CALGARY and HOUSTON, Sept. 18,
2018 /CNW/ - Enbridge Inc. (TSX: ENB) (NYSE: ENB)
(Enbridge), on behalf of itself and certain of its wholly owned
U.S. subsidiaries, Enbridge Energy Partners, L.P. (NYSE: EEP) (EEP)
and Enbridge Energy Management, L.L.C. (NYSE: EEQ) (EEQ) today
announced that they have entered into separate definitive
agreements (Agreements) under which Enbridge will acquire all of
the outstanding public Class A common units of EEP and all of the
outstanding public Listed Shares of EEQ. The acquired equity of the
combined transactions is valued at US$3.5
billion based on the closing price of Enbridge's common
shares on the New York Stock Exchange (NYSE) on September 17, 2018.
Pursuant to the Agreement for the EEP buy-in, EEP public
unitholders will receive 0.3350 common shares of Enbridge for each
Class A common unit of EEP (EEP Exchange Ratio), which represents
an 8.7% increase to the exchange ratio proposed by Enbridge on
May 17, 2018, of 0.3083 Enbridge
common shares per EEP Class A common unit. Pursuant to the
Agreement for the EEQ buy-in, EEQ public shareholders will receive
0.3350 common shares of Enbridge for each Listed Share of EEQ (EEQ
Exchange Ratio), which is at parity with the EEP Exchange
Ratio.
These Agreements, in conjunction with the definitive agreement
reached with Enbridge Income Fund Holdings Inc. (TSX: ENF) (ENF)
announced today, and the previously announced definitive agreement
reached with Spectra Energy Partners, LP (NYSE: SEP) (SEP) on
August 24, 2018, represent the
achievement of significant milestones in the simplification of
Enbridge's corporate structure. Upon closing of these buy-in
transactions, the rollup of these sponsored vehicles will
streamline Enbridge's corporate and capital structures and brings
all of the core liquids and gas pipeline assets under the umbrella
of a single publicly-traded entity to the benefit of all
shareholders and unitholders.
Benefits and Considerations for EEP Unitholders and EEQ
Shareholders
Significant weakening of the U.S. Master Limited Partnership
(MLP) capital markets has adversely affected the growth
opportunities for MLPs, including EEP. MLPs are dependent on
consistent access to capital markets at an effective cost of
capital to fund projects to grow their distributions. The
respective March 15 and July 18, 2018 income tax allowance policy
announcement and order by the Federal Energy Regulatory Commission
(FERC), and the regulatory rate impact from the U.S. Tax Cuts and
Jobs Act have had a net significant adverse impact on EEP. If EEP
were to continue as a stand-alone entity, after taking into account
its lower revenue and weak MLP capital markets, it would be
required to transition to a self-funding model with no cost
effective access to equity capital. EEP's priority would be to
strengthen its balance sheet, which would require near term
incremental Enbridge support, and reduce its distributions, which
would have corresponding negative implications to EEQ. The
transaction premiums are attractive to EEP unitholders and EEQ
shareholders, particularly in light of EEP's expected distribution
reduction as a stand-alone entity. The EEP Exchange Ratio and EEQ
Exchange Ratio represent an 8.7% and 16.0%, respectively, increase
to the exchange ratio proposed by Enbridge on May 17, 2018.
