CALGARY, ALBERTA--(Marketwire - Oct. 25, 2012) - Enbridge Income Fund Holdings Inc. (TSX:ENF) (ENF or the Company) announced today earnings of $14.6 million and $43.2 million, for the three and nine months ended September 30, 2012, respectively, reflecting the performance of its investment in Enbridge Income Fund (the Fund).
The Company's financial performance is a direct reflection of the Fund's ability to generate cash for distribution to its unitholders. The Fund's cash available for distribution (CAFD) totaled $151.8 million for the nine months ended September 30, 2012, an increase of 81% compared with the same period of 2011. The improvement in the Fund's CAFD reflected contributions from the 190-megawatt (MW) Ontario Wind Project, 99-MW Talbot Wind Project and 80-MW Sarnia Solar Project (the Renewable Assets) which were acquired in October of 2011.
"The Company has delivered another quarter of solid financial performance," said John Whelen, President, Enbridge Income Fund Holdings Inc. "Our renewable power generation facilities continue to experience high operational availability and were a strong contributor of earnings and distributable cash flow during the quarter. Our Gas Transmission and Liquids Transportation businesses also continued to generate steady and predictable financial results.
"We also advanced a number of commercial and strategic initiatives. In our Liquids Transportation business, the Bakken Expansion Program is under construction and is on track to be completed and in-service in the first quarter of 2013. In our Green Power business, the Whitecourt Recovered Energy Project, which is being undertaken by our 50% owned affiliate NRGreen, is also under construction and is expected to commence operations in the third quarter of next year.
"There were also developments in the Gas Transmission business," continued Mr. Whelen. "Alliance Canada has announced a proposed new service model and toll structure that would apply to the pipeline system after existing firm service contracts expire in 2015. We believe that this new service offering, together with Alliance's inherent advantages in transporting liquids rich gas, will be very appealing to both existing and prospective shippers."
The Company and the Fund also announced today in a separate news release the execution of an agreement to acquire crude oil storage facilities and additional renewable power generation assets from subsidiaries of Enbridge Inc. for an aggregate price of $1.164 billion (the Transaction). Completion of the Transaction is subject to shareholder approval, closing of related financing and receipt of regulatory and third party approvals. In connection with the Transaction, the Company also entered into an agreement with a syndicate of investment dealers for the sale of 9,597,000 million subscription receipts at a price of $23.15 per subscription receipt for total proceeds of $222.2 million. The subscription receipts will convert to common shares of the Company upon the Transaction receiving required shareholder approvals and satisfaction of other conditions. Please see the news release filed today on SEDAR under the caption Enbridge Income Fund to Acquire $1.164 billion of Crude Oil Storage and Renewable Power Generations Assets from Enbridge Inc. for more information.
"The prospect of acquiring this portfolio of assets is exciting," noted Mr. Whelen. We believe that these facilities which are all underpinned by long-term, fixed price contracts would be a great fit for the Fund. If approved by shareholders, this transaction would further diversify the Fund's business mix further reinforcing its value to investors seeking a steady and predictable payout of cash flow from low-risk energy infrastructure assets," concluded Mr. Whelen.
THIRD QUARTER 2012 REVIEW
The unaudited interim financial statements and Management's Discussion and Analysis (MD&A) of both ENF and the Fund, which contain additional notes and disclosures, are available on the Company's website at www.enbridgeincomefund.com.
- The Company's earnings for the three and nine months ended September 30, 2012 were $14.6 million ($0.37 per common share) and $43.2 million ($1.09 per common share), respectively, compared with $6.8 million ($0.27 per common share) and $20.5 million ($0.82 per common share) for the three and nine months ended September 30, 2011. The earnings increase is attributable to increased ownership in the Fund and an increase in per unit distributions received on such investment, as well as a reduction in income tax expense. During the first nine months of 2012, the Company owned 80.7% of the Fund's issued and outstanding trust units (which represented a 30.8% overall economic interest in the Fund, with the balance held by Enbridge Inc.) and received distributions of $0.121 per unit per month whereas during the nine months ended September 30, 2011 the Company owned 72.6% of the Fund's trust units (27.7% economic interest) and received distributions equivalent to $0.115 per unit per month.
- The Fund's cash available for distribution (CAFD) increased 61% and 81% to $43.3 million and $151.8 million for the three and nine months ended September 30, 2012, respectively, as a result of cash contributions from the Renewable Assets which were acquired in October 2011. The Renewable Assets benefited from high operational availability and strong wind and solar resource during the nine months ended September 30, 2012. The Fund's liquids transportation and natural gas transmission assets continued to deliver steady cash flows in the first nine months of 2012. CAFD generated by the Saskatchewan System ($55.7 million) and Alliance Canada ($54.4 million) was comparable with the first nine months of the prior year.
