Enbridge agrees on Canadian pipeline business transfer

Enbridge Inc. has reached agreement with Enbridge Income Fund to transfer its Canadian Liquids Pipelines Business, held by Enbridge Pipelines Inc. and Enbridge Pipelines Athabasca Inc., and certain Canadian renewable energy assets to the fund for consideration payable at closing valued at CAN$30.4 billion.

The transaction is subject to customary regulatory approvals and closing conditions, as well as a vote of the public shareholders of Enbridge Income Fund Holdings Inc., which is expected to occur in August 2015.

That is a key component of Enbridge's Financial Strategy Optimisation introduced in December of last year, which included an increase in the company's targeted dividend payout.

It advances the company's sponsored vehicle strategy and supports Enbridge's previously announced 33% dividend increase in 2015 and expected annual average dividend per share (DPS) growth of 14 to 16% from 2016 through to 2018.

It also positions Enbridge to extend its industry leading DPS growth beyond 2018.

The transaction is expected to provide Enbridge with an alternate source of funding for its enterprise wide growth initiatives and enhance its competitiveness for new organic growth opportunities and asset acquisitions.

In conjunction with the execution of the transaction, Enbridge will commence employing supplemental cash flow metrics as part of its normal course quarterly reporting of financial performance and in its guidance.

Among other measures, management also expects to utilise available cash flow from operations (ACFFO), as defined under Non-GAAP Measures below, to assess the performance of its base business and expected growth programme as well as its dividend outlook.

"We are very pleased to have reached an agreement with the fund on what we believe is truly a win-win transaction for shareholders of both Enbridge and Enbridge Income Fund Holdings," said Al Monaco, President and Chief Executive Officer, Enbridge Inc.

"For Enbridge, this transaction and our previously announced increase in dividend payout enhances the value of our existing assets and industry leading CAN$44 billion capital programme. Strategically, we believe the transaction should allow us to further improve our competitiveness to capture new investment opportunities and position Enbridge to deliver industry leading growth beyond 2018. The change to our structure is expected to generate even greater shareholder value from our business plan by reducing our overall cost of equity capital, allowing us to accelerate dividend growth and further diversify our sources of funding. Adopting an ACFFO reporting metric and guidance will more clearly convey the compelling cash flow and dividend growth that we expect our reliable business model will generate through the current planning horizon and beyond.

"For the fund, the transaction will be transformational," said Mr. Monaco. "It will provide greater asset scale and more visible sources of low risk growth and we believe it will position the fund as the premier liquids pipelines vehicle in Canada. The combination of asset quality, visible growth and superior dividend growth helps establish ENF and the Fund as highly effective and sustainable sources of equity and debt capital."

Edited from source by Elizabeth Corner

Read the article online at: https://www.worldpipelines.com/business-news/22062015/enbridge-agrees-on-canadian-pipeline-business-transfer/