8-K

ENBRIDGE INC 8-K Report (Jul 16, 2014)

Filed July 16, 2014For Securities:ENBENBMFEBBGFEBRGFEBRZFENBGFENBRFENFFFEBGEFENBFFENBHFENBNFENBOFENBSFEBBNFENNPF

Summary

This 8-K filing by Enbridge Inc. (ENB) from July 16, 2014, primarily concerns the company's decision to issue two new series of cumulative redeemable preference shares: Series 13 and Series 14. These new shares are designed to offer fixed or floating dividend rates, with specific redemption and conversion features outlined. The issuance aims to provide Enbridge with additional capital flexibility and potentially diversify its financing structure. Key terms include fixed dividend rates for Series 13 initially, with provisions for subsequent fixed or floating rates based on government yields, and floating dividends for Series 14 based on T-Bill rates. Both series have a $25 par value and are redeemable by Enbridge starting in 2020 (Series 13) and 2025 (Series 14) with a premium in some cases. Notably, there are provisions for conversion between Series 13 and Series 14 preference shares, creating a dynamic relationship between the two classes. The filing also details dividend payment dates, purchase for cancellation options, and restrictions on capital distributions that could affect junior shareholders.

Key Highlights

  • 1Enbridge Inc. is issuing two new series of preference shares: 14,000,000 Series 13 Cumulative Redeemable Preference Shares and 14,000,000 Series 14 Cumulative Redeemable Preference Shares.
  • 2Series 13 Preference Shares will have a fixed initial annual dividend rate of $1.10 per share, payable quarterly, during the Initial Fixed Rate Period (until June 1, 2020). Subsequent dividend rates will be fixed based on Government of Canada yields plus a spread.
  • 3Series 14 Preference Shares will pay cumulative preferential cash dividends based on a floating quarterly dividend rate, determined by the T-Bill rate plus a spread.
  • 4Both series have a $25.00 par value. Series 13 is redeemable by Enbridge starting June 1, 2020, and Series 14 is redeemable starting June 1, 2025.
  • 5Holders of Series 13 Preference Shares have the right to convert their shares into Series 14 Preference Shares on designated conversion dates (starting June 1, 2020). Conversely, holders of Series 14 Preference Shares can convert into Series 13 Preference Shares on designated dates (starting June 1, 2025).
  • 6Restrictions are in place to prevent Enbridge from paying dividends on common shares or reducing capital if cumulative dividends on these preference shares are not paid in full.
  • 7The preference shares are structured to be held through a book-based system (CDS), with global certificates registered in the name of 'CDS & Co.'.

Frequently Asked Questions

This filing formally announces Enbridge Inc.'s decision to issue two new series of cumulative redeemable preference shares, Series 13 and Series 14, detailing their terms, rights, and conditions. It's a legal disclosure of the creation and terms of these new securities.

Series 13 starts with a fixed annual dividend of $1.10 per share during its initial period. After that, and for subsequent periods, its dividend rate will be fixed based on government bond yields plus a spread. Series 14, on the other hand, will pay a floating dividend rate, determined quarterly by the T-Bill rate plus a spread, creating more variability in its dividend payments.

Yes, there's a conversion feature between Series 13 and Series 14. Holders of Series 13 can convert them into Series 14 on specific dates starting in 2020. Conversely, holders of Series 14 can convert them into Series 13 on specific dates starting in 2025. These conversions are subject to certain conditions, including minimum outstanding share requirements.

Yes, the filing states that Enbridge cannot declare or pay dividends on its common shares or other junior shares unless all accrued and unpaid dividends on Series 13 and Series 14 preference shares (and any other parity shares) have been paid in full. This prioritizes payments to preference shareholders.