Enbridge Inc.
TSX : ENB
NYSE : ENB

Enbridge Inc.

April 28, 2017 07:00 ET

Enbridge Inc. Announces Conclusion and Outcomes of Enbridge Energy Partners, L.P. Strategic Review

CALGARY, ALBERTA--(Marketwired - April 28, 2017) - Enbridge Inc. (TSX:ENB)(NYSE:ENB) (Enbridge or the Company) announced today that the strategic review of Enbridge Energy Partners, L.P. (NYSE:EEP) (EEP or the Partnership) has been completed. The following actions, together with the previously announced measures earlier this year, have been taken to restore EEP's value proposition to its unitholders and to Enbridge.

Acquisition of Midcoast Assets - Enbridge, through its wholly owned U.S. subsidiary Enbridge Energy Company, Inc. (EECI), will acquire EEP's interest in the Midcoast Gas Gathering & Processing business (Midcoast) for cash consideration of US$1.31 billion plus existing indebtedness of Midcoast Energy Partners, L.P. (MEP) (which was US$840 million as at March 31, 2017). Subsequent to the closing of the previously announced privatization of MEP, which closed on April 27, 2017, 100 percent of the Midcoast business will be owned by EECI.

Finalization of Bakken Pipeline System Joint Funding Agreement (JFA) - EECI and EEP finalized a JFA whereby the investment will be jointly owned 75 percent by EECI and 25 percent by EEP. The Bakken Pipeline System is expected to be placed into service during the second quarter of 2017 and is expected to generate strong and stable cash flows for both Enbridge and EEP.

EEP Redemption of Series 1 Preferred Units - EEP will redeem and repay US$1.6 billion of obligations related to its Series 1 Preferred Units outstanding to EECI, including US$357 million of accumulated deferred distributions. EEP will fund the US$1.2 billion face value of the preferred units by issuing US$1.2 billion of Class A common units to EECI, and repay the deferred distributions with a portion of the cash proceeds from the sale of the Midcoast assets. This transaction simplifies EEP's capital structure and improves its credit profile.

In addition to the foregoing, the Board of the Partnership's designate manager announced a reduction in EEP's quarterly distribution from US$0.583 to US$0.350 per unit to unitholders of record at the close of business on May 8,, 2017. Retaining additional cash flow allows EEP to internally fund more of its attractive growth projects, alleviate near term equity capital requirements and strengthen its balance sheet.

"EEP holds some of our most strategic and high quality, long-life, critical energy infrastructure assets in North America," said Al Monaco, President and CEO of Enbridge. "The objective of the strategic review was to re-establish EEP as an effective sponsored vehicle for the benefit of EEP unitholders and Enbridge. We believe today's actions, and those undertaken earlier this year, achieve this objective by returning EEP to a pure-play liquids pipeline MLP - with premium low-risk assets, a strong financial position, self-funding capability, ample distribution coverage and visible growth. Both EEP unitholders and Enbridge shareholders will continue to derive value from these unique assets in the near term and in the years to come."

On January 27, EEP and Enbridge announced interim measures to alleviate EEP's near-term funding requirements and enhance its cash flows, including the acquisition by Enbridge of the public float in MEP, the finalization of a joint funding arrangement for the U.S. portion of the Line 3 Replacement Project (L3R), and the exercise of EEP's option for an additional 15 percent interest in the cash generating Eastern Access Project. Those initiatives, together with those announced today, reposition EEP as a compelling low-risk investment. The transactions result in a more streamlined capital structure at EEP and simplify Enbridge's holdings in the Partnership by eliminating certain classes of preferred and partnership units. There are no other material support actions by Enbridge required, nor are any further actions contemplated.

The combined restructuring actions have the overall effect of Enbridge acquiring all of EEP's gas gathering and processing business and a 99 percent interest in L3R in exchange for approximately US$1.1 billion in net cash and the transfer to EEP of a 15 percent interest in the Eastern Access Expansion. EEP will initially hold a 25 percent interest in the Bakken System Pipeline investment and an initial 1 percent interest in L3R with options to increase its ownership in these two strong projects by 20 percent and 39 percent, respectively. Together with a third existing option, a 15 percent interest in the Mainline Expansion project, EEP will hold options for a total capital investment opportunity of US$1.6 billion. Enbridge will realize reduced distributions from EEP as a result of EEP's reduction in unitholder distributions.

