Enbridge transfers liquid pipelines business in $30B deal

In a move geared at raising cash for Enbridge Energy and a stream of earning properties for its income fund, Enbridge is transferring its Canadian liquids pipeline business and some renewable energy assets to affiliated Enbridge Income Fund Holdings Inc.

The transaction is valued at $30.4 billion and involves transferring $18.7 billion of equity from the publicly traded income fund and one of its subsidiaries to Enbridge Energy. It would then control 90 per cent of the fund.

Enbridge, which wants to build the Northern Gateway pipeline, said the deal provides a low-cost source of capital.

It also expects to increase its earnings per share by approximately 10 per cent per year on average from 2015 to 2018.

Enbridge Income Fund, which will assume about $11.7 billion of debt as part of the transaction, gets access to a portfolio with potential growth opportunities. It becomes a larger entity in a move Enbridge described as "transformational."

The deal will allow Enbridge Income to boost its dividend 10 per cent on the close of the transaction, expected in late August and a further 10 per cent at the beginning of 2016 and each year after through 2019.

It announced a dividend of 12 cents per common share earlier this week.

What Enbridge is transferring:

• Its large diameter crude oil, NGL and refined products pipelines in Western Canada which connect to the U.S. mainline system near Gretna, Man.
• A number of pipelines in Eastern Canada, including controversial Line 9.
• The Canadian segment of the Alberta Clipper pipeline, currently undergoing an expansion to its ultimate capacity of 800,000 barrels per day.
• The Canadian segment of the Line 3 replacement program.
• Its regional oilsands system which collects synthetic crude oil and diluted bitumen from eight different producing oilsands projects and delivers it to Edmonton and Hardisty, Alta.
• 50 per cent interest in the Saint Robert Bellarmin wind farm, a 67.5 per cent interest in Lac Alfred wind farm and an 80 percent in the Massif du Sud wind farm, all in Quebec and a 50 per cent interest in the Blackspring Ridge wind farm in Alberta.