These transactions offer EEP public unitholders and EEQ public
shareholders a superior investment proposition in Enbridge common
shares, including:
- Direct ownership in the largest energy infrastructure company
in North America comprised of
premium liquids transportation, natural gas transmission and
natural gas distribution utility franchises that generate diverse,
safe and reliable cash flows
- A secured growth profile which underpins expected 10% annual
dividend growth through 2020 with substantially enhanced dividend
coverage compared to EEP standalone
- A diverse opportunity set for continued growth beyond 2020 that
is supported by a strong cost of capital
- A stronger balance sheet and superior credit profile
- Reduction in risks related to continued uncertainty and
potential unfavorable changes applied to MLPs related to the
revised FERC tax allowance policies
- Increased opportunity for further meaningful capital
appreciation as Enbridge advances its strategic priorities,
including simplification of the Enbridge corporate structure,
improved financial position and organic growth projects not
currently available to EEP shareholders
- Enhanced trading liquidity
Benefits and Considerations for Enbridge Shareholders
The buy-ins of EEP and EEQ are strategically and economically
attractive to current and future Enbridge shareholders and provide
substantial benefits, including:
- Increased ownership in its core businesses and further
enhancement of its industry-leading, low-risk profile
- Significant advancement of Enbridge's strategy to simplify and
streamline its corporate structure which further increases the
transparency of its strong cash generating assets
- Higher retention of cash generated from the EEP assets, which
will support continued strong dividend coverage and self-funded
growth
- An improved Enbridge credit profile due to the elimination of
EEP public distributions, as well as opportunities to minimize the
structural subordination of Enbridge debt
- Significant benefits to Enbridge's post 2020 outlook primarily
due to tax optimization synergies
- Reduction in risks related to uncertainty and potential
unfavorable changes associated with regulatory tax policies applied
to MLPs and incremental Enbridge support required by EEP in
difficult capital markets
- No change to consolidated EBITDA following completion of the
EEP and EEQ buy-in transactions since the assets held by EEP and
EEQ are already managed and operated by Enbridge's U.S.
subsidiaries and consolidated for accounting purposes by
Enbridge
Considering these transactions, in combination with the ENF and
SEP buy-ins, there is no change to Enbridge's current three year
financial guidance, including the 10% dividend growth rate through
2020, supported by several positive developments in the business,
including the success of Enbridge's recent asset divestiture
program which has exceeded expectations.
Other Information
As a result of the mergers provided for under the Agreements,
Enbridge would acquire all of the 215.7 million public outstanding
Class A common units of EEP and all of the public outstanding
Listed Shares of EEQ at the time of the closing, which currently
total 87.1 million shares, at an agreed exchange ratio of 0.3350
common shares of Enbridge for each Class A common unit of EEP and
each Listed Share of EEQ. In aggregate, based on these fixed
exchange ratios, Enbridge would issue an estimated 101.4 million
Enbridge common shares in connection with these transactions,
representing approximately 6% of the total number of Enbridge
common shares outstanding. Following consummation of the mergers,
EEP and EEQ will become wholly owned subsidiaries of
Enbridge.
A more detailed description of the Agreements will be set forth
in an Enbridge Current Report on Form 8-K that it expects to file
with the Securities and Exchange Commission (SEC) after markets
close on September 18, 2018.
The transactions have been approved by the board of directors of
Enbridge and certain of its wholly owned U.S. subsidiaries. The
board of directors of EEQ, in its capacity as the delegate of the
general partner of EEP (in such capacity, EEP Board) and the board
of directors of EEQ (EEQ Board) delegated to their respective
special committees consisting solely of independent directors (EEP
Special Committee and EEQ Special Committee), the authority to
review, evaluate and negotiate the proposed buy-in on behalf of EEP
and EEQ, respectively. The respective EEP and EEQ Special
Committees unanimously approved the respective EEP and EEQ buy-in
transactions and recommended approval of the transactions to the
EEP and EEQ Boards. The EEP transaction has been approved by the
EEP Board based on the recommendation, and the EEQ transaction has
been approved by the EEQ Board based on the recommendation. Each of
the EEP Board and the EEQ Board unanimously recommends that the EEP
unitholders and EEQ shareholders vote in favor of the respective
Agreements.
Pursuant to the agreement for the EEP buy-in transaction,
approval of (i) at least two-thirds of the outstanding limited
partner units of EEP and (ii) a majority of the outstanding Class A
common units of EEP (other than Class A common units held by
Enbridge and its affiliates) and the outstanding I-Units of EEP
held by EEQ (other than I-Units voted at the direction of Enbridge
and its affiliates), voting as a single class, is required to close
that transaction.
Pursuant to the Agreement for the EEQ buy-in transaction,
approval of a majority of the outstanding Listed Shares of EEQ
(other than the Listed Shares held by Enbridge and its affiliates)
is required to close the transaction. The closing of the EEP buy-in
transaction is a condition to close the EEQ buy-in transaction.
Voting is to occur in person or by proxy at respective special EEP
unitholder and EEQ shareholder meetings called to consider the
Agreements, targeted to be held late in the fourth quarter of
2018.
