8-K

ENBRIDGE INC 8-K Report (Jun 19, 2015)

Filed June 19, 2015For Securities:ENBENBMFEBBGFEBRGFEBRZFENBGFENBRFENFFFEBGEFENBFFENBHFENBNFENBOFENBSFEBBNFENNPF

Summary

Enbridge Inc. announced a significant agreement to transfer its Canadian Liquids Pipelines Business and certain Canadian renewable energy assets to Enbridge Income Fund (the Fund) for approximately $30.4 billion. This transaction is a core component of Enbridge's financial strategy to enhance shareholder value, support dividend growth, and position the company for continued industry-leading growth beyond 2018. The deal is expected to be accretive to adjusted earnings per share and will transform the Fund into a premier Canadian liquids pipelines investment vehicle. The agreement outlines a consideration package including units in the Fund structure and assumption of debt, alongside performance-based rights (TPDR) designed to allow Enbridge to benefit from future growth in the transferred assets. Enbridge will maintain management and operational control of the transferred assets. The company is also adopting new financial reporting metrics, specifically Available Cash Flow from Operations (ACFFO), to better reflect its business performance and dividend outlook, targeting a payout ratio of 40-50% of ACFFO.

Key Highlights

  • 1Agreement to transfer Canadian Liquids Pipelines Business and renewable energy assets to Enbridge Income Fund for $30.4 billion.
  • 2Transaction aims to support higher dividend payouts and extend Enbridge's industry-leading growth rate beyond 2018.
  • 3Expected Available Cash Flow from Operations (ACFFO) growth of approximately 18% from 2014 to 2018.
  • 4Projected dividend per share growth of 33% in 2015, followed by 14-16% average annual growth from 2016-2018.
  • 5Consideration includes $18.7 billion in units and $11.7 billion in assumed debt.
  • 6Enbridge will retain management and operational control of the transferred assets.
  • 7New ACFFO metric adoption for assessing performance and dividend outlook, with a target payout range of 40-50% of ACFFO.

Frequently Asked Questions

The transaction is designed to enhance shareholder value by supporting higher dividend payouts and positioning Enbridge for continued industry-leading growth beyond 2018. It also provides Enbridge with an alternate source of funding for its growth initiatives and improves its competitiveness for new opportunities.

Enbridge announced a 33% dividend per share growth in 2015. Looking ahead, the company expects an annual average dividend per share growth of 14-16% from 2016 to 2018. Additionally, Enbridge will now express its dividend payout target as a percentage of Available Cash Flow from Operations (ACFFO), targeting a range of 40-50%, which is equivalent to its previous target based on adjusted earnings.

The assets being transferred include Enbridge's Canadian Liquids Pipelines Business (comprising the Canadian Mainline, Regional Oil Sands System, and related assets) and certain Canadian renewable energy assets. These assets come with a significant program of commercially secured growth projects.

No, Enbridge will remain as the manager and operator of the transferred Canadian Liquids Pipelines Business. This ensures continuity of management and operational expertise, focusing on safe and reliable operations.