8-K

ENBRIDGE INC 8-K Report (Apr 18, 2012)

Filed April 18, 2012For Securities:ENBENBMFEBBGFEBRGFEBRZFENBGFENBRFENFFFEBGEFENBFFENBHFENBNFENBOFENBSFEBBNFENNPF

Summary

Enbridge Inc. filed a Form 6-K on April 18, 2012, primarily to report the issuance of two new series of preference shares: Series J and Series K. These shares are designated as Cumulative Redeemable Preference Shares and are structured with specific dividend rights, redemption provisions, and conversion features. The Series J Preference Shares are set to receive a fixed cumulative preferential cash dividend of US$1.00 per share annually during the initial period, with provisions for adjusting to a floating rate thereafter based on US Treasury Bills and a spread. The Series K Preference Shares will have a dividend rate tied to a floating rate determined by US Treasury Bills plus a spread. Both series have a liquidation preference of US$25.00 per share and are redeemable by Enbridge. Importantly, both series have conversion rights into each other, with specific dates and conditions attached to these conversions, suggesting a strategic capital structure adjustment by the company.

Key Highlights

  • 1Enbridge Inc. announced the creation and issuance of two new series of preference shares: Cumulative Redeemable Preference Shares, Series J and Series K.
  • 2Each series will consist of 8,000,000 shares with a liquidation preference of US$25.00 per share.
  • 3Series J Preference Shares will initially pay a fixed annual dividend of US$1.00 per share, subject to adjustments in subsequent periods.
  • 4Series K Preference Shares will pay a floating quarterly dividend rate, tied to US Treasury Bill rates plus a spread.
  • 5Both Series J and Series K Preference Shares have redemption features, with specific dates and prices outlined.
  • 6Holders of Series J Preference Shares have the right to convert their shares into Series K Preference Shares starting in 2017, and vice versa for Series K into Series J starting in 2022, subject to certain conditions.
  • 7The issuance and terms of these preference shares are governed by Canadian corporate law and are intended to be settled through a book-based system.

Frequently Asked Questions

The primary purpose of this Form 6-K filing is to report the creation and terms of two new series of preference shares: Cumulative Redeemable Preference Shares, Series J and Series K, as detailed in the attached Certificates of Amendment.

Both series have a US$25.00 liquidation preference. Series J initially pays a fixed US$1.00 annual dividend, transitioning to a floating rate later. Series K pays a floating quarterly dividend tied to T-Bill rates plus a spread. Both are redeemable by Enbridge and have conversion rights into each other under specific conditions and dates.

Holders of Series J Preference Shares can convert them into Series K Preference Shares starting on June 1, 2017, and every five years thereafter. Conversely, holders of Series K Preference Shares can convert them into Series J Preference Shares starting on June 1, 2022, and every five years thereafter. The conversion ratio is 1:1, but these rights are subject to minimum outstanding share requirements and potential termination if redemption notices are issued.

The filing itself does not directly impact common shareholders, but the terms of the preference shares include restrictions on Enbridge paying dividends on common shares or reducing capital if cumulative dividends on the preference shares are not met. This provides a layer of protection for preference shareholders over common shareholders in certain financial situations.