The respective closing of the EEP and EEQ buy-in transactions
are also targeted to occur late in the fourth quarter, and in each
case, will be subject to securing the respective EEP unitholder and
EEQ shareholder approvals referenced above and other customary
closing conditions. Therefore, subject to EEQ Board approval, EEP
is expected to pay a cash distribution to its unitholders and EEQ
is expected to pay a stock dividend to its shareholders in the
fourth quarter consistent with previously disclosed distribution
and dividend guidance.
After being filed, EEP unitholders and EEQ shareholders will be
able to obtain copies of the proxy statement/prospectus related to
the EEP buy-in transaction and the proxy statement/prospectus
related to the EEQ buy-in transaction, without charge, at the SEC's
internet site (http://www.sec.gov).
BofA Merrill Lynch and Scotiabank acted as financial advisors to
Enbridge. McCarthy Tetrault LLP, Sullivan & Cromwell LLP and
Vinson & Elkins LLP acted as Canadian legal and tax, U.S. legal
and U.S. tax advisors, respectively, to Enbridge.
Evercore acted as financial advisor to the EEP Special Committee
and Goldman Sachs &Co. LLC acted as financial advisor to the
EEQ Special Committee, while Bracewell LLP and Morris, Nichols,
Arsht & Tunnell LLP acted as legal advisor to the EEP Special
Committee and the EEQ Special Committee.
Forward-Looking Statements
This communication includes "forward-looking statements" within
the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. Forward‑looking
statements are based on the beliefs and assumptions of Enbridge
Inc. ("Enbridge"), Enbridge Energy Partners, L.P. ("EEP"), Enbridge
Energy Management, L.L.C. ("EEQ"), Spectra Energy Partners, LP
("SEP"), and Enbridge Income Fund Holdings Inc. ("ENF" and,
together with EEP, EEQ and SEP, the "Sponsored Vehicles"). These
forward-looking statements are identified by terms and phrases such
as: anticipate, believe, intend, estimate, expect, continue,
should, could, may, plan, project, predict, will, potential,
forecast and similar expressions and include, but are not limited
to, statements regarding the expected closing, consummation,
completion, timing and benefits of the proposed acquisitions of the
Sponsored Vehicles (collectively , the "Proposed Transactions"),
the expected synergies and equity holder value to result from the
combined companies, the expected levels of cash distributions or
dividends by the Sponsored Vehicles to their respective
shareholders or unitholders, the expected levels of dividends by
Enbridge to its shareholders, the expected financial results of
Enbridge and its Sponsored Vehicles and their respective
affiliates, and the future credit ratings, financial condition and
business strategy of Enbridge, its Sponsored Vehicles and their
respective affiliates.
Although Enbridge and its Sponsored Vehicles believe these
forward-looking statements are reasonable based on the information
available on the date such statements are made and processes used
to prepare the information, such statements are not guarantees of
future performance and readers are cautioned against placing undue
reliance on forward-looking statements. By their nature, these
statements involve a variety of assumptions, known and unknown
risks and uncertainties and other factors, which may cause actual
results, levels of activity and achievements to differ materially
from those expressed or implied by such statements. Material
assumptions include assumptions about the following: the expected
supply of and demand for crude oil, natural gas, natural gas
liquids ("NGL") and renewable energy; prices of crude oil, natural
gas, NGL and renewable energy; exchange rates; inflation; interest
rates; availability and price of labor and construction materials;
operational reliability; customer and regulatory approvals;
maintenance of support and regulatory approvals for projects;
anticipated in-service dates; weather; the timing and closing of
dispositions; the realization of anticipated benefits and synergies
of the Proposed Transactions; governmental legislation;
acquisitions and the timing thereof; the success of integration
plans; impact of capital project execution on future cash flows;
credit ratings; capital project funding; expected earnings;
expected future cash flows; and estimated future dividends.