- The Fund's earnings for the three and nine months ended September 30, 2012 were $12.3 million and $46.1 million, respectively, compared with $20.3 million and $75.7 million in the prior year comparative periods. Earnings for the first nine months of 2012 included contributions from the Renewable Assets net of an increase in financing costs as a portion of the Renewable Asset acquisition was debt financed. Prior period earnings were retrospectively adjusted to present Renewable Asset earnings from January 1, 2011 (as mandated by common control guidance); however, such retrospective adjustments were exclusive of associated financing costs. Non-cash deferred income tax expense also increased as a result of increased earnings within the Fund's subsidiary corporations.
- The Bakken Expansion Program is currently under construction and on track to be in-service in the first quarter of 2013. The Program is being undertaken jointly with the Fund's affiliate Enbridge Energy Partners. Total expenditures to date on the Fund's share of the project were $99 million at September 30, 2012.
- On October 25, 2012, the Fund entered into an agreement to acquire contracted crude oil storage facilities and renewable power generation facilities owned by direct and indirect subsidiaries of Enbridge, a related party, for an aggregate value of $1.164 billion (the "Transaction"). The crude oil storage facilities, which consist of the Hardisty Contract Terminals and Hardisty Storage Caverns in Alberta, provide approximately 11 million barrels of crude oil storage capacity at the Hardisty crude oil pipeline hub. The crude oil storage facilities are currently operating under long term take-or-pay storage contracts with remaining terms averaging 22 years. The renewable power generation facilities are located in Ontario and consist of 100% interests in the 99-megawatt (MW) Greenwich Wind Project, 15-MW Amherstburg Solar Project and 5-MW Tilbury Solar Project. The renewable power generation facilities are supported by fixed price power purchase agreements with the Ontario Power Authority with remaining terms exceeding 18 years. Enbridge, through its affiliates, will continue to manage the crude oil storage facilities and renewable power generation facilities pursuant to management and administrative agreements. The Transaction is subject to approval by shareholders, completion of related financing by the Company and the Fund and receipt of regulatory and third party approvals.
- On October 10, 2012, Alliance Canada announced a proposed new service model and toll structure that would apply to the pipeline system when the bulk of existing firm service contracts expire in December 2015. The new service offering provides shippers with choices that include new zonal and full path transportation services, fixed or index-based tolls and a range of contract terms. It builds on Alliance's unique capabilities to cost efficiently transport high-energy natural gas. Discussions with existing and prospective shippers are ongoing and an open season for the capacity that will come free in late 2015 is expected to be held in 2013. The proposals will be subject to commitments by shippers and approval by regulators.
- The Company's Board of Directors declared and paid dividends of $0.103 per common share for each month of the nine month period ended September 30, 2012. In addition, a monthly dividend of $0.103 per common share was declared on October 15, 2012 to be paid on November 15, 2012 to shareholders of record at the close of business on October 31, 2012.
ABOUT ENBRIDGE INCOME FUND HOLDINGS INC.
Enbridge Income Fund Holdings Inc. is a publicly traded corporation. The Company, through its investment in Enbridge Income Fund, holds high quality, low risk energy infrastructure assets. The Fund's assets include a 50% interest in the Canadian segment of the Alliance Pipeline, a 100% interest in the various pipelines comprising the Saskatchewan System, and interests in more than 400 megawatts of renewable and alternative power generation capacity. Information about Enbridge Income Fund Holdings Inc. is available on the Company's website at www.enbridgeincomefund.com.
FORWARD LOOKING INFORMATION
In the interest of providing the Company's shareholders and potential investors with information about the Company and its investee, the Fund, and the Fund's subsidiaries and joint ventures, including management's assessment of the Company's and the Fund's future plans and operations, certain information provided in this News Release constitutes forward-looking statements or information (collectively, "forward-looking statements"). This information may not be appropriate for other purposes. Forward-looking statements are typically identified by words such as "anticipate", "expect", "project", "estimate", "forecast", "plan", "intend", "target", "believe" and similar words suggesting future outcomes or statements regarding an outlook. In particular, forward-looking statements include:
- expected costs related to projects under construction;
- expected scope and in-service dates for projects under construction;
- expected timing and amount of recovery of capital costs of assets;
- expected capital expenditures;
- expected future dividends and Fund distributions;
- the Fund's expected cash available for distribution.
