8-K

ENBRIDGE INC 8-K Report (Sep 1, 2017)

Filed September 1, 2017For Securities:ENBENBMFEBBGFEBRGFEBRZFENBGFENBRFENFFFEBGEFENBFFENBHFENBNFENBOFENBSFEBBNFENNPF

Summary

This Form 6-K filing from Enbridge Inc. on September 1, 2017, primarily serves to incorporate two press releases dated August 2 and August 17, 2017. The key information for investors concerns the Series L Preferred Shares and their conversion rights. Enbridge announced that it would not redeem its Series L Preferred Shares on September 1, 2017, giving holders the option to convert them into Series M Preferred Shares. However, a subsequent press release confirmed that the conversion threshold was not met, meaning all outstanding Series L Shares remained Series L Shares and were not converted into Series M Shares. The dividend rate for Series L shares that remain outstanding will reset to a fixed annual rate of 4.959% for the period from September 1, 2017, to August 31, 2022. This rate is based on the five-year U.S. Treasury bond yield plus a spread. The Series M shares, had they been issued, would have carried a floating quarterly dividend rate. This filing provides clarity on the capital structure and dividend commitments related to these preferred share series.

Key Highlights

  • 1Enbridge Inc. announced on August 2, 2017, that it would not redeem its Series L Cumulative Redeemable Preference Shares (Series L Shares) on September 1, 2017.
  • 2Holders of Series L Shares were offered the right to convert their shares into Series M Cumulative Redeemable Preference Shares (Series M Shares) on a one-for-one basis on September 1, 2017.
  • 3The conversion was subject to certain conditions, including a minimum of 1,000,000 Series L Shares remaining outstanding after conversion for conversions to proceed, or a minimum of 1,000,000 Series M Shares being created.
  • 4On August 17, 2017, Enbridge announced that the conversion threshold for Series L Shares was not met, meaning no Series L Shares would be converted into Series M Shares.
  • 5All 16,000,000 outstanding Series L Shares will remain Series L Shares.
  • 6The fixed annual dividend rate for Series L Shares, for the period from September 1, 2017, to August 31, 2022, was set at 4.959%, based on the 5-year U.S. Treasury yield plus a spread.
  • 7The Series M Shares, had they been issued, would have had a floating quarterly dividend rate.

Frequently Asked Questions

This filing (on Form 6-K) incorporated two press releases. The primary information concerned Enbridge's Series L Preferred Shares, specifically the option for holders to convert them into Series M Preferred Shares and the subsequent outcome where no conversions took place.

No, Enbridge announced on August 17, 2017, that the conversion threshold was not met. Therefore, all outstanding Series L Preferred Shares will remain Series L Preferred Shares and will not be converted into Series M Preferred Shares.

For Series L Shares that remain outstanding, the new fixed annual dividend rate for the five-year period commencing September 1, 2017, to August 31, 2022, is 4.959%. This rate is determined by the yield on a 5-year U.S. Treasury bond plus a 3.15% spread.

If conversions had occurred and Series M Shares were issued, they would have carried a floating quarterly dividend rate. This rate would reset every quarter, based on the annual rate of 3-month U.S. Treasury bills plus a 3.15% spread.