Legal Opinions – Canadian

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July 31, 2000

The Manitoba Hydro-Electric Board
820 Taylor Avenue
Winnipeg MB R3C 2P4

Dear Sirs:

Re:
Issue of Short Term Promissory Notes
Our Matter No. 0053037 GWA

We understand that The Manitoba Hydro-Electric Board (the “Corporation”) proposes to borrow or raise money from time to time for temporary purposes under the authority of Section 30 of The Manitoba Hydro Act (the “Act”) by way of the issue and sale of short term promissory notes guaranteed as to principal and interest, if any (the “Guarantee”) by the Government of Manitoba (the “Notes”), the Notes to be issued in principal amounts of not less than $100,000.00 or multiples thereof to a maximum of $500,000,000 and to be issued and sold in Canada for terms not to exceed one year from the respective dates of issue thereof and/or to be issued and sold in the United States for terms not to exceed nine months from the respective dates of issue thereof.

You have requested our opinion in connection with the issue by the Corporation from time to time of the Notes and in that regard, we have examined the following:

  1. The Manitoba Hydro Act, Revised Statutes of Manitoba, 1987, c.H-190, as amended;
  2. Insurance Companies Act (Canada), Statutes of Canada 1991, c.47, as amended;
  3. Trust and Loan Companies Act (Canada), Statutes of Canada 1991, c.45, as amended;
  4. Pension Benefits Standards Act, 1985 (Canada), Revised Statutes of Canada, 1985, c.32 (2nd Supp.), as amended;
  5. Income Tax Act (Canada), Revised Statutes of Canada, 1952, c.148, as amended;
  6. Copy of a Resolution passed by the Board of the Corporation on August 25, 1992, certified on July 31, 2000 as being in full force and effect;
  7. Copy of a Resolution passed by the Board of the Corporation on August 20, 1998, certified on July 31, 2000 as being in full force and effect;
  8. Certified copy of Order of the Lieutenant Governor in Council of the Province of Manitoba No. 815/1992, certified on July 31, 2000;
  9. Form of discount promissory note and form of interest bearing promissory note to be used in the issue and sale of the Notes;
  10. Information Memorandum of the Corporation, dated July 31, 2000 regarding the issue of the Notes;
  11. Opinion of Torys, Ontario special counsel, dated July 31, 2000 and opinions of counsel in the Provinces and Territories of Canada other than Manitoba and Ontario.

Based upon, subject to and relying on the foregoing, we are of the opinion that:

  1. The Corporation is a duly constituted and existing Corporation under the laws of the Province of Manitoba and is an agent of the Crown in right of the Province of Manitoba;
  2. The Corporation has the legal capacity and authority to issue, from time to time, the Notes, not to exceed, in the aggregate, the principal amount outstanding at any one time of $500,000,000 in Canadian or U.S. funds and/or in any other currency of any country not exceeding, in the aggregate, an amount of principal outstanding at any time equivalent to $500,000,000 in Canadian funds as calculated in the manner prescribed in Section 35 of the Act, and all necessary actions have been duly taken by the Corporation and all necessary authorizations and approvals under the laws of the Province of Manitoba have been duly obtained for the authorization, execution, issuance, sale and delivery of the Notes;
  3. Each of the Notes, when issued in either of the two forms set forth in the Corporation’s Information Memorandum and when signed manually or by facsimile signature by the Chairman and the Secretary of the Corporation, as authorized for that purpose by Resolution of the Board of the Corporation, and when manually countersigned by an officer appointed by the Corporation for that purpose, (the President and Chief Executive Officer, Vice-President, Finance and Chief Financial Officer, Treasurer or Treasury Officer of the Corporation, or any person duly appointed for that purpose by a chartered bank or trust company authorized by the Corporation to act as an agent of the Corporation for the purposes of issuing and paying the Notes, and each of them, being an authorized signing officer for that purpose) and when delivered by or on behalf of the Corporation for value, will constitute a legal, valid and binding obligation of the Corporation, and when bearing the Guarantee by the Government of Manitoba (the “Government”) of the payment of the principal thereof and the interest thereon, if any, signed by the Minister of Finance of the Province of Manitoba as provided in Order of the Lieutenant Governor in Council No. 815/1992, will constitute a legal, valid and binding obligation of the Government. The giving of the Guarantee endorsed on each of the Notes has been duly authorized under the laws of the Province of Manitoba and the Order of the Lieutenant Governor in Council of the Province applicable thereto;
  4. No filing or registration is necessary in order for the Corporation to offer, sell and distribute the Notes to the public in any of the Provinces or Territories of Canada, except that in the Province of Quebec, any disclosure document must be filed without delay with the Quebec Securities Commission;
  5. In the Province of British Columbia, if the recipient of the Notes is an individual, the Notes must have, at the date of sale, a credit rating equal to or higher than P-1 from Moody’s Investors Service, Inc., A-1 from Standard & Poor’s Corporation, A-1 (low) from Canadian Bond Rating Services Inc., or R-1-L from Dominion Bond Rating Services Limited;
  6. As at the date hereof, the Notes are eligible investments in which, subject to general investment provisions, conditions and restrictions pertaining generally to purchasers or to a specific purchaser:
    1. the provisions of the Insurance Companies Act (Canada) and the Regulations thereunder would not, subject to compliance with the prudent investment standards and the investment policies, standards and procedures contemplated by such Act, preclude funds of an insurance company governed by such Act from being invested;
    2. the provisions of the Trust and Loan Companies Act (Canada) and the Regulations thereunder would not, subject to compliance with the prudent investment standards and the investment standards, policies and procedures contemplated by such Act, preclude funds of a company, as defined in and governed by such Act, from being invested;
    3. by virtue of Section 9(3)(d) of Schedule III to the Regulations enacted pursuant to the Pension Benefit Standards Act, 1985 (Canada), the funds of a pension plan whose investment powers are determined by Schedule III of the said Regulations may be invested;
    4. the provisions of the Loan and Trust Corporations Act (Ontario) and the Regulation thereunder would not, subject to compliance with the prudent investment standards of the Act, preclude the funds received as deposits by registered corporations (as defined in that Act) from being invested;
    5. by virtue of Section 433(1)(a) and Section 434 of the Insurance Act (Ontario), an insurer incorporated or organized under the laws of Ontario may, under such Act, and without resorting to the provisions of Section 433(4) thereof, invest its funds; and
    6. the provisions of the Pension Benefits Act (Ontario) and the Regulation thereunder would not preclude the funds of a pension plan regulated thereunder from being invested, provided that:
      1. if the plan administrator is investing the assets of the plan in accordance with such Regulation as it read on December 30, 1999, the Notes are within a category or sub-category of investment that is specifically permitted by, and for which guidelines are established in, the statement of investment policies and goals for such plan filed under that Act, and provided further that such investment is in compliance with the prudent investment standards of that Act; or
      2. if the plan administrator is investing the assets of the plan in accordance with sections 6, 7, 7.1, and 7.2 and Schedule III to the Regulation under the Pension Benefits Standards Act, 1985 (Canada) as it read on December 31, 1999, as incorporated by reference into the Regulation under the Pension Benefits Act (Ontario), the investment by such plan in the Notes adheres to the investment criteria established thereunder, and provided further that such investment is in compliance with the prudent investment standards of the Pension Benefits Act (Ontario);
  7. There are no withholding taxes payable under the laws of Canada or of the Province of Manitoba in respect of the Notes or the interest thereon, if any, by owners who are non-residents of Canada; there are not other income taxes or capital gains taxes payable under the laws of Canada or of the Province of Manitoba in respect of the Notes or the interest thereon, if any, by owners who are non-residents of Canada who do not use or hold the Notes in carrying on business in Canada.

Our opinion expressed herein is given on the basis of the laws as they exist on the date hereof. We assume no responsibility to update our opinion if the laws are, subsequent to the date hereof, amended, revoked, revised or supplemented in any way which impacts on the opinion contained herein.

Yours very truly,

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