Although the Company believes that these forward-looking statements are reasonable based on the information available on the date such statements are made and processes are 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 expected supply and demand for crude oil, natural gas and natural gas liquids; prices of crude oil, natural gas and natural gas liquids; expected exchange rates; inflation; interest rates; the availability and price of labour and pipeline construction materials; operational reliability; customer project approvals; maintenance of support and regulatory approval for the Fund's projects; anticipated in-service dates and weather. Assumptions regarding the expected supply and demand of crude oil, natural gas and natural gas liquids, and the prices of these commodities, are material to and underlay all forward-looking statements. These factors are relevant to all forward-looking statements as they may impact current and future levels of demand for the Fund's services. Similarly, exchange rates, inflation and interest rates impact the economies and business environments in which the Company and the Fund operate, may impact levels of demand for the Fund's 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 expected earnings and associated per unit or per share amounts, or estimated future distributions or dividends. The most relevant assumptions associated with forward-looking statements on projects under construction, including estimated in-service dates and expected capital expenditures, include: the availability and price of labour and pipeline construction materials; the effects of inflation on labour and material costs; the effects of interest rates on borrowing costs; and the impact of weather and customer and regulatory approvals on construction schedules.
The Company's forward-looking statements, and forward looking statements with respect to the Fund, are subject to risks and uncertainties pertaining to operating performance, regulatory parameters, project approval and support, weather, economic conditions, exchange rates, interest rates and commodity prices, including but not limited to those risks and uncertainties discussed in this News Release and in the Company's and the Fund's other filings with Canadian securities regulators. The impact of any one risk, uncertainty or factor on a particular forward-looking statement is not determinable with certainty as these are interdependent and the Company's and the Fund's future course of action depends on management's assessment of all information available at the relevant time. Except to the extent required by law, the Company and the Fund assume no obligation to publicly update or revise any forward-looking statements made in this News Release or otherwise, whether as a result of new information, future events or otherwise. All subsequent forward-looking statements whether written or oral, attributable to the Company or the Fund or persons acting on the Company's or the Fund's behalf, are expressly qualified in their entirety by these cautionary statements.
NON-GAAP MEASURES
This News Release contains references to the Fund's cash available for distribution. Cash available for distribution represents the Fund's cash available to fund distributions on trust units and ECT preferred units as well as for debt repayments and reserves. This measure is important to shareholders as the Company's objective is to provide a predictable flow of dividends to shareholders and the Company's cash flows are derived from its investment in the Fund. Cash available for distribution is not a measure that has standardized meaning prescribed by United States Generally Accepted Accounting Principles (U.S. GAAP) and is not considered a GAAP measure. Therefore, this measure may not be comparable with similar measures presented by other issuers. The Fund's Cash Available for Distribution reconciliation for the three and six months ended June 30, 2012 and for the comparable periods in 2011 is as follows:
| Three months ended, September 30, |
Nine months ended, September 30, |
||||||||
| 2012 | 20111 | 2012 | 20111 | ||||||
| (millions of Canadian dollars) | |||||||||
| Cash provided by operating activities | 52.9 | 42.7 | 145.5 | 157.1 | |||||
| Add/(deduct): | |||||||||
| Renewable Assets pre-Acquisition cash flows1 | - | (23.9 | ) | - | (83.6 | ) | |||
| Green Power maintenance capital expenditures | - | - | (0.2 | ) | - | ||||
| Green Power joint venture cash distributed/(retained) | 0.3 | - | 1.3 | (0.9 | ) | ||||
| Saskatchewan System maintenance capital expenditures | (2.8 | ) | (1.1 | ) | (7.0 | ) | (3.1 | ) | |
| Change in operating assets and liabilities in the period | (7.1 | ) | 9.2 | 12.2 | 14.4 | ||||
| Cash available for distribution | 43.3 | 26.9 | 151.8 | 83.9 | |||||
(1) Green Power earnings for all 2011 periods have been retrospectively adjusted to furnish comparative information related to the October 2011 acquisition of the Renewable Assets. The impact of the retrospective adjustments has been eliminated from CAFD as these cash flows were not available to distribute to unitholders.
