

4.         Interest shall be payable to the date of maturity of the Debentures and on default shall be payable both before and after default and judgment.  Any amounts payable by the City of Ottawa as interest on overdue principal or interest in respect of the Debentures shall be paid out of current revenue.  Whenever it is necessary to compute any amount of interest in respect of the Debentures for a period of less than one full year, other than with respect to regular interest payments, such interest shall be calculated on the basis of the actual number of days in the period and a year of 365 days or 366 days, if applicable.

5.         In limited circumstances (as agreed to by both the City of Ottawa and CDS) the Global Debentures shall be exchangeable for certificated Debentures in definitive fully registered form in authorized denominations upon surrender of the Global Debentures to the Treasurer of the City of Ottawa.  Any of the Debentures issued as definitive Debentures may, with the approval of the Debenture Committee, be countersigned in writing by officials so designated by the Debenture Committee.  The definitive Debentures shall aggregate the same principal amount as the principal outstanding balance of the Global Debentures as of the record date for such exchange in accordance with the provisions of the Global Debentures, shall bear the same interest rate and maturity date, shall bear all unmatured interest obligations and shall have the same benefits and be subject to the same terms and conditions as the Global Debentures (except insofar as they specifically relate to the Global Debentures).  In issuing definitive Debentures no change shall be made in the amount which would otherwise be payable in each year under the Global Debentures.  The definitive Debentures shall be in fully registered form, payable as to principal and outstanding interest in lawful money of Canada at maturity upon presentation and surrender thereof at any specified branch in Canada of the City of Ottawa’s bank designated in the definitive Debentures.  Prior to maturity the definitive Debentures shall be payable as to interest by cheque sent by mail to the registered addresses of the registered holders or, if authorized in writing, by electronic transfer.

6.         In respect of the Debentures there shall be raised, as part of the general levy, in each year of their currency the amount of $6,900,000.00 which shall be payable for interest on the Debentures ($3,450,000.00 on each of January 14 and July 14) and the amount of $2,755,859.97 for deposit into the Sinking Fund on or before July 14 (commencing on July 14, 2012) for the payment at maturity (July 14, 2042) of the principal of the Debentures.  In each such year, for the Capital Works, the said two amounts shall be raised as part of the general levy, to the extent that the amounts have not been provided for by any other available source including other taxes or fees or charges imposed on persons or property by a by-law of any municipality.

7.         The Debentures may contain any provision for their registration thereof authorized by any statute relating to municipal debentures in force at the time of the issue thereof.

8.         The City of Ottawa shall maintain a registry in respect of the Debentures in which shall be recorded the names and the addresses of the registered holders and particulars of the Debentures held by them respectively and in which particulars of the cancellations, exchanges, substitutions and transfers of Debentures may be recorded and the City of Ottawa is authorized to use electronic, magnetic or other media for records of or related to the Debentures or for copies of them.

9.         The City of Ottawa shall not be bound to see to the execution of any trust affecting the ownership of any Debenture or be affected by notice of any equity that may be subsisting in respect thereof.  The City of Ottawa shall deem and treat registered holders of the Debentures, including the Global Debentures, as the absolute owners thereof for all purposes whatsoever notwithstanding any notice to the contrary and all payments to or to the order of registered holders shall be valid and effectual to discharge the liability of the City of Ottawa on the Debentures to the extent of the amount or amounts so paid.  Where a Debenture is registered in more than one name, the principal of and interest from time to time payable on such Debenture shall be paid to or to the order of all the joint registered holders thereof, failing written instructions to the contrary from all such joint registered holders, and such payment shall constitute a valid discharge to the City of Ottawa.  In the case of the death of one or more joint registered holders, despite the foregoing provisions of this section, the principal of and interest on any Debentures registered in their names may be paid to the survivor or survivors of such holders and such payment shall constitute a valid discharge to the City of Ottawa.

10.       The Debentures are transferable or exchangeable at the office of the Treasurer of the City of Ottawa upon presentation for such purpose accompanied by an instrument of transfer or exchange in a form approved by the City of Ottawa and which form is in accordance with the prevailing Canadian transfer legislation and practices, executed by the registered holder thereof or such holder’s duly authorized attorney or legal personal representative, whereupon and upon registration of such transfer or exchange and cancellation of the Debenture or Debentures presented, the Mayor and the Treasurer shall issue and deliver a new Debenture or Debentures of an equal aggregate principal amount in any authorized denomination or denominations as directed by the transferee, in the case of a transfer or as directed by the registered holder in the case of an exchange.

11.       The Mayor and the Treasurer shall issue and deliver new Debentures in exchange or substitution for Debentures outstanding on the registry with the same maturity date and of like form which have become defaced, lost, subject to a mysterious or unexplainable disappearance, stolen, destroyed or dematerialized, provided that the applicant therefor shall have: (a) paid such costs as may have been incurred in connection therewith; (b) (in the case a Debenture is defaced, lost, mysteriously or unexplainably missing, stolen, destroyed or dematerialized) furnished the City of Ottawa with such evidence (including evidence as to the certificate number of the Debenture in question) and indemnity in respect thereof satisfactory to the City of Ottawa in its discretion; and (c) surrendered to the City of Ottawa any defaced Debenture in respect of which new Debentures are to be issued in substitution.

12.       The Debentures issued upon any registration of transfer or exchange or in substitution for any Debentures or part thereof shall carry all the rights to interest if any, accrued and unpaid which were carried by such Debentures or part thereof and shall be so dated and shall bear the same maturity date and, subject to the provisions of this By-law, shall be subject to the same terms and conditions as the Debentures in respect of which the transfer, exchange or substitution is effected.

13.       The cost of all transfers and exchanges, including the printing of authorized denominations of the new Debentures, shall be borne by the City of Ottawa.  When any of the Debentures are surrendered for transfer or exchange the Treasurer of the City of Ottawa shall: (a) in the case of an exchange, cancel and destroy the Debentures surrendered for exchange; (b) in the case of an exchange, certify the cancellation and destruction in the registry; and (c) enter in the registry particulars of the new Debenture or Debentures issued in exchange.

14.       Subject to an agreement that the City of Ottawa may enter into to the contrary, reasonable fees may be imposed by the City of Ottawa for the substitution of a new Debenture or new Debentures for any of the Debentures that are defaced, lost, mysteriously or unexplainably missing, stolen, destroyed or dematerialized and for the replacement of any of the interest cheques that are defaced, lost, mysteriously or unexplainably missing, stolen or destroyed.  Where new Debentures are issued in substitution in these circumstances the City of Ottawa shall: (a) treat as cancelled and destroyed the Debentures in respect of which new Debentures will be issued in substitution; (b) certify the deemed cancellation and destruction in the registry; (c) enter in the registry particulars of the new Debentures issued in substitution; and (d) make a notation of any indemnities provided.

