8-K

ENBRIDGE INC 8-K Report (Dec 4, 2014)

Filed December 4, 2014For Securities:ENBENBMFEBBGFEBRGFEBRZFENBGFENBRFENFFFEBGEFENBFFENBHFENBNFENBOFENBSFEBBNFENNPF

Summary

Enbridge Inc. announced a significant strategic restructuring and dividend policy update on December 3, 2014. The company plans to transfer its Canadian Liquids Pipelines business, along with certain renewable energy assets, to its Canadian affiliate, Enbridge Income Fund (EIF). This move aims to enhance investor value by leveraging Enbridge's substantial organic growth capital program and improving funding costs for new opportunities. Key financial highlights include a substantial 33% increase in the quarterly common share dividend, effective March 1, 2015, and a revised dividend payout policy range of 75% to 85% of adjusted earnings, up from the previous 60%-70% range. Enbridge also provided 2015 adjusted earnings per share (EPS) guidance of $2.05 to $2.35, excluding the expected 10% accretion from the Canadian restructuring. The company anticipates an average annual dividend growth rate of 14% to 16% from 2015 to 2018.

Key Highlights

  • 1Announced a 33% increase in its quarterly common share dividend, payable March 1, 2015, to $0.465 per share.
  • 2Plans to transfer its Canadian Liquids Pipelines business and certain renewable energy assets to Enbridge Income Fund (EIF).
  • 3Introduced a revised dividend payout policy range of 75% to 85% of adjusted earnings, an increase from the previous 60%-70% range.
  • 4Provided 2015 adjusted EPS guidance of $2.05 to $2.35, with an expected additional 10% accretion from the Canadian restructuring.
  • 5Expects an average annual dividend growth rate of 14% to 16% for common shares from 2015 through 2018.
  • 6The Canadian restructuring is targeted for completion mid-2015, subject to approvals.
  • 7Considering a parallel U.S. restructuring plan involving Enbridge Energy Partners, L.P. (EEP).

Frequently Asked Questions

The main purpose of the restructuring is to enhance the value of Enbridge's significant organic growth capital program and to improve the competitiveness of its funding costs for new opportunities and asset acquisitions by transferring the Canadian Liquids Pipelines business to Enbridge Income Fund (EIF).

The 33% dividend increase and the shift to a higher payout ratio (75%-85% of adjusted earnings) signal management's confidence in Enbridge's cash flow growth and ability to fund its capital program. This aims to provide shareholders with accelerated dividend growth and increased returns over the next several years.

Enbridge plans to transfer its Canadian Liquids Pipelines business, which includes its Canadian mainline system and Regional Oil Sands system assets, along with certain Canadian renewable energy assets currently held through EPI and EPA, to EIF.

The transfer of the Canadian Liquids Pipelines business is expected to provide similar EPS accretion to Enbridge as previous transfers, approximating an average increase of 10% annually through 2018, above the EPS profile previously expected from its organic growth program.