Enbridge Sponsored Vehicle Strategy

With regard to Enbridge's overall sponsored vehicle strategy, Mr. Monaco added: "We believe that sponsored vehicles can be an effective way to hold and grow energy infrastructure assets and they can provide a good source of funding that can optimize the overall cost of capital for the Enbridge group, much like they have done for us over time."

"That said, removing unnecessary complexity from our business has always been a priority for Enbridge where it makes sense. Since the beginning of the year, our structure has been streamlined by privatizing MEP, consolidating DCP Midstream L.P. (DCP) and restoring EEP's value proposition. This leaves us with two strong pure-play pipeline MLPs: one being a liquids pipeline business (EEP) and the other a natural gas pipeline business (Spectra Energy Partners, L.P. (SEP) - NYSE:SEP). We also have an interest in DCP - a pure-play premier gas gathering and processing business, which is now also well positioned within its sector. There are no plans for other major changes; however, we will review our structure on an on-going basis with a view to rationalizing our holdings to maximize transparency and shareholder value."

SEP will be maintained as a long-haul natural gas pipeline business with a continuation of its compelling investor value proposition. There is no plan or intention to transfer the Midcoast assets to SEP.

All of the strategic review actions are scheduled to close by the end of the first half of this year and are not expected to be material. Enbridge will be providing its first quarterly financial results post the Spectra transaction along with its combined 2017 financial outlook on May 11.

FORWARD-LOOKING INFORMATION

Certain information provided in this news release constitutes forward-looking statements. The words "anticipate", "expect", "project", "estimate", "forecast", "plan", "intend", "believe" and similar expressions are intended to identify such forward-looking statements. Forward-looking statements in this news release include, but are not limited to, statements with respect to: the strategic review of EEP and the transactions or other actions arising from such review, including with regards to the timing and closing of such transactions and the anticipated benefits and efficiencies to be derived therefrom; the Company's funding of its investment in EEP and MEP; the financing arrangements between the Company, EECI, EEP and MEP ; longer-term funding options and other future support actions; project in service dates and cash flow projections; the Company's financial outlook and projections; and the Company's overall sponsored vehicle strategy, including with regards to any future review or changes of the sponsored vehicle structure or any transactions involving the sponsored vehicles. Although the Company believes these statements are based on information and assumptions which are current, reasonable and complete, these statements are necessarily subject to a variety of assumptions, risks and uncertainties pertaining to the terms, timing and completion of the proposed transactions and strategic review and the realization of anticipated benefits and efficiencies; interim financing and longer-term funding, including definitive terms thereof; operating performance; future business prospects and performance; financial strength and flexibility; debt and equity market conditions; regulatory parameters; customer, shareholder, regulatory and other stakeholder approvals and support; anticipated in service dates; economic and competitive conditions; exchange rates, inflation and interest rates; changes in tax law and tax rates; counterparty risk; the availability and price of labour and construction materials; and supply of and demand for commodities and commodity prices. A further discussion of the risks and uncertainties facing the Company can be found in the Company's filings with Canadian and United States securities regulators. While the Company makes these forward-looking statements in good faith, should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary significantly from those expected. Except as may be required by applicable securities laws, the Company assumes no obligation to publicly update or revise any forward-looking statements made herein or otherwise, whether as a result of new information, future events or otherwise.

About Enbridge Inc.

Enbridge Inc. 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 2.8 million barrels of crude oil each day through its Mainline and Express Pipeline, and accounts for nearly 68% of U.S.-bound Canadian crude oil production, 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 3.5 million retail customers in Ontario, Quebec, New Brunswick and New York State. Enbridge also has a growing involvement in electricity infrastructure with interests in more than 2,500 MW of net renewable generating capacity, and an expanding offshore wind portfolio in Europe. The Company has ranked on the Global 100 Most Sustainable Corporations index for the past eight 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.

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