15.       Except as otherwise expressly provided herein, any notice required to be given to a registered holder of one or more of the Debentures will be sufficiently given if a copy of such notice is mailed or otherwise delivered to the registered address of such registered holder.

16.       (1)        The Mayor and the Treasurer are hereby authorized to cause the Debentures to be issued, the Treasurer and the Clerk are hereby individually authorized to generally do all things and to execute all other documents and papers in the name of the City of Ottawa in order to carry out the sale of the Debentures through CDS’ book entry only system and the Treasurer is authorized to affix the City of Ottawa’s municipal seal to any of such documents and papers.

            (2)         The money received by the City of Ottawa from the sale of the Debentures, including any premium, and any earnings derived from the investment of that money, shall be apportioned and applied to the Capital Works, and to no other purpose except as permitted by the Act.

17.       The City of Ottawa has reserved the right to issue additional debentures of the same maturity, interest rate and terms and conditions.

18.       Subject to the City of Ottawa’s investment policies and goals and the applicable legislation, the City of Ottawa may, if not in default under the Debentures, at any time purchase any of the Debentures in the open market or by tender or by private contract at any price and on such terms and conditions (including, without limitation, the manner by which any tender offer may be communicated or accepted and the persons to whom it may be addressed) as the City of Ottawa may in its discretion determine.

19.       This By-law comes into force on the day it is passed.

 

ENACTED AND PASSED this    day of     , 2011

                        CHAIR,                                                          VICE CHAIR,          

                        DEBENTURE COMMITTEE                       DEBENTURE COMMITTEE

 

 

                       

                        CITY MANAGER                                         CITY TREASURER

MEMBER                                                       MEMBER




 


City of Ottawa

Schedule “B” to By-law No. 2011-

Unless this certificate is presented by an authorized representative of CDS Clearing and Depository Services Inc. (CDS) to the City of Ottawa (the “Issuer”) or its agent for registration of transfer, exchange or payment, and any certificate issued in respect thereof is registered in the name of CDS & CO., or in such other name as is requested by an authorized representative of CDS (and any payment is made to CDS & CO. or to such other entity as is requested by an authorized representative of CDS), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since the registered holder hereof, CDS & CO., has a property interest in the securities represented by this certificate herein and it is a violation of its rights for another person to hold, transfer or deal with this certificate.

No. FR000001                                                                                                                                                                $50,000,000.00

                                                                                                                                                                                    CUSIP  689551DF3

   C A N A D A                                                      ISIN CA 689551DF39

Province of Ontario

City of Ottawa

_______________________________________________________

FULLY REGISTERED GLOBAL 4.60% SINKING FUND DEBENTURE

THE ISSUER, for value received, hereby promises to pay to

CDS & CO.

as nominee of CDS or registered assigns, subject to the Conditions attached hereto which form part hereof (the “Conditions”), by the maturity date of this global debenture (July 14, 2042), the principal amount of

FIFTY MILLION DOLLARS

----------------------------------- ($50,000,000.00) ---------------------------------

in lawful money of Canada, and to pay interest thereon until the maturity date of this global debenture in like money in semi-annual payments from July 14, 2011, or the last date on which interest has been paid on this global debenture, whichever is later, at the rate of  4.60% per annum, in arrears on the 14th day of January and the 14th day of July, in each year (each, a “Payment Date”) in the manner provided in the Conditions.  Subject to the Conditions, interest shall be paid on default at the aforesaid rate both before and after default and judgment.  The payments of interest, the amount to be deposited into the applicable sinking fund and the principal balance outstanding in each year are shown in the Schedule on the reverse side hereof.

This global debenture is subject to the Conditions.

DATED at the City of Ottawa the 14th day of July, 2011.

IN TESTIMONY WHEREOF and under the authority of By-law No. 2011-      of the Issuer duly passed on the     day of July, 2011 (the “Debenture By-law”), this global debenture is sealed with the municipal seal of the Issuer and signed by the Mayor and by the Treasurer thereof.

Date of Registration:  July 14, 2011



__________________________                   (seal)                     _____________________________
Mayor                                                                                                    Treasurer


 

SCHEDULE

 

 

Year

Interest

Interest

Total Annual Interest Payment Each Year

Annual Sinking Fund Deposit

Principal

Rate

$

14-Jul

Balance

%

 

$

Outstanding

 

14-Jan

14-Jul

 

 

14-Jul

 

$

$

 

 

$

 

 

 

 

 

 

 