Assumptions regarding the expected supply of and demand for crude
oil, natural gas, NGL and renewable energy, and the prices of these
commodities, are material to and underlie all forward-looking
statements, as they may impact current and future levels of demand
for Enbridge's and its Sponsored Vehicles' services. Similarly,
exchange rates, inflation and interest rates impact the economies
and business environments and may impact levels of demand for
Enbridge's and its Sponsored Vehicles' services and cost of inputs,
and are therefore inherent in all forward‑looking statements. Due
to the interdependencies and correlation of these macroeconomic
factors, the impact of any one assumption on a forward-looking
statement cannot be determined with certainty, particularly with
respect to the impact of the Proposed Transactions, expected
earnings and cash flow or estimated future dividends.
Forward‑looking statements involve risks and uncertainties that
may cause actual results to be materially different from the
results predicted. There are a number of important factors that
could cause actual results to differ materially from those
indicated in any forward‑looking statement including, but not
limited to: the risk that the Proposed Transactions do not occur;
negative effects from the pendency of the Proposed Transactions;
the ability to realize expected cost savings and benefits from the
Proposed Transactions; the timing to consummate the Proposed
Transactions; whether the Sponsored Vehicles or Enbridge will
produce sufficient cash flows to provide the level of cash
distributions they expect with respect to their respective units or
shares; outcomes of litigation and regulatory investigations,
proceedings or inquiries; operating performance of Enbridge and its
Sponsored Vehicles; regulatory parameters regarding Enbridge and
its Sponsored Vehicles; other Enbridge dispositions; project
approval and support; renewals of rights of way; weather, economic
and competitive conditions; public opinion; changes in tax laws and
tax rates; changes in trade agreements, exchange rates, interest
rates, commodity prices, political decisions and supply of and
demand for commodities; and any other risks and uncertainties
discussed herein or in Enbridge's or its Sponsored Vehicles' other
filings with Canadian and United
States securities regulators. All forward-looking statements
in this communication are made as of the date hereof and, except to
the extent required by applicable law, neither Enbridge nor any of
the Sponsored Vehicles assume any obligation to publicly update or
revise any forward‑looking statements made in this communication or
otherwise, whether as a result of new information, future events or
otherwise. All subsequent forward‑looking statements, whether
written or oral, attributable to Enbridge, its Sponsored Vehicles
or persons acting on their behalf, are expressly qualified in their
entirety by these cautionary statements. The factors described
above, as well as additional factors that could affect Enbridge's
or any of its Sponsored Vehicles' respective forward‑looking
statements, are described under the headings "Risk Factors" and
"Cautionary Statement Regarding Forward‑Looking Information" in
Enbridge's Annual Report on Form 10-K for the fiscal year ended
December 31, 2017, which was filed
with the U.S. Securities and Exchange Commission ("SEC") and
Canadian securities regulators on February
16, 2018, each of EEP's, EEQ's and SEP's Annual Report on
Form 10-K for the fiscal year ended December
31, 2017, which were filed with the SEC on February 16, 2018, ENF's Management's Discussion
and Analysis for the year ended December 31,
2017, which was filed with Canadian securities regulators on
February 16, 2018, and in Enbridge's
and its Sponsored Vehicles' respective other filings made with the
SEC and Canadian securities regulators, which are available via the
SEC's website at www.sec.gov and at www.sedar.com, as
applicable.
Additional Information about Enbridge and the Proposed
Transactions and Where to Find It
This communication does not constitute an offer to sell or the
solicitation of an offer to buy any securities or a solicitation of
any proxies or approval. The Proposed Transactions will be
submitted to the shareholders of EEQ or ENF or unitholders of EEP
or SEP, as applicable, for their consideration. Enbridge will file
with the SEC proxy statements of EEQ and EEP, respectively, and a
consent statement of SEP, each of which will also constitute a
prospectus of Enbridge. Enbridge and its Sponsored Vehicles also
plan to file other documents with the SEC and Canadian securities
regulators regarding the Proposed Transactions. INVESTORS AND
SECURITY HOLDERS OF ENBRIDGE AND ITS SPONSORED VEHICLES ARE URGED
TO READ THE APPLICABLE REGISTRATION STATEMENT, PROXY OR CONSENT
SOLICITATION STATEMENT/PROSPECTUS AND OTHER RELEVANT DOCUMENTS THAT
WILL BE FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY WHEN
THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION ABOUT THE PROPOSED TRANSACTIONS. Investors,
shareholders and unitholders will be able to obtain free copies of
such documents containing important information about Enbridge and
its Sponsored Vehicles once such documents are filed with the SEC,
through the website maintained by the SEC at http://www.sec.gov.