SELECTED FINANCIAL AND OPERATING HIGHLIGHTS
| ENBRIDGE INCOME FUND HOLDINGS INC. | Three months ended September 30, | Nine months ended September 30, |
|||||||
| 2012 | 2011 | 2012 | 2011 | ||||||
| (millions of Canadian dollars, except share and per share amounts) | |||||||||
| Earnings | 14.6 | 6.8 | 43.2 | 20.5 | |||||
| Earnings per common share, basic and diluted | $ | 0.37 | $ | 0.27 | $ | 1.09 | $ | 0.82 | |
| Cash provided by operating activities | 13.5 | 14.5 | 39.1 | 23.2 | |||||
| Dividends declared | 12.3 | 7.2 | 36.8 | 21.7 | |||||
| Dividends per common share | $ | 0.309 | $ | 0.288 | $ | 0.927 | $ | 0.864 | |
| Number of common shares outstanding | 39,741,000 | 25,125,000 | |||||||
| ENBRIDGE INCOME FUND1 | Three months ended September 30, |
Nine months ended September 30, |
||||||||||
| 2012 | 20113 | 2012 | 20113 | |||||||||
| (millions of Canadian dollars, except unit and per unit amounts) | ||||||||||||
| Earnings | ||||||||||||
| Green Power | 13.0 | 12.7 | 56.9 | 50.1 | ||||||||
| Saskatchewan System | 12.0 | 12.3 | 36.7 | 35.1 | ||||||||
| Alliance Canada | 13.4 | 13.9 | 38.7 | 41.0 | ||||||||
| Corporate | (26.1 | ) | (18.6 | ) | (86.2 | ) | (50.5 | ) | ||||
| 12.3 | 20.3 | 46.1 | 75.7 | |||||||||
| Cash available for distribution2 | ||||||||||||
| Green Power | 25.6 | 0.6 | 94.9 | 3.3 | ||||||||
| Saskatchewan System | 17.5 | 21.1 | 55.7 | 58.0 | ||||||||
| Alliance Canada | 18.4 | 17.3 | 54.4 | 54.4 | ||||||||
| Corporate | (18.2 | ) | (12.1 | ) | (53.2 | ) | (31.8 | ) | ||||
| 43.3 | 26.9 | 151.8 | 83.9 | |||||||||
| Cash provided by operating activities | 52.9 | 42.7 | 145.5 | 157.1 | ||||||||
| Cash distributions declared | 37.4 | 25.1 | 112.2 | 75.4 | ||||||||
| Distributions per trust unit and ECT preferred unit | $ | 0.362 | $ | 0.346 | $ | 1.086 | $ | 1.038 | ||||
| Number of units outstanding | ||||||||||||
| ECT preferred units | 54,074,750 | 38,023,750 | ||||||||||
| Trust units | 49,241,000 | 34,625,000 | ||||||||||
| Operating Results | ||||||||||||
| Green Power (thousands of megawatt hours produced) | ||||||||||||
| Ontario Wind Project3 | 80.5 | 74.6 | 356.0 | 332.1 | ||||||||
| Talbot Wind Project3 | 34.5 | 39.3 | 195.9 | 191.1 | ||||||||
| Sarnia Solar Project3 | 43.9 | 40.9 | 112.2 | 101.0 | ||||||||
| NRGreen | 16.3 | 15.0 | 52.3 | 50.7 | ||||||||
| Wind Power Joint Ventures4 | 13.7 | 17.3 | 60.2 | 62.4 | ||||||||
| Saskatchewan System (thousands of barrels per day) | ||||||||||||
| Westspur System | 167.8 | 201.9 | 185.4 | 191.7 | ||||||||
| Saskatchewan Gathering System | 121.2 | 132.4 | 132.0 | 131.5 | ||||||||
| Weyburn System | 31.4 | 30.4 | 31.7 | 30.5 | ||||||||
| Virden System | 22.5 | 19.6 | 23.5 | 18.4 | ||||||||
| Alliance Canada (millions of cubic feet per day) | 1,448.0 | 1,495.0 | 1,555.0 | 1,562.0 | ||||||||
(1) Financial Highlights for Enbridge Income Fund have been extracted from financial statements prepared in accordance with United States generally accepted accounting principles.
(2) See Non-GAAP Measures.
(3) Green Power earnings and power production for all 2011 periods have been retrospectively adjusted to furnish comparative information related to the October 2011 acquisition of the Renewable Assets. The impact of the retrospective adjustments has been eliminated from CAFD as these cash flows were not available to distribute to unitholders.
(4) Wind Power Joint Ventures is comprised of the Fund's interest in the Sunbridge, Magrath and Chin Chute wind projects.
Contact Information:
Jennifer Varey
Media
(403) 508-6563
jennifer.varey@enbridge.com
Enbridge Income Fund Holdings Inc.
Teri Majer
Investment Community
(403) 508-3185
teri.majer@enbridge.com