2011

-----

------------

------------

------------

---------------

50,000,000.00

2012

4.60

1,150,000.00

1,150,000.00

2,300,000.00

918,619.99

50,000,000.00

2013

4.60

1,150,000.00

1,150,000.00

2,300,000.00

918,619.99

50,000,000.00

2014

4.60

1,150,000.00

1,150,000.00

2,300,000.00

918,619.99

50,000,000.00

2015

4.60

1,150,000.00

1,150,000.00

2,300,000.00

918,619.99

50,000,000.00

2016

4.60

1,150,000.00

1,150,000.00

2,300,000.00

918,619.99

50,000,000.00

2017

4.60

1,150,000.00

1,150,000.00

2,300,000.00

918,619.99

50,000,000.00

2018

4.60

1,150,000.00

1,150,000.00

2,300,000.00

918,619.99

50,000,000.00

2019

4.60

1,150,000.00

1,150,000.00

2,300,000.00

918,619.99

50,000,000.00

2020

4.60

1,150,000.00

1,150,000.00

2,300,000.00

918,619.99

50,000,000.00

2021

4.60

1,150,000.00

1,150,000.00

2,300,000.00

918,619.99

50,000,000.00

2022

4.60

1,150,000.00

1,150,000.00

2,300,000.00

918,619.99

50,000,000.00

2023

4.60

1,150,000.00

1,150,000.00

2,300,000.00

918,619.99

50,000,000.00

2024

4.60

1,150,000.00

1,150,000.00

2,300,000.00

918,619.99

50,000,000.00

2025

4.60

1,150,000.00

1,150,000.00

2,300,000.00

918,619.99

50,000,000.00

2026

4.60

1,150,000.00

1,150,000.00

2,300,000.00

918,619.99

50,000,000.00

2027

4.60

1,150,000.00

1,150,000.00

2,300,000.00

918,619.99

50,000,000.00

2028

4.60

1,150,000.00

1,150,000.00

2,300,000.00

918,619.99

50,000,000.00

2029

4.60

1,150,000.00

1,150,000.00

2,300,000.00

918,619.99

50,000,000.00

2030

4.60

1,150,000.00

1,150,000.00

2,300,000.00

918,619.99

50,000,000.00

2031

4.60

1,150,000.00

1,150,000.00

2,300,000.00

918,619.99

50,000,000.00

2032

4.60

1,150,000.00

1,150,000.00

2,300,000.00

918,619.99

50,000,000.00

2033

4.60

1,150,000.00

1,150,000.00

2,300,000.00

918,619.99

50,000,000.00

2034

4.60

1,150,000.00

1,150,000.00

2,300,000.00

918,619.99

50,000,000.00

2035

4.60

1,150,000.00

1,150,000.00

2,300,000.00

918,619.99

50,000,000.00

2036

4.60

1,150,000.00

1,150,000.00

2,300,000.00

918,619.99

50,000,000.00

2037

4.60

1,150,000.00

1,150,000.00

2,300,000.00

918,619.99

50,000,000.00

2038

4.60

1,150,000.00

1,150,000.00

2,300,000.00

918,619.99

50,000,000.00

2039

4.60

1,150,000.00

1,150,000.00

2,300,000.00

918,619.99

50,000,000.00

2040

4.60

1,150,000.00

1,150,000.00

2,300,000.00

918,619.99

50,000,000.00

2041

4.60

1,150,000.00

1,150,000.00

2,300,000.00

918,619.99

50,000,000.00

2042

4.60

1,150,000.00

1,150,000.00

2,300,000.00

918,619.99

------------------

 

 

35,650,000.00

35,650,000.00

71,300,000.00

28,477,219.69

 

 

 

 


 

LEGAL OPINION

We have examined the Debenture By-law of the Issuer authorizing the issue of sinking fund debentures in the aggregate principal amount of $150,000,000.00 dated July 14, 2011 and maturing on July 14, 2042.

 

The Debenture By-law has been properly passed and is within the legal powers of the Issuer.  The three global sinking fund debentures issued under the Debenture By-law in the within form (the Global Debentures) are direct, general and unsubordinated obligations of the Issuer.  The Global Debentures are enforceable against the Issuer subject to the special jurisdiction and powers of the Ontario Municipal Board over defaulting municipalities under the Municipal Affairs Act, as amended.  This opinion is subject to and incorporates all the assumptions, qualifications and limitations set out in our opinion letter delivered on the date of the Global Debentures.

 

Toronto, July 14, 2011                                                                                                              BORDEN LADNER GERVAIS LLP

 


 

CONDITIONS OF GLOBAL DEBENTURE

Form, Denomination, Ranking and Beneficial Interests in Global Debenture

1.         The sinking fund debentures issued pursuant to the Debenture By-law (the “Debentures”) are issuable as fully registered Debentures without coupons in minimum denominations of $1,000.00.

2.         The Debentures are direct, general and unsubordinated obligations of the Issuer.  The Debentures rank concurrently and equally in respect of payment of principal and interest with all other debentures of the Issuer except for the availability of money in a sinking or retirement fund for a particular issue of debentures.

3.         This Debenture is a Global Debenture registered in the name of the nominee of CDS and held by CDS.  Beneficial interests in this Global Debenture are represented through book entry accounts, to be established and maintained by CDS, on its records for CDS’ participants (the “Participants”) in accordance with its participant agreement and rules and procedures which are posted on CDS’ website.

4.         Except in the limited circumstances described herein, owners of beneficial interests in this Global Debenture will not be entitled to have Debentures registered in their names, will not receive or be entitled to receive physical delivery of Debentures and will not be considered registered holders of Debentures under the Conditions.  The Issuer does not have any responsibility or liability for maintaining, supervising or reviewing any records of CDS or Participants relating to payments made or to be made by CDS or any Participant on account of beneficial ownership interests in this Global Debenture.

Certificated Debentures

5.         This Global Debenture is exchangeable, in whole but not in part, for certificated Debentures in definitive form registered in the name of a person other than CDS or its nominee only upon the occurrence of any of the following events (a) upon reasonable notice by CDS to the Issuer, CDS may discontinue the eligibility of this Global Debenture on deposit, or cease to hold this Global Debenture in respect of the Debentures, with or without cause; or (b) if CDS ceases to be a recognized clearing agency under applicable Canadian or provincial securities legislation and a successor is not appointed; or (c) if the Issuer gives CDS appropriate notice that it is unable or unwilling to continue to have CDS hold this Global Debenture as a book entry only security or that it desires or has processed an entitlement requiring a withdrawal of this Global Debenture, and the Issuer has all right, power, capacity and authority to do so.

 

6.         Debentures issued in exchange for this Global Debenture shall be issued as certificated Debentures in definitive form in authorized denominations, shall have the same benefits and be subject to the same terms and conditions as this Global Debenture (except insofar as they specifically relate to this Global Debenture as such), shall be registered in such names and in such denominations as CDS shall direct and shall be delivered as directed by the persons in whose names such definitive Debentures are to be registered.

 

7.         Upon the exchange of certificated Debentures in definitive form for this Global Debenture, the Issuer shall receive and cancel this Global Debenture, shall reduce the holdings of CDS & CO. on the registry to nil and shall issue or cause to be issued in exchange for this Global Debenture certificated Debentures in definitive form in an aggregate principal amount equal to and in exchange for the Participants’ proportionate interests in this Global Debenture as of the record date for such exchange, as directed by CDS.  On or after any such exchange, but only to the extent reasonably practicable in the circumstances, the Issuer shall make all payments in respect of such certificated Debentures in definitive form to the registered holders thereof, notwithstanding such exchange occurred after the record date for any payment and prior to such payment date.

 

 

Registration

 

8.         The Issuer will keep at its designated office in the City of Ottawa a registry in which shall be entered the names and addresses of the registered holders of Debentures and particulars of the Debentures held by them respectively and in which transfers, exchanges and substitutions of Debentures may be registered.

 

Title

 

9.         The Issuer shall not be bound to see to the execution of any trust affecting the ownership of any Debenture or be affected by notice of any equity that may be subsisting in respect thereof.  The Issuer shall deem and treat registered holders of Debentures, including this Global Debenture, as the absolute owners thereof for all purposes whatsoever notwithstanding any notice to the contrary and all payments to or to the order of registered holders shall be valid and effectual to discharge the liability of the Issuer on the Debentures to the extent of the amount or amounts so paid.

Payments of Principal and Interest

 

10.       There shall be raised for interest on the Debentures in each year of their currency the amount of $6,900,000.00 for the payment of interest ($3,450,000.00 on each of January 14 and July 14).  In each year during the currency of the Debentures, an amount of $2,755,859.97 shall be deposited by the Issuer  into a sinking fund for the payment of principal of the Debentures at maturity, all in accordance with the provisions of the Debenture By-law and the Municipal Act, 2001, as amended.