Copies can also be obtained, without charge, by directing a request
to Enbridge Inc., 200, 425 – 1st Street S.W., Calgary, Alberta, Canada T2P 3L8, Attention:
Investor Relations.
Participants in the Solicitations
Enbridge, each of its Sponsored Vehicles, and certain of their
respective directors and executive officers, may be deemed
participants in the solicitation of consents or proxies from the
holders of equity securities of the Sponsored Vehicles in
connection with the Proposed Transactions. Information about the
directors and executive officers of Enbridge is set forth in its
definitive proxy statement filed with the SEC on April 5, 2018. Information about the directors
and executive officers of EEP, EEQ and SEP is set forth in EEP's,
EEQ's and SEP's Annual Report on Form 10-K for the fiscal year
ended December 31, 2017,
respectively, each of which was filed with the SEC on February 16, 2018. Information about the
directors and executive officers of ENF is set forth in ENF's
Annual Information Form for the fiscal year ended December 31, 2017, which was filed with Canadian
securities regulators on February 16,
2018. Each of these documents can be obtained free of charge
from the sources indicated above. Other information regarding the
participants in any consent or proxy solicitation with respect to
the Proposed Transactions and a description of their direct and
indirect interests, by security holdings or otherwise, will be
contained in the relevant materials to be filed by Enbridge and the
Sponsored Vehicles with the SEC when they become available.
About Enbridge Inc.
Enbridge Inc. (the Company) is North America's premier energy infrastructure
company with strategic business platforms that include an extensive
network of crude oil, liquids and natural gas pipelines, regulated
natural gas distribution utilities and renewable power generation.
The Company safely delivers an average of 2.9 million barrels of
crude oil each day through its Mainline and Express Pipeline;
accounts for approximately 65% of U.S.-bound Canadian crude oil
exports; and moves approximately 20% of all natural gas consumed in
the U.S., serving key supply basins and demand markets. The
Company's regulated utilities serve approximately 3.7 million
retail customers in Ontario,
Quebec, and New Brunswick. Enbridge also has interests in
more than 2,500 MW of net renewable generating capacity in
North America and Europe. The Company has ranked on the Global
100 Most Sustainable Corporations index for the past nine years;
its common shares trade on the Toronto and New
York stock exchanges under the symbol ENB.
Life takes energy and Enbridge exists to fuel people's
quality of life. For more information, visit
www.enbridge.com.
About Enbridge Energy Partners, L.P.
Enbridge Energy Partners, L.P. owns and operates a
diversified portfolio of crude oil transportation systems in
the United States. Its principal
crude oil system is the largest pipeline transporter of growing oil
production from western Canada and
the North Dakota Bakken formation. The system's deliveries to
refining centers and connected carriers in the United States account for approximately 25
percent of total U.S. oil imports. Enbridge Energy Partners, L.P.
is traded on the New York Stock Exchange under the symbol EEP;
information about the partnership is available on its website
at www.enbridgepartners.com.
About Enbridge Energy Management, L.L.C.
Enbridge Energy Management, L.L.C. manages the business and
affairs of Enbridge Energy Partners, L.P. (EEP), and its sole asset
is an approximate 21 percent limited partner interest in EEP.
Enbridge Energy Company, Inc., an indirect wholly owned subsidiary
of Enbridge Inc. of Calgary, Alberta,
Canada (NYSE: ENB) (TSX: ENB) is the general partner of EEP
and holds an approximate 35 percent interest in the partnership.
Enbridge Energy Management is the delegate of the general partner
of EEP.
FOR FURTHER INFORMATION PLEASE CONTACT:
Media:
Michael
Barnes
Toll Free: (888) 992-0997
Email: media@enbridge.com
Investment Community:
Enbridge Inc.
Jonathan
Gould
Toll Free: (800) 481-2804
Email: investor.relations@enbridge.com
Enbridge Energy Partners, L.P. & Enbridge Energy
Management, L.L.C.
Roni Cappadonna
Toll Free: (800) 481-2804
Email: investor.relations@enbridge.com
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SOURCE Enbridge Inc.