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ENBRIDGE INC 8-K Report, Material Agreement (Sep 5, 2023)

Filed September 5, 2023For Securities:ENBENBMFEBBGFEBRGFEBRZFENBGFENBRFENFFFEBGEFENBFFENBHFENBNFENBOFENBSFEBBNFENNPF

Summary

Enbridge Inc. (ENB) announced a significant strategic move through the entry into three separate purchase and sale agreements with Dominion Energy, Inc. to acquire its^{-1} gas utility assets across multiple states. The total transaction value is approximately $13.9 billion, comprising cash and assumed debt. These acquisitions, which are not cross-conditioned, are expected to close in 2024 and include Dominion Energy's "EOG" (Eastern Operations Group) assets for $6.6 billion, Questar Gas and related entities for $4.3 billion, and PSNC (Public Service Company of North Carolina) for $3.1 billion. To finance these acquisitions, Enbridge has secured a $9.4 billion bridge facility, with plans to reduce or eliminate its utilization through various permanent financing sources such as equity offerings, debt issuance, and asset sales. This move represents a substantial expansion of Enbridge's regulated utility footprint in the U.S. market, diversifying its asset base and potentially enhancing long-term stable cash flows, though subject to customary closing conditions including regulatory approvals.

Key Highlights

  • 1Enbridge is acquiring Dominion Energy's EOG, Questar, and PSNC gas utility assets for a total of approximately $13.9 billion.
  • 2The acquisitions are structured as three separate, non-cross-conditioned deals.
  • 3The total purchase price includes both cash consideration and assumed debt for each segment.
  • 4A $9.4 billion bridge facility has been committed to finance the transaction, with plans to replace it with permanent financing.
  • 5Expected closing for all acquisitions is in 2024, subject to customary conditions including regulatory approvals (HSR, FCC, CFIUS, and state-level commissions).
  • 6Enbridge may be required to pay termination fees if regulatory approvals are not obtained, ranging from approximately $78.3 million to $154.8 million per transaction.

Frequently Asked Questions

Enbridge is acquiring three sets of assets from Dominion Energy for a combined total of approximately $13.9 billion. This includes $6.6 billion for the EOG assets, $4.3 billion for Questar Gas and related companies, and $3.1 billion for PSNC.

Enbridge has secured a $9.4 billion bridge facility to fund the acquisitions. The company intends to reduce or eliminate the need to draw on this facility by utilizing permanent financing sources, such as equity and debt offerings, and potentially asset sales, before the acquisitions close.

The acquisitions are subject to several customary conditions, including the expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act (HSR Act), approval from the Federal Communications Commission (FCC) for license changes, clearance from the Committee on Foreign Investment in the United States (CFIUS), and approvals from various state public utility commissions (e.g., Ohio, Utah, Wyoming, North Carolina). The acquisitions are expected to close in 2024.

If the acquisitions do not close by September 5, 2024 (with a potential extension to December 4, 2024), and this is due to a failure to obtain required regulatory approvals, Enbridge may be obligated to pay Dominion Energy termination fees. These fees are approximately $154.8 million for the EOG acquisition, $106.9 million for the Questar acquisition, and $78.3 million for the PSNC acquisition.