 

11.       The record date for purposes of payment of principal and of interest on the Debentures is as of 5:00 p.m. on the sixteenth calendar day preceding any Payment Date, including the maturity date.  Principal of and interest on the Debentures are payable by the Issuer to the persons registered as holders in the registry on the relevant record date.  The Issuer shall not be required to register any transfer, exchange or substitution of Debentures during the period from any record date to the corresponding Payment Date.

 

12.       The Issuer shall make all payments in respect of semi-annual interest on the Debentures on each Payment Date commencing on January 14, 2012 and of principal at maturity electronically in final and irrevocable same-day funds in accordance with the applicable requirements of CDS, so long as this Global Debenture is held by CDS.

 

13.       In the case that certificated Debentures in definitive form are issued, the Issuer shall make all payments in respect of principal and outstanding interest in lawful money of Canada at maturity upon presentation and surrender thereof at any specified branch in Canada of the Issuer’s bank designated in the definitive Debentures, and prior to maturity, shall make payments of interest by cheque sent by mail to the registered addresses of the registered holders or, if authorized in writing, by electronic transfer.

 

14.       Whenever it is necessary to compute any amount of interest in respect of the Debentures for a period of less than one full year, other than with respect to regular semi-annual interest payments, such interest shall be calculated on the basis of the actual number of days in the period and a year of 365 days or 366 days, if applicable.

 

15.       Payments in respect of contributions to the Sinking Fund as well as  principal of and interest on the Debentures shall be made only on a day on which banking institutions in Toronto, Ontario and Ottawa, Ontario, are not authorized or obligated by law or executive order to be closed (a “Business Day”), and if any date for payment is not a Business Day, payment shall be made on the next following Business Day and no further interest shall be paid in respect of the delay in such payment.

 

16.       Where a Debenture is registered in more than one name, the principal of and interest from time to time payable on such Debenture shall be paid to or to the order of all the joint registered holders thereof, failing written instructions to the contrary from all such joint registered holders, and such payment shall constitute a valid discharge to the Issuer.

 

17.       In the case of the death of one or more joint registered holders, despite sections 9 and 16 of the Conditions, the principal of and interest on any Debentures registered in their names may be paid to the survivor or survivors of such holders and such payment shall constitute a valid discharge to the Issuer.

Transfers, Exchanges and Substitutions

18.       Debentures are transferable or exchangeable at the office of the Treasurer of the Issuer upon presentation for such purpose accompanied by an instrument of transfer or exchange in a form approved by the Issuer and which form is in accordance with the prevailing Canadian transfer legislation and practices, executed by the registered holder thereof or such holder’s duly authorized attorney or legal personal representative, whereupon and upon registration of such transfer or exchange and cancellation of the Debenture or Debentures presented, a new Debenture or Debentures of an equal aggregate principal amount in any authorized denomination or denominations will be delivered as directed by the transferee, in the case of a transfer or as directed by the registered holder in the case of an exchange.

19.       The Issuer shall issue and deliver Debentures in exchange for or in substitution for Debentures outstanding on the registry with the same maturity date and of like form in the event of a defacement, loss, mysterious or unexplainable disappearance, theft, destruction or dematerialization, provided that the applicant therefor shall have (i) paid such costs as may have been incurred in connection therewith; (ii) (in the case of a lost, mysteriously or unexplainably missing, stolen, destroyed or dematerialized Debenture) furnished the Issuer with such evidence (including evidence as to the certificate number of the Debenture in question) and indemnity in respect thereof satisfactory to the Issuer in its discretion; and (iii) surrendered to the Issuer any defaced Debenture in respect of which new Debentures are to be issued in substitution.

20.       Each Debenture executed and delivered upon any registration of transfer or exchange for or in substitution for any Debenture or part thereof shall carry all the rights to interest, if any, accrued and unpaid which were carried by such Debenture or part thereof and shall be so dated.

21.       Subject to an agreement that the Issuer may enter into to the contrary, the Issuer shall not impose any fees in respect of the Debentures, in the normal course of business, other than reasonable fees for the issue of new Debentures or for the issue of new cheques in substitution for Debentures that are defaced, lost, mysteriously or unexplainably missing, stolen, destroyed or dematerialized, or interest cheques that are defaced, lost, mysteriously or unexplainably missing or stolen.

Purchases

22.       Subject to the investment policies and goals of the Issuer and the applicable legislation, the Issuer may, if not in default under the Debentures, at any time purchase Debentures in the open market or by tender or by private contract at any price and on such terms and conditions (including without limitation, the manner by which any tender offer may be communicated or accepted and the persons to whom it may be addressed) as the Issuer may in its discretion determine.

Additional Debentures

 

23.       The Issuer reserves the right to issue additional sinking fund debentures of the same maturity, interest rate and terms and conditions.

Notices

24.       Except as otherwise expressly provided herein, any notice required to be given to a registered holder of one or more of the Debentures will be sufficiently given if a copy of such notice is mailed or otherwise delivered to the registered address of such registered holder.  If the Issuer or any registered holder is required to give any notice in connection with the Debentures on or before any day and that day is not a Business Day then such notice may be given on the next following Business Day.

Time

25.       Unless otherwise expressly provided herein, any reference herein to a time shall be considered to be a reference to Toronto time.

Governing Law

26.       The Debentures are governed by and shall be construed in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable in Ontario.


 

 

            BY-LAW NO. 2011-

 

                                                            -o-o-o-o-o-o-o-o-o-o-o-o-o-o-o-o-o-

A by-law of the City of Ottawa to authorize the issue of sinking fund debentures in the principal amount of $150,000,000.00, for capital works of the City of Ottawa

 

              -o-o-o-o-o-o-o-o-o-o-o-o-o-o-o-o-o-

 

Enacted by Debenture Committee at its meeting of         , 2011

 

              -o-o-o-o-o-o-o-o-o-o-o-o-o-o-o-o-o-

 

              LEGAL SERVICES

              amp – F11-·-DEB-30

 

DEBENTURE COMMITTEE AUTHORITY:

Delegation of Authority

 

 


 

Document 2

BY-LAW NO. 2011-

 

            A by-law of the City of Ottawa to authorize the borrowing upon amortizing debentures in the principal amount of $50,000,000.00 towards the cost of certain capital works of the City of Ottawa

            WHEREAS subsection 401(1) of the Municipal Act, 2001, as amended (the “Act”) provides that a municipality may incur a debt for municipal purposes, whether by borrowing money or in any other way, and may issue debentures and prescribed financial instruments and enter prescribed financial agreements for or in relation to the debt;

            AND WHEREAS subsection 408 (2.1) provides that a municipality may issue a debenture or other financial instrument for long-term borrowing only to provide financing for a capital work;

