Enbridge Inc. (TSX: ENB) (NYSE: ENB) announced March 31 that it has delivered a formal proposal to the Boards of Enbridge Commercial Trust (ECT) and Enbridge Income Fund Holdings Inc. (TSX: ENF) (EIFH) to transfer Enbridge’s Canadian Liquids Pipelines business along with certain renewable energy assets to Enbridge Income Fund.
The formal proposal follows the December 2014 announcement of a proposed Canadian restructuring plan. The general terms and projected financial outcomes of the proposed transfer are substantially consistent with those originally described in that announcement.
The transaction is anticipated to provide Enbridge with an alternate source of lower-cost funding through which to support enterprise-wide growth initiatives. It would also be transformational for the Fund, significantly increasing its business scale and scope, providing a highly transparent source of long-term growth.
“This is an important step forward in the execution of the Canadian restructuring plan,” said Al Monaco, Enbridge Inc. President and Chief Executive Officer. “Our program to optimize our cost of capital for the benefit of our investors is on track.”
The proposed transfer was approved in principle by Enbridge’s Board of Directors in December 2014 but remains subject to finalization of internal reorganization steps and a number of internal and external consents and approvals, including all necessary shareholder and regulatory approvals and final approval of definitive transfer terms by the Enbridge Board. The transfer also remains subject to approval by the Boards of ECT and EIFH, following a recommendation by a joint special committee. Assuming all necessary consents and approvals are obtained, the transfer and initial investment by EIFH are targeted for completion by mid 2015.
Enbridge is also in the process of reviewing a potential parallel U.S. restructuring plan which would involve transfer of its directly held U.S. Liquids Pipelines assets to its U.S. affiliate, Enbridge Energy Partners LP. This review has not yet progressed to a conclusion.
Enbridge Inc. is a North American leader in delivering energy and has been included on the Global 100 Most Sustainable Corporations in the World ranking for the past seven years. As a transporter of energy, Enbridge operates, in Canada and the U.S., the world’s longest crude oil and liquids transportation system. It also has significant and growing involvement in natural gas gathering, transmission and midstream businesses, and an increasing involvement in power transmission. Enbridge has interests in more than 2,200 MW (1,600 MW net) of renewable and alternative energy generating capacity and is expanding its interests in wind, solar and geothermal. Enbridge employs more than 11,000 people, primarily in Canada and the United States.