8-K

ENBRIDGE INC 8-K Report (Sep 3, 2013)

Filed September 3, 2013For Securities:ENBENBMFEBBGFEBRGFEBRZFENBGFENBRFENFFFEBGEFENBFFENBHFENBNFENBOFENBSFEBBNFENNPF

Summary

This 8-K filing by Enbridge Inc. (ENB) on September 3, 2013, incorporates two key press releases from August 2013. The first, dated August 1, details the declaration of Enbridge's quarterly common share dividend of $0.315, consistent with the previous quarter. Notably, a portion of this dividend is designated as non-eligible for the Canadian dividend tax credit due to its source from the sale of shares in an investee company, Noverco Inc. The second press release, dated August 19, addresses a legal dispute where TransCanada Pipelines Limited filed a statement of claim against Enbridge Gas Distribution Inc. regarding the termination of a Memorandum of Understanding (MOU). Enbridge Gas disputes the claim, stating the termination was due to TransCanada's failure to comply with Ontario's Storage and Transportation Access Rule, which mandates open and non-discriminatory capacity allocation.

Key Highlights

  • 1Enbridge declared a quarterly common share dividend of $0.315, payable September 1, 2013.
  • 2A portion of the common share dividend ($0.1808 per share) will not qualify for the Canadian dividend tax credit.
  • 3The non-eligible portion of the dividend stems from funds received following the sale of Noverco Inc. shares.
  • 4Enbridge Gas Distribution is facing a lawsuit from TransCanada Pipelines Limited regarding the termination of a Memorandum of Understanding (MOU).
  • 5Enbridge Gas disputes TransCanada's claim, asserting the MOU termination was necessary to comply with Ontario's open access pipeline regulations.
  • 6Enbridge Gas believes TransCanada's actions made it impossible to offer capacity compliantly, and they will vigorously defend against the claim.
  • 7Various preferred share dividends were also declared, designated as eligible dividends.

Frequently Asked Questions

The primary takeaway is the declaration of a quarterly dividend of $0.315 per common share, maintaining consistency with the prior quarter. However, investors, particularly those in Canada, should note that a portion of this dividend will not be considered an 'eligible dividend' for tax purposes, which could impact their net dividend income.

The non-eligible portion arises from specific funds distributed to shareholders that originated from dividends received by Enbridge from its investee, Noverco Inc., following the sale of some of Noverco's shares in Enbridge. Canadian tax rules differentiate between dividends sourced from operating income and those from capital transactions or specific investee distributions.

TransCanada has sued Enbridge Gas, alleging a breach of a Memorandum of Understanding (MOU) related to a pipeline segment. Enbridge Gas contends that it terminated the MOU because TransCanada failed to meet regulatory requirements for open and non-discriminatory capacity allocation under Ontario law, making it impossible for Enbridge Gas to comply with provincial regulations.

Enbridge Gas is confident in its position and intends to vigorously defend against the claim, asserting that TransCanada has suffered no damages. If the legal proceedings were to proceed unfavorably, potential impacts could include legal costs and possible settlements, although Enbridge Gas appears to be contesting any damages. The company maintains it has offered alternative compliant capacity access to TransCanada.