            AND WHEREAS the Council of the City of Ottawa has passed the by-laws enumerated in column (1) of Schedule “A” attached hereto and forming part of this By-law (“Schedule “A””) authorizing the capital work described in column (2) of Schedule “A” (the “Project”), and authorizing the entering into of a Financing Agreement for the provision of temporary and long-term borrowing from the Ontario Infrastructure Projects Corporation in respect of the Project (the “Financing Agreement”) and desires to issue debentures for the Project in the amount specified in column (5) of Schedule “A”;

            AND WHEREAS before authorizing the Project the City of Ottawa had its Treasurer update its most recent annual debt and financial obligation limit received from the Ministry of Municipal Affairs and Housing in accordance with the applicable regulation and, prior to authorizing the Project the Treasurer determined that the estimated annual amount payable in respect of the Project would not cause the City of Ottawa to exceed the updated limit and that the approval of the Project by the Ontario Municipal Board was not required;

            AND WHEREAS on April 11, 2007 the City of Ottawa adopted a Debt and Financing Policy which was subsequently amended (the “Policy”) and which provides the administrative framework and guidelines for issuing short and long-term debt;

            AND WHEREAS On June 6, 2011, the Ontario Infrastructure and Lands Corporation Act, 2011 was proclaimed into force amalgamating the Ontario Realty Corporation, Ontario Infrastructure Projects Corporation, and the Stadium Corporation of Ontario Limited and such corporations were continued as a corporation without share capital under the name Ontario Infrastructure and Lands Corporation (“OILC”);

            AND WHEREAS to provide long term financing for the Project, pursuant to the Financing Agreement dated and effective as of June 22, 2010, and in accordance with the Policy and the Act, it is now expedient to issue 4.01% amortizing debentures in the aggregate principal amount of $50,000,000.00 in lawful money of Canada, payable in semi-annual instalments of combined (blended) principal and interest in each year, commencing on January 16, 2012 and ending on July 15, 2026, on the terms hereinafter set forth.

            THEREFORE the Debenture Committee of the City of Ottawa enacts as follows:

1.         For the Project, the borrowing upon the credit of the City of Ottawa of the aggregate principal sum of $50,000,000.00 and the issue of amortizing debentures therefore upon the credit of the City of Ottawa to be repaid in semi-annual instalments of combined (blended) principal and interest, as hereinafter set forth, are hereby authorized.

2.         The Mayor and the Treasurer of the City of Ottawa are hereby authorized to cause any number of amortizing debentures to be issued for such sums of money as may be required for the Project in definitive form, not exceeding in total the said sum of $50,000,000.00 (the “Debentures”).  The Debentures shall bear the City of Ottawa municipal seal and the signatures of the Mayor and the Treasurer of the City of Ottawa, all in accordance with the provisions of the Act.  The municipal seal of the City of Ottawa and the signatures referred to in this section may be printed, lithographed, engraved or otherwise mechanically reproduced.  The Debentures are sufficiently signed if they bear the required signatures and each person signing has the authority to do so on the date he or she signs.

3.         The Debentures shall be in fully registered form as one or more certificates in the aggregate principal amount of $50,000,000.00, in the name of OILC or as OILC may otherwise direct, substantially in the form attached as Schedule “B” hereto and forming part of this By-law with provision for payment of principal and interest (other than in respect of the final payment of principal and outstanding interest on the maturity date upon presentation and surrender) by pre-authorized debit in respect of such principal and interest to the credit of such registered holder on such terms as to which the registered holder and the City of Ottawa may agree.

4.         In accordance with the provisions of section 25 of the Ontario Infrastructure and Lands Corporation Act, 2011 as security for the payment by the City of Ottawa of the indebtedness of the City of Ottawa to OILC under the Debentures (the “Obligations”), the City of Ottawa is hereby authorized to agree in writing with OILC that the Minister of Finance is entitled, without notice to the City of Ottawa, as appropriate, to deduct from money appropriated by the Legislative Assembly of Ontario for payment to the City of Ottawa, or from money appropriated by such Assembly for payment to the City of Ottawa in respect of such matters as may be specified, amounts not exceeding the amounts that the City of Ottawa fails to pay to OILC on account of the Obligations and to pay such amounts to OILC.

5.         The Debentures shall all be dated the 15th day of July, 2011 and shall be issued within two years after the day on which this By-law is enacted, and as to both principal and interest shall be expressed and be payable in lawful money of Canada.  The Debentures shall bear interest at the rate of 4.01% per annum from the date thereof payable semi-annually in arrears as described in this section.  The Debentures shall be paid in full by July 15, 2026 and payable in semi-annual instalments of combined (blended) principal and interest on such days in January and July as are set forth in Schedule “C” attached hereto and forming part of this By-law (“Schedule “C””) in each of the years during the currency of the Debentures as set forth in the amortization schedule set forth in Schedule “C”.

6.         Payments in respect of principal of and interest on the Debentures shall be made only on a day on which banking institutions in Toronto, Ontario and Ottawa, Ontario, are not authorized or obligated by law or executive order to be closed (a “Business Day”) and if any date for payment is not a Business Day, payment shall be made on the next following Business Day.

7.         Interest shall be payable to the date of maturity of the Debentures and on default shall be payable on any overdue amounts both before and after default and judgment at a rate per annum equal to the greater of the rate specified on the Schedule as attached to and forming part of the Debentures for such amounts plus 200 basis points (2% per annum) or Prime Rate (as defined below) plus 200 basis points (2% per annum), calculated on a daily basis from the date such amounts become overdue for so long as such amounts remain overdue and the City of Ottawa shall pay to the registered holders any and all costs incurred by the registered holders as a result of the overdue payment.  Any amounts payable by the City of Ottawa as interest on overdue principal or interest and all costs incurred by the registered holders as a result of the overdue payment in respect of the Debentures shall be paid out of current revenue.  Whenever it is necessary to compute any amount of interest in respect of the Debentures for a period of less than one full year, other than with respect to regular semi-annual interest payments, such interest shall be calculated on the basis of the actual number of days in the period and a year of 365 or 366 days as appropriate.

Prime Rate” means, on any day, the annual rate of interest which is the arithmetic mean of the prime rates announced from time to time by the five major Canadian Schedule I banks, as of the issue date of this Debenture, Royal Bank of Canada, Canadian Imperial Bank of Commerce, The Bank of Nova Scotia, Bank of Montreal and The Toronto-Dominion Bank (the “Reference Banks”) as their reference rates in effect on such day for Canadian dollar commercial loans made in Canada. If fewer than five of the Reference Banks quote a prime rate on such days, the “Prime Rate” shall be the arithmetic mean of the rates quoted by the remaining Reference Banks.

