8-K

ENBRIDGE INC 8-K Report (Mar 27, 2013)

Filed March 27, 2013For Securities:ENBENBMFEBBGFEBRGFEBRZFENBGFENBRFENFFFEBGEFENBFFENBHFENBNFENBOFENBSFEBBNFENNPF

Summary

Enbridge Inc. filed a Form 6-K on March 27, 2013, primarily to report a Certificate of Amendment related to the issuance of new series of preference shares. Specifically, the company amended its articles to designate two new series: Cumulative Redeemable Preference Shares, Series 1, and Cumulative Redeemable Preference Shares, Series 2. Each series has an authorized issuance of 16,000,000 shares. These new preference shares carry specific dividend rights, redemption terms, and conversion features. Series 1 Preference Shares are slated for a fixed cumulative preferential cash dividend of US$1.00 per share annually during the initial fixed rate period, with potential adjustments in subsequent periods based on U.S. government bond yields plus a spread. Series 2 Preference Shares are designed with floating rate dividends tied to U.S. Treasury bill rates plus a spread. Both series are redeemable and convertible, with Series 1 convertible into Series 2 and Series 2 convertible into Series 1, under specific conditions and dates, primarily starting in June 2018 for Series 1 and June 2023 for Series 2. The filings also detail provisions for liquidation distributions, purchase for cancellation, and restrictions on the payment of dividends on common shares.

Key Highlights

  • 1Enbridge Inc. filed a Form 6-K on March 27, 2013, to report amendments to its articles of incorporation.
  • 2The amendments authorize the issuance of two new series of preference shares: Series 1 and Series 2, each with an authorized issuance of 16,000,000 shares.
  • 3Series 1 Preference Shares are initially designed with a fixed annual dividend of US$1.00 per share, payable quarterly.
  • 4Series 2 Preference Shares are designed with floating rate dividends based on U.S. T-Bill rates plus a spread, payable quarterly.
  • 5Both series have redemption provisions, with Series 1 redeemable from June 1, 2018, and Series 2 redeemable from June 1, 2018, with different call protection terms.
  • 6Both series have conversion rights, with Series 1 convertible into Series 2 starting June 1, 2018, and Series 2 convertible into Series 1 starting June 1, 2023, subject to certain conditions.
  • 7The filing outlines procedures for dividend payments, purchase for cancellation, liquidation distributions, and restrictions on common share dividends.

Frequently Asked Questions

The primary purpose of this 8-K filing is to report a Certificate of Amendment to Enbridge Inc.'s articles of incorporation, which formally designates and outlines the terms for two new series of preference shares: Cumulative Redeemable Preference Shares, Series 1, and Cumulative Redeemable Preference Shares, Series 2.

The Series 1 Preference Shares will initially receive a fixed cumulative preferential cash dividend of US$1.00 per share annually, payable quarterly. In subsequent periods, the dividend rate will be adjusted based on U.S. Government Bond Yields plus 3.14%. The Series 2 Preference Shares will have a floating dividend rate, calculated quarterly based on the T-Bill Rate plus 3.14%.

Neither series can be redeemed before June 1, 2018. Series 1 Preference Shares can be converted into Series 2 Preference Shares starting on June 1, 2018, and every five years thereafter. Series 2 Preference Shares can be converted into Series 1 Preference Shares starting on June 1, 2023, and every five years thereafter. Redemption dates also align with these conversion periods.

Yes, the filing states that Enbridge cannot declare or pay dividends on its common shares or any other junior shares unless all accrued and unpaid dividends on the Series 1 and Series 2 Preference Shares (and any other parity shares) have been paid in full.