Enbridge Inc.

Enbridge Inc.

September 17, 2014 08:00 ET

Enbridge Proposes To Transfer U.S. $900 Million Asset to Enbridge Energy Partners

CALGARY, ALBERTA--(Marketwired - Sept. 17, 2014) - Enbridge Inc. (TSX:ENB) (NYSE:ENB) announced today that it has proposed to transfer its 66.7 percent interest in the U.S. segment of the Alberta Clipper Pipeline to its affiliate, Enbridge Energy Partners L.P. (NYSE: EEP) (EEP) for approximately U.S. $900 million. EEP is the owner of the other 33.3 percent interest. The proposed consideration includes cash of approximately U.S. $300 million, plus approximately U.S. $600 million of Class E equity units to be issued to Enbridge by EEP. The proposed transfer and terms are subject to review and recommendation by an independent committee of the Board of Directors of Enbridge Energy Management, L.L.C, the delegate of EEP's general partner, and to approval by that Board. The transfer is targeted to close by the end of 2014.

The U.S. segment of Alberta Clipper earns a stable cost of service return which is not subject to variations in throughput or operating costs. The transfer will not require any issuance of equity to the public by EEP, and is expected to be immediately accretive to distributable cash flow per unit by approximately 3 percent.

The Class E units to be issued to Enbridge would be entitled to the same distributions as the Class A units held by the public and would be convertible into Class A units on a one-for-one basis at Enbridge's option. The Class E units would be redeemable at EEP's option after 30 years, if not converted by Enbridge. The units would have a liquidation preference equal to their fair value on closing. Enbridge's economic interest in EEP would increase from approximately 34 percent to approximately 36 percent as a result of the transfer.

Mr. J. Richard Bird, Enbridge's Executive Vice President, Chief Financial Officer and Corporate Development commented, "This is the latest in a series of actions which Enbridge has taken to enhance EEP's distributable cash flow and restore its effectiveness as one of the sources of low cost funding for Enbridge's organic growth opportunities and, through drop downs such as this one, for Enbridge's broader growth capital program. Following these actions EEP's valuation has improved to the point where a drop down is now accretive to both EEP's distributable cash flow and to Enbridge's earnings, and we are able to accelerate this aspect of our financial strategy. This initial drop down has been intentionally structured to impose no incremental equity funding requirement on EEP given all the other actions taken to put the Partnership into a position of requiring minimal additional equity until its growth investments come into service and begin contributing to distributable cash flow. This additional step we've taken should serve to confirm that EEP's effectiveness as a sponsored vehicle has been restored, and pave the way for further drop downs."

The U.S. segment of the Alberta Clipper Pipeline is a 36-inch diameter, 325 mile long crude oil pipeline from the U.S. border near Neche, North Dakota to Superior, Wisconsin. The initial capacity of the line is 450,000 barrels per day (bpd) and was constructed under the terms of a joint funding agreement under which Enbridge funded two-thirds of the capital costs in return for a corresponding economic interest in the earnings and cash flow from the investment. The line is being expanded in two phases to a capacity of 800,000 bpd through the addition of increased pumping horsepower. The required expansion investments are subject to separate joint funding arrangements between Enbridge and EEP.

About Enbridge Inc.

Enbridge Inc., a Canadian Company, is a North American leader in delivering energy and has been included on the Global 100 Most Sustainable Corporations in the World ranking for the past six years. As a transporter of energy, Enbridge operates, in Canada and the U.S., the world's longest crude oil and liquids transportation system. The Company also has a significant and growing involvement in natural gas gathering, transmission and midstream businesses, and an increasing involvement in power transmission. As a distributor of energy, Enbridge owns and operates Canada's largest natural gas distribution company, and provides distribution services in Ontario, Quebec, New Brunswick and New York State. As a generator of energy, Enbridge has interests in more than 1,800 megawatts of renewable and alternative energy generating capacity and is expanding its interests in wind and solar energy and geothermal. Enbridge employs more than 10,000 people, primarily in Canada and the U.S. and is ranked as one of Canada's Top 100 Employers for 2014. Enbridge's common shares trade on the Toronto and New York stock exchanges under the symbol ENB. For more information, visit www.enbridge.com.

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