8.         Each year in which a payment of an instalment of combined (blended) principal and interest becomes due in respect of the Debentures, there shall be raised as part of the general levy the amounts of principal and interest payable in each year as set out in Schedule “C” to the extent that the amounts have not been provided for by any other available source including other taxes or fees or charges imposed on persons or property by a by-law of any municipality.

9.         The Debentures may contain any provision for their registration thereof authorized by any statute relating to municipal debentures in force at the time of the issue thereof.

10.       The City of Ottawa shall maintain a registry in respect of the Debentures in which shall be recorded the names and the addresses of the registered holders and particulars of the Debentures held by them respectively and in which particulars of the cancellation, exchanges, substitutions and transfers of Debentures, may be recorded and the City of Ottawa is authorized to use electronic, magnetic or other media for records of or related to the Debentures or for copies of them.

11.       The City of Ottawa shall not be bound to see to the execution of any trust affecting the ownership of any Debenture or be affected by notice of any equity that may be subsisting in respect thereof.  The City of Ottawa shall deem and treat registered holders of Debentures as the absolute owners thereof for all purposes whatsoever notwithstanding any notice to the contrary and all payments to or to the order of registered holders shall be valid and effectual to discharge the liability of the City of Ottawa on the Debentures to the extent of the sum or sums so paid.  Where a Debenture is registered in more than one name, the principal of and interest from time to time payable on such Debenture shall be paid to or to the order of all the joint registered holders thereof, failing written instructions to the contrary from all such joint registered holders, and such payment shall constitute a valid discharge to the City of Ottawa.  In the case of the death of one or more joint registered holders, despite the foregoing provisions of this section, the principal of and interest on any Debentures registered in their names may be paid to the survivor or survivors of such holders and such payment shall constitute a valid discharge to the City of Ottawa.

12.       The Debentures will be transferable or exchangeable at the office of the Treasurer of the City of Ottawa upon presentation for such purpose accompanied by an instrument of transfer or exchange in a form approved by the City of Ottawa and which form is in accordance with the prevailing Canadian transfer legislation and practices, executed by the registered holder thereof or such holder’s duly authorized attorney or legal personal representative, whereupon and upon registration of such transfer or exchange and cancellation of the Debenture or Debentures presented, the Mayor and the Treasurer shall issue and deliver a new Debenture or Debentures of an equal aggregate principal amount in any authorized denomination or denominations as directed by the transferee, in the case of a transfer or as directed by the registered holder in the case of an exchange.

13.       The Mayor and the Treasurer shall issue and deliver new Debentures in exchange or substitution for Debentures outstanding on the registry with the same maturity and of like form which have become lost, stolen, mutilated, defaced or destroyed, provided that the applicant therefore shall have: (a) paid such costs as may have been incurred in connection therewith; (b) (in the case of a lost, stolen or destroyed Debenture) furnished the City of Ottawa with such evidence (including evidence as to the certificate number of the Debenture in question) and indemnity in respect thereof satisfactory to the City of Ottawa in its discretion; and (c) surrendered to the City of Ottawa any mutilated or defaced Debentures in respect of which new Debentures are to be issued in substitution.

14.       The Debentures issued upon any registration of transfer or exchange or in substitution for any Debentures or part thereof shall carry all the rights to interest if any, accrued and unpaid which were carried by such Debentures or part thereof and shall be so dated and shall bear the same maturity date and, subject to the provisions of this By-law, shall be subject to the same terms and conditions as the Debentures in respect of which the transfer, exchange or substitution is effected.

15.       The cost of all transfers and exchanges, including the printing of authorized denominations of the new Debentures, shall be borne by the City of Ottawa.  When any of the Debentures are surrendered for transfer or exchange the City Treasurer of the City of Ottawa shall: (a) in the case of an exchange, cancel and destroy the Debentures surrendered for exchange; (b) in the case of an exchange, certify the cancellation and destruction in the registry; and (c) enter in the registry particulars of the new Debenture or Debentures issued in exchange.

16.       Reasonable fees for the substitution of a new Debenture or new Debentures for any of the Debentures that are lost, stolen, mutilated, defaced or destroyed and for the replacement of lost, stolen, mutilated, defaced or destroyed principal and interest cheques may be imposed by the City of Ottawa.  Where new Debentures are issued in substitution in these circumstances the City of Ottawa shall: (a) treat as cancelled and destroyed the Debentures in respect of which new Debentures will be issued in substitution; (b) certify the deemed cancellation and destruction in the registry; (c) enter in the registry particulars of the new Debentures issued in substitution; and (d) make a notation of any indemnities provided.

17.       Except as otherwise expressly provided herein, any notice required to be given to a registered holder of one or more of the Debentures will be sufficiently given if a copy of such notice is mailed or otherwise delivered to the registered address of such registered holder.

18.       The Mayor and the Treasurer are hereby authorized to cause the Debentures to be issued, the Clerk and Treasurer are hereby individually authorized to generally do all things and to execute all documents and other papers in the name of the City of Ottawa in order to carry out the issue of the Debentures and the Treasurer is authorized to affix the City of Ottawa’s municipal seal to any of such documents and papers.

19.       The proceeds realized in respect of the Debentures, after providing for the expenses related to their issue, if any, shall be apportioned and applied for the Project and for no other purpose except as permitted by the Act.

20.       Subject to the City of Ottawa’s investment policies and goals, the applicable legislation and the terms and conditions of the Debentures, the City of Ottawa may, if not in default under the Debentures, at any time purchase any of the Debentures in the open market or by tender or by private contract at any price and on such terms and conditions (including, without limitation, the manner by which any tender offer may be communicated or accepted and the persons to whom it may be addressed) as the City of Ottawa may in its discretion determine.

21.       This By-law comes into force on the day it is passed.


 

 

ENACTED AND PASSED this       day of July, 2011

            CHAIR,                                                                     

            DEBENTURE COMMITTEE                      

 

 

           

            CITY MANAGER                                         CITY TREASURER

MEMBER                                                     MEMBER

 


 

City of Ottawa

Schedule “A” to By-law No. 2011-   

 




By-law



Project
Description

Approved Amount to be Financed Through the Issue of Debentures



Amount of Debentures Previously Issued



Amount of Debentures to be Issued



Term of
Years of
Debentures

(1)

(2)

(3)

(4)

(5)

(6)

 

 

$

$

$

 

2010-149

Capital costs in connection with the Bus replacement program

 

142,000,000.00

92,000,000.00

50,000,000.00

15

 

TOTAL

 

 

50,000,000.00

 

 

 


City of Ottawa

Schedule “B” to By-law No. 2011-    

No. FR000001

$50,000,000.00

C A N A D A

Province of Ontario

CITY OF OTTAWA

_______________________________________________________

FULLY REGISTERED 4.01% AMORTIZING DEBENTURE

CITY OF OTTAWA, for value received, hereby promises to pay to

Ontario Infrastructure AND LANDS cORPORATION
(“OILC”)

or registered assigns, subject to the Conditions attached hereto which form part hereof (the “Conditions”), upon presentation and surrender of this debenture by the final maturity date of this debenture (July 15, 2026), the principal sum of

