Hydro One Replaces Board as Quarterly Profit Beats Estimates

(Bloomberg) -- Hydro One Ltd. has replaced its board after its former directors were ousted by Ontario Premier Doug Ford in a mission to overhaul the Toronto-based utility.

The 10 new members include Tom Woods, a former vice chairman at Canadian Imperial Bank of Commerce who will act as interim board chairman, Cherie Brant, a partner at law firm Dickinson Wright PLLC, and Timothy Hodgson, managing partner at Alignvest Management Corp.

“This highly-qualified board has strong governance and industry experience and brings with them significant electricity, business and capital markets expertise,” Hydro One’s acting Chief Executive Officer Paul Dobson said in a statement on Tuesday.

The previous board resigned along with former Hydro One CEO Mayo Schmidt in July after Ford fulfilled an election promise to oust management as part of a drive to lower electricity costs in Canada’s most populous province. Multiple Bay Street analysts downgraded Hydro One’s stock shortly thereafter, while noting risk to the company’s pending merger with U.S. power supplier Avista Corp.

The new board will kicking off a search for a permanent CEO, Dobson said. “I imagine that is a very high priority for them,” he said on the earnings call. “We look forward to working with them to help them in that regard."

The company also reported second-quarter adjusted earnings on Tuesday of 33 cents a share, which beat the 25-cent average of 12 analysts’ estimates compiled by Bloomberg. RBC Dominion Securities Inc. said solid results will continue to be overlooked.

“With the political uncertainty with respect to the environment for Hydro One in Ontario in addition to uncertainty with respect to the Avista transaction, we believe these items will overshadow” the results, analyst Robert Kwan said in a note.

Hydro One shares rose 1.4 percent to C$19.37 at 10:19 a.m. in Toronto and are down 14 percent this year. The stock has three buy ratings, 11 holds and three sells, according to data compiled by Bloomberg.

To contact the reporter on this story: Michael Bellusci in Toronto at mbellusci2@bloomberg.net

To contact the editors responsible for this story: Courtney Dentch at cdentch1@bloomberg.net, Jacqueline Thorpe, Steven Frank

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