Legal opinions - U.S.

Sullivan and Cromwell letterhead

July 31, 2000

The Manitoba Hydro-Electric Board,
P.O. Box 815-STN Main,
Winnipeg, Manitoba R3C 2P4,
Canada.

Ladies and Gentlemen:

We have acted as special United States counsel for The Manitoba Hydro-Electric Board (“Manitoba Hydro”) in connection with the proposed issuance and sale by Manitoba Hydro of its short-term promissory notes in maturities not exceeding nine months (the “Notes”), bearing the guarantees (the “Guarantees”) of the Government of Manitoba (the “Government”) and being delivered pursuant to a letter agreement, dated October 17, 1983 (the “Agency Agreement”), between Manitoba Hydro and The Bank of New York (the “Agent”). In such capacity we have examined such documents and such questions of United States Federal and New York law as we have considered necessary or appropriate for the purposes of this opinion, and on the basis of the foregoing, we advise you that, in our opinion:

  1. The Agency Agreement has been duly authorized, executed and delivered and constitutes a valid and legally binding agreement of Manitoba Hydro.
  2. The Notes have been duly authorized and, when executed, countersigned and delivered against payment in accordance with the Agency Agreement, will constitute valid and legally binding obligations of Manitoba Hydro.
  3. The Guarantees have been duly authorized and, when endorsed on Notes duly delivered against payment in accordance with the Agency Agreement, will constitute valid and legally binding obligations of the Government.

Our opinion contained in paragraphs (2) and (3) above is subject to the qualification that the aggregate principal amount of Notes outstanding at any one time shall not exceed $500,000,000 in Canadian and/or U.S. funds and/or equivalent Canadian funds in other foreign currencies.

In rendering the foregoing opinion, to the extent that it involves matters governed by the laws of Canada and Manitoba, we have relied on the opinion, dated the date hereof, of Thompson, Dorfman, Sweatman, special counsel to Manitoba Hydro. We have also assumed that the signatures on all documents examined by us are genuine.

A copy of this opinion may be delivered to Moody’s Investors Service, Inc., Standard & Poor’s Corporation and The Bank of New York, each of which may rely hereon as if this opinion were addressed to it individually.

Very truly yours,

Sullivan and Cromwell signature

Sullivan and Cromwell letterhead

July 31, 2000

The Manitoba Hydro-Electric Board,
P.O. Box 815-STN Main,
Winnipeg, Manitoba R3C 2P4,
Canada.

Ladies and Gentlemen:

We have acted as special United States counsel for The Manitoba Hydro-Electric Board (“Manitoba Hydro”) with respect to the proposed issuance and sale by Manitoba Hydro of short-term promissory notes (the “Notes”) bearing the guarantees (the “Guarantees”) of the Government of Manitoba (the “Guarantor”).

You have requested our opinion regarding the availability of an exemption for the Notes and the Guarantees from the registration requirements of the United States Securities Act of 1933, as amended (the “Securities Act”), and from the requirement to qualify an indenture with respect to the Notes and the Guarantees under the United States Trust Indenture Act of 1939, as amended (the “Trust Indenture Act”). We have been advised by you and understand that the Notes will be issued under the circumstances, and subject to the conditions, set forth below.

The Notes will be bought and resold by dealers and investment bankers as principals (or in some instances sold through them acting as agents) and will be offered and sold by them solely to institutional investors and other entities and individuals who normally purchase commercial paper in large denominations. The maturity of the Notes offered or sold in the United States will not be more than nine months from the date of issuance. Notes with maturities exceeding nine months may be offered or sold outside the United States, but will not be offered or sold to any investor within the United States, including by means of any general solicitation or advertising. The Notes will not contain any provision for extension or automatic roll-over, either at the option of the holder or the option of Manitoba Hydro. The Notes will be issued in bearer form or registered in the name of the holder and will be interest bearing with principal and interest payable at maturity or issued at a discount to mature at the principal amount. The Notes will be issued in multiples of $100,000 in Canadian and/or U.S. funds and/or equivalent Canadian funds in other foreign currencies at the time of issue. All Notes issued by Manitoba Hydro will be rated in one of the highest two categories by at least one nationally recognized rating organization. The aggregate principal amount of Notes outstanding at any one time shall not exceed the lesser of $500,000,000 in Canadian and/or U.S. funds and/or equivalent Canadian funds in other foreign currencies and the amount determined in accordance with the formula described below (computed at the date of issuance of a Note). Manitoba Hydro will maintain lines of credit, in Canadian and U.S. funds, and liquid assets in amounts which, at all times in its opinion, will be sufficient to meet the payment of outstanding Notes.

Prospective purchasers will be furnished an information memorandum containing certain summary information regarding Manitoba Hydro and the Guarantor.

The proceeds from the sale of the Notes will be added to the general funds of Manitoba Hydro which are utilized to meet a variety of cash expenditure requirements. Thus, it will normally not be possible to identify the use of the proceeds from the Notes with specific transactions. However, Manitoba Hydro will limit the issuance of the Notes so that the amount of Notes outstanding at any particular time will not exceed the sum of its:

  1. bank balances and temporary investments of duration less than one year;
  2. accounts receivable, accrued revenue and other current assets;
  3. interest receivable;
  4. materials and supplies;
  5. depreciation charges for the preceding fiscal year;
  6. general operating and administrative expenses, such as salaries, pension payments and other wage-related expenditures and
  7. water rentals of a term less than one year for the preceding fiscal year.

For purposes of applying this limitation formula, amounts in Canadian dollars will be translated into U.S. dollars at the noon spot exchange rate on the date of determination for U.S. dollars against Canadian dollars quoted by the Bank of Canada.

As of March 31, 2000, the latest date for which audited financial information is available, and for the period then ending, the total amount available under the above formula was approximately Canadian $890,000,000. Converted into U.S. dollars at the noon spot exchange rate for U.S. dollars against Canadian dollars quoted by the Bank of Canada on March 31, 2000 (U.S. $0.6880 per Canadian dollar), this would equal approximately U.S. $612,000,000. Accordingly, the aggregate principal amount of Notes outstanding on that date would have been restricted to U.S. $500,000,000.

On the basis of the foregoing, relying upon representations from Manitoba Hydro and our understandings referred to above, we are of the opinion that

  1. the Notes and the Guarantees offered in the United States will constitute exempt securities under Section 3(a)(3) of the Securities Act,
  2. the Notes and the Guarantees may be offered outside the United States in the manner contemplated above in reliance on Regulation S under the Securities Act and
  3. consequently registration of the Notes and the Guarantees under the Securities Act is not required in order that the Notes may be sold in the manner contemplated above nor is the qualification of an indenture with respect thereto required under the Trust Indenture Act.

You are authorized to deliver copies of this opinion to Moody’s Investors Service, Inc., Standard & Poor’s Corporation and The Bank of New York, each of which may rely upon this opinion as if it were addressed to them.

Very truly yours,

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