 

FIFTY MILLION DOLLARS

--------------------- ($50,000,000.00) ---------------------

 

by semi-annual instalments of combined (blended) principal and interest in the manner and in the amounts set forth in the attached Amortization Schedule (the “Schedule”) and subject to late payment interest charges pursuant to the Conditions, in lawful money of Canada.  Interest shall be paid until the maturity date of this debenture, in like money in semi-annual payments from the 15th day of July, 2011 or from the last date on which interest has been paid on this debenture, whichever is later at the rate of 4.01% per annum, in arrears, on the specified dates, as set forth in the Schedule (each, a “Payment Date”) in the manner provided in the Conditions.  Interest shall be paid on default at the applicable rate set out in the Conditions both before and after default and judgment.  The applicable rate of interest, the payments of principal and interest and the principal balance outstanding in each year are shown in the Schedule.

The Municipality, pursuant to section 25 of the Ontario Infrastructure and Lands Corporation Act, 2011 (the “OILC Act, 2011”) hereby irrevocably agrees that the Minister of Finance is entitled, without notice to the Municipality, to deduct from money appropriated by the Legislative Assembly of Ontario for payment to the Municipality, or from money appropriated by such Assembly for payment to the Municipality in respect of such matters as may be specified, amounts not exceeding the amounts that the Municipality fails to pay to OILC on account of the indebtedness evidenced by this debenture, and to pay such amounts to OILC.

This debenture is subject to the Conditions.

DATED at the City of Ottawa the 15th day of July, 2011.

 

IN TESTIMONY WHEREOF and under the authority of By-law Number 2011-255 of the Municipality duly passed on the 7th day of July, 2011 (the “By-law”), this debenture is sealed with the municipal seal of the Municipality and signed by the Mayor and by the Treasurer thereof.

 

Date of Registration:  July 15, 2011

_________________________      (seal)        _________________________
Jim Watson, Mayor                                          Marian Simulik
, Treasurer


 


Amortizing Debenture Schedule

 


 

OILC hereby agrees that the Minister of Finance is entitled to exercise certain rights of deduction pursuant to section 25 of the OILC Act, 2011 as described in this debenture.

                                                                                    Ontario Infrastructure and Lands Corporation

 

                                                                                    by:                                                                                                                                                                    Authorized Signing Officer

 

 

 
 

 

 

 

 

 

 


LEGAL OPINION

 

We have examined the By-law of the City of Ottawa authorizing the issue of amortizing debentures in the principal amount of $50,000,000.00 dated July 15, 2011 and maturing on July 15, 2026 and payable in semi-annual instalments of combined (blended) principal and interest on such days in January and July as are set out in the Schedule in each year commencing on January 16, 2012 and ending on July 15, 2026, both inclusive.

 

In our opinion, the By-law has been properly passed and is within the legal powers of the City of Ottawa.  The debenture issued under the By-law in the within form (the Debenture) is the direct, unsecured and unsubordinated obligation of the City of Ottawa.  The Debenture is enforceable against the City of Ottawa subject to the special jurisdiction and powers of the Ontario Municipal Board over defaulting municipalities under the Municipal Affairs Act, as amended.  This opinion is subject to and incorporates all the assumptions, qualifications and limitations set out in our opinion letter.

 

July 15, 2011

                                                                                                                                                                 

 

 

__________________________

Borden Ladner Gervais LLP

 

 


CONDITIONS OF THE DEBENTURE

 

Form, Denomination, and Ranking of the Debenture

1.         The debentures issued pursuant to the By-law (collectively the “Debentures” and individually a “Debenture”) are issuable as fully registered Debentures without coupons.

 

2.         The Debentures are direct, unsecured and unsubordinated obligations of the City of Ottawa.  The Debentures rank concurrently and equally in respect of payment of principal and interest with all other debentures of the City of Ottawa except for the availability of money in a sinking or retirement fund for a particular issue of debentures.

 

3.         This Debenture is one fully registered Debenture registered in the name of OILC and held by OILC. 

 

Registration

4.         The City of Ottawa shall maintain at its designated office a registry in respect of the Debentures in which shall be recorded the names and the addresses of the registered holders and particulars of the Debentures held by them respectively and in which particulars of the cancellation, exchanges, substitutions and transfers of Debentures, may be recorded and the City of Ottawa is authorized to use electronic, magnetic or other media for records of or related to the Debentures or for copies of them.

 

Title

5.         The City of Ottawa shall not be bound to see to the execution of any trust affecting the ownership of any Debenture or be affected by notice of any equity that may be subsisting in respect thereof.  The City of Ottawa shall deem and treat registered holders of Debentures, including this Debenture, as the absolute owners thereof for all purposes whatsoever notwithstanding any notice to the contrary and all payments to or to the order of registered holders shall be valid and effectual to discharge the liability of the City of Ottawa on the Debentures to the extent of the sum or sums so paid.  Where a Debenture is registered in more than one name, the principal of and interest from time to time payable on such Debenture shall be paid to or to the order of all the joint registered holders thereof, failing written instructions to the contrary from all such joint registered holders, and such payment shall constitute a valid discharge to the City of Ottawa.  In the case of the death of one or more joint registered holders, despite the foregoing provisions of this section, the principal of and interest on any Debentures registered in their names may be paid to the survivor or survivors of such holders and such payment shall constitute a valid discharge to the City of Ottawa.

Payments of Principal and Interest

6.         The record date for purposes of payment of principal of and interest on the Debentures is as of 5:00 p.m. on the sixteenth calendar day preceding any Payment Date including the maturity date.  Principal of and interest on the Debentures are payable by the City of Ottawa to the persons registered as holders in the registry on the relevant record date.  The City of Ottawa shall not be required to register any transfer, exchange or substitution of Debentures during the period from any record date to the corresponding Payment Date.

 

7.         The City of Ottawa shall make all payments in respect of semi-annual instalments of combined (blended) principal and interest on the Debentures on each Payment Date commencing on January 16, 2012 (other than in respect of the final payment of principal and outstanding interest on the final maturity date upon presentation and surrender of this Debenture) by pre-authorized debit in respect of such interest and principal to the credit of the registered holder on such terms as the City of Ottawa and the registered holder may agree.

 

8.         The City of Ottawa shall pay to the registered holder interest on any overdue amount of principal or interest in respect of any Debenture, both before and after default and judgment, at a rate per annum equal to the greater of the rate specified on the Schedule as attached to and forming part of the Debenture for such amount plus 200 basis points (2% per annum) or Prime Rate (as defined below) plus 200 basis points (2% per annum), calculated on a daily basis from the date such amount becomes overdue for so long as such amount remains overdue and the City of Ottawa shall pay to the registered holder any and all costs incurred by the registered holder as a result of the overdue payment.

