Enbridge Income Fund

Enbridge Income Fund

March 29, 2010 19:18 ET

Enbridge Income Fund Board Approves Restructuring

CALGARY, ALBERTA--(Marketwire - March 29, 2010) - Enbridge Income Fund (TSX:ENF.UN) (the "Fund") today announced that the Enbridge Commercial Trust (ECT) Board of Trustees, which oversees the governance of the Fund, has approved a plan of arrangement (the "Arrangement") for restructuring the Fund and will recommend that unitholders approve the Arrangement at the Fund's annual meeting on May 3, 2010.

"We're pleased the Board has approved the proposed restructuring and deemed it to be fair to the Fund's public unitholders and in their best interests, as well as in the best interests of the Fund," said Jim Schultz, President of Enbridge Management Services Inc., the Administrator of the Fund.

The proposed restructuring under the Arrangement would involve the exchange of all publicly held trust units, which collectively represent a 28% economic interest in the Fund, as well as a portion of the Enbridge Inc. ("Enbridge") interest in the Fund, for shares of a taxable Canadian corporation to be called Enbridge Income Fund Holdings Inc. (EIFH). The scope of activities of EIFH would be limited to investment in the Fund and Enbridge would manage the business of EIFH, in addition to continuing in its current roles as administrator of the Fund and manager of ECT.

On completion of the Arrangement, public unitholders would retain their current proportionate economic interest in the Fund, held indirectly through EIFH. The Fund would cease to be a specified investment flow-through (SIFT) trust under Canadian tax rules and would not be subject to the SIFT tax scheduled to take effect in 2011, although both EIFH and Enbridge Inc. would be subject to corporate income tax on taxable income received from the Fund. Dividends paid by EIFH are expected to be eligible dividends which qualify for the enhanced federal dividend tax credit. Public unitholders would have a choice either to effect the exchange on a tax-deferred basis (by making a joint tax election with EIFH) if they have embedded capital gains on their units, or to realize any embedded gain or loss.

The Board's approval came after a committee of independent ECT Trustees had completed its review of the Arrangement, with the assistance and guidance of independent legal, tax and financial advisors. The review process affirmed that EIFH should maintain an investor value proposition similar to the Fund's current proposition, providing the bulk of the return to its investors in the form of a dependable high cash payout from low risk energy infrastructure assets. It was determined that these goals would be best supported if the Arrangement did not include a one-time cash payment to unitholders on exchange of their Fund units, as initially contemplated. Consistent with the Fund's own value proposition, EIFH would also be expected to benefit from a modest amount of growth arising from expansion of the Fund's asset base and development or acquisition of additional energy infrastructure.

The Administrator expects that post the restructuring, EIFH would initially pay an annualized dividend of approximately $1.15 per common share, the same as the annualized distribution per trust unit currently paid by the Fund. It is expected that EIFH would pay dividends on a quarterly basis.

EIFH has made a substitutional listing application to have its shares listed on the Toronto Stock Exchange and have its own board of directors, while the Fund would be de-listed. ECT's Board of Trustees would remain in place after the Arrangement. The Arrangement would take effect prior to the end of 2010.

The Arrangement is more fully described in a Management Information Circular that will be mailed to unitholders in early April. At the Fund's annual meeting, the Arrangement is required to be approved by both (a) 66 2/3% of all of the votes represented by all unitholders attending the meeting in person or by proxy, and (b) a simple majority of the votes represented by the Fund's public unitholders attending the meeting in person or by proxy, excluding Enbridge and those related parties whose votes are required to be excluded in accordance with applicable securities rules. In addition to board and unitholder approval, the Arrangement is also subject to final Court and Toronto Stock Exchange approvals.

About Enbridge Income Fund

Enbridge Income Fund is an unincorporated, open-ended trust created to provide a stable and sustainable flow of distributable cash to unitholders. The Fund is a premier income fund in Canada with a low-risk profile focused on energy infrastructure assets. It owns a 50% interest in the Canadian segment of the Alliance Pipeline, a 100% interest in Enbridge Pipelines (Saskatchewan) Inc., and a 50% interest in NRGreen Power Limited Partnership, which operates electrical generation facilities using waste heat, and holds interests in three wind power projects in Western Canada. The business of the Fund is governed by Enbridge Commercial Trust. Enbridge Income Fund's trust units are listed and trade on the Toronto Stock Exchange under the symbol "ENF.UN".

Information about Enbridge Income Fund is available on the Fund's web site at www.enbridgeincomefund.com.

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