 

9.         Whenever it is necessary to compute any amount of interest in respect of the Debentures for a period of less than one full year, other than with respect to regular semi-annual interest payments, such interest shall be calculated on the basis of the actual number of days in the period and a year of 365 days or 366 days, as appropriate.

10.       Payments in respect of principal of and interest on the Debentures shall be made only on a day on which banking institutions in Toronto, Ontario and Ottawa, Ontario, are not authorized or obligated by law or executive order to be closed (a “Business Day”), and if any date for payment is not a Business Day, payment shall be made on the next following Business Day as noted on the Schedule and no further interest shall be paid in respect of the delay in such payment.

 

11.       The Debentures are transferable or exchangeable at the office of the Treasurer of the City of Ottawa upon presentation for such purpose accompanied by an instrument of transfer or exchange in a form approved by the City of Ottawa and which form is in accordance with the prevailing Canadian transfer legislation and practices, executed by the registered holder thereof or such holder’s duly authorized attorney or legal personal representative, whereupon and upon registration of such transfer or exchange and cancellation of the Debenture or Debentures presented, a new Debenture or Debentures of an equal aggregate principal amount in any authorized denomination or denominations will be delivered as directed by the transferee, in the case of a transfer or as directed by the registered holder in the case of an exchange.

 

12.       The City of Ottawa shall issue and deliver new Debentures in exchange or substitution for Debentures outstanding on the registry with the same maturity and of like form which have become lost, stolen, mutilated, defaced or destroyed, provided that the applicant therefore shall have: (a) paid such costs as may have been incurred in connection therewith; (b) (in the case of a lost, stolen or destroyed Debenture) furnished the City of Ottawa with such evidence (including evidence as to the certificate number of the Debenture in question) and indemnity in respect thereof satisfactory to the City of Ottawa in its discretion; and (c) surrendered to the City of Ottawa any mutilated or defaced Debentures in respect of which new Debentures are to be issued in substitution.

 

13.       The Debentures issued upon any registration of transfer or exchange or in substitution for any Debentures or part thereof shall carry all the rights to interest if any, accrued and unpaid which were carried by such Debentures or part thereof and shall be so dated and shall bear the same maturity date and, subject to the provisions of the By-law, shall be subject to the same terms and conditions as the Debentures in respect of which the transfer, exchange or substitution is effected.

 

14.       The cost of all transfers and exchanges, including the printing of authorized denominations of the new Debentures, shall be borne by the City of Ottawa.  When any of the Debentures are surrendered for transfer or exchange the Treasurer of the City of Ottawa shall: (a) in the case of an exchange, cancel and destroy the Debentures surrendered for exchange; (b) in the case of an exchange, certify the cancellation and destruction in the registry; and (c) enter in the registry particulars of the new Debenture or Debentures issued in exchange.

 

15.       Reasonable fees for the substitution of a new Debenture or new Debentures for any of the Debentures that are lost, stolen, mutilated, defaced or destroyed and for the replacement of lost, stolen, mutilated, defaced or destroyed principal and interest cheques may be imposed by the City of Ottawa.  Where new Debentures are issued in substitution in these circumstances the City of Ottawa shall: (a) treat as cancelled and destroyed the Debentures in respect of which new Debentures will be issued in substitution; (b) certify the deemed cancellation and destruction in the registry; (c) enter in the registry particulars of the new Debentures issued in substitution; and (d) make a notation of any indemnities provided.

 

16.       If OILC elects to terminate its obligations under the financing agreement entered into between the parties, OILC, at its discretion, shall assess any losses that it may incur as a result of the termination as follows: if on the date of termination the outstanding principal balance on the Debenture is less than the Net Present Value of the Debenture, the City of Ottawa shall pay the difference between these two amounts to OILC.

 

Notices

 

17.       Except as otherwise expressly provided herein, any notice required to be given to a registered holder of one or more of the Debentures will be sufficiently given if a copy of such notice is mailed or otherwise delivered to the registered address of such registered holder.  If the City of Ottawa or any registered holder is required to give any notice in connection with the Debentures on or before any day and that day is not a Toronto Business Day (as defined in section 10 of these Conditions) then such notice may be given on the next following Toronto Business Day.

Time

 

18.       Unless otherwise expressly provided herein, any reference herein to a time shall be considered to be a reference to Toronto time.

Governing Law

19.       The Debentures are governed by and shall be construed in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable in Ontario.

                                                            

 

 

Definitions:

(a)                “Net Present Value” will be calculated based on the following formulae: For Serial Debenture – [(principal) / (1+(r/2))^n ] + [interest payment /(r/2))*(1-(1/(1+(r/2))^n)] for each remaining serial principal repayment or for Amortizing Debenture – [loan payment /(r/2))*(1-1/(1+(r/2))^n)], where “r” is the prevailing lending rate less an appropriate basis point deduction for costs incurred and “n” is the number of semi-annual periods to maturity.

(b)        Prime Rate” means, on any day, the annual rate of interest which is the arithmetic mean of the prime rates announced from time to time by the five major Canadian Schedule I banks, as of the issue date of this Debenture, Royal Bank of Canada, Canadian Imperial Bank of Commerce, The Bank of Nova Scotia, Bank of Montreal and The Toronto-Dominion Bank (the “Reference Banks”) as their reference rates in effect on such day for Canadian dollar commercial loans made in Canada. If fewer than five of the Reference Banks quote a prime rate on such days, the “Prime Rate” shall be the arithmetic mean of the rates quoted by the remaining Reference Banks.

 


CITY OF OTTAWA

SCHEDULE “C” TO BY-LAW NO. 2011-255


 

CITY OF OTTAWA

SCHEDULE “C” TO BY-LAW NO. 2011-255

 


 

 

                                                            BY-LAW NO. 2011-255

 

                                                            -o-o-o-o-o-o-o-o-o-o-o-o-o-o-o-o-o-

A by-law of the City of Ottawa to authorize the borrowing upon amortizing debentures in the principal amount of $50,000,000.00 towards the cost of certain capital works of the City of Ottawa.

                                                            -o-o-o-o-o-o-o-o-o-o-o-o-o-o-o-o-o-

 

Enacted by Debenture Committee at its meeting of July 7, 2011

 

                                                            -o-o-o-o-o-o-o-o-o-o-o-o-o-o-o-o-o-

 

                                                            LEGAL SERVICES

                                                            amp – •

 

DEBENTURE COMMITTEE AUTHORITY:

DC Report 3, Item 1