Highlights
- All conditions in merger agreement have been met;
Transaction expected to close on February
27
- The combined company will be a global energy
infrastructure leader and the largest energy infrastructure company
in North America with roughly
C$166 billion (US$126 billion) enterprise value
- Leading strategic business platforms including liquids
and natural gas pipelines, natural gas distribution utilities and
renewable power generation
- Industry leading C$27
billion (US$21 billion) of
secured growth projects and approximately C$48 billion (US$37
billion) of probability weighted projects under development
drives transparent long-term cash flow growth
- 10 to 12 percent average annual dividend increases
expected from 2018 through 2024
- Strong, investment grade balance sheet
- Expected run-rate synergies of pre-tax C$540 million (US$415
million) by 2019, and estimated tax savings of C$260 million (US$200
million) beginning in 2019
CALGARY, Alberta and
HOUSTON, Feb. 23, 2017 /PRNewswire/ -- Enbridge Inc.
(TSX, NYSE:ENB) (Enbridge) and Spectra Energy Corp (NYSE:SE)
(Spectra Energy) today announced that the previously announced
merger of the two companies (the Transaction) has received all
required regulatory clearances under the merger agreement,
including from the Canadian Competition Bureau, and is expected to
close on February 27, 2017.
"We are very pleased to have now received all required
regulatory clearances and we look forward to realizing the
significant customer and shareholder benefits of combining these
two strong companies," said Al
Monaco, President and Chief Executive Officer of Enbridge.
"With the completion of the Transaction, Enbridge will become a
leading global energy infrastructure company and the largest in
North America with roughly
C$166 billion (US$126 billion) in enterprise value and the
strongest liquids and natural gas infrastructure franchises on the
continent. We will have a diverse set of low-risk businesses
comprised of a best in class network of crude oil, liquids and
natural gas pipelines, a large portfolio of strong, regulated gas
distribution utilities and a growing renewable power generation
platform. The combined company will be positioned to provide
integrated services and first and last mile connectivity to
virtually all key liquids and gas supply basins and demand markets
in North America."
Mr. Monaco added: "A significant amount of collaboration has
allowed us to get to this point. The two companies have completed
extensive planning in advance of closing and will be focused on a
successful integration. Our teams are well prepared to ensure a
smooth transition for our customers, employees and other
stakeholders, while maintaining a sharp focus on our number one
priority – the safety and reliability of our networks. We look
forward to realizing the benefits of this strategic combination
while delivering the energy people want and need."
Spectra Energy Chief Executive Officer Greg Ebel, who will become chairman of
Enbridge once the Transaction closes, said: "By combining the
strength of Enbridge with the strength of Spectra Energy, we are
creating an unrivaled company that will provide superior value –
now and into the future – for our customers, employees, investors
and communities. The Transaction will significantly enhance
and extend the dividend growth outlook for Spectra Energy
shareholders. No other company in our industry will have this kind
of high-return, low-risk model that investors value so highly."
Financial Matters
Enbridge expects the Transaction will support its 12 to 14
percent secured ACFFO per share CAGR guidance over the 2015-2019
planning horizon, and will be strongly additive to the Company's
growth outlook beyond that timeframe.
As previously announced, following the closing of the
Transaction, Enbridge will have a substantial capital project
portfolio, including C$27 billion
(US$21 billion) of commercially
secured growth projects coming into service between 2017 and 2019,
and C$48 billion probability-weighted
development project portfolio. The growth program is expected to
enable the Company to deliver highly visible ongoing dividend
growth of 10 to 12 percent per year, on average, through 2024,
while maintaining a conservative payout of 50 to 60 percent of
ACFFO.
Enbridge is committed to maintaining its financial strength. In
order to further reinforce its financial position and help support
continued strong investment grade credit ratings, the Transaction
was structured as a share for share exchange. No incremental debt
will be incurred on closing of the Transaction. In addition, at the
time the Transaction was announced last September, Enbridge set a
target of monetizing C$2 billion of
non-core assets to provide additional financial strength and
flexibility. Approximately C$1.7
billion of that C$2 billion
target has been achieved through the sale of its South Prairie
Region assets and agreements to sell additional non-core assets.
Enbridge management has identified other potential divestments that
should enable the Company to meet or exceed this target. No
follow-on equity offerings by Enbridge are required to complete
funding of the combined secured C$27
billion (US$21 billion)
secured growth program through 2019.
The combination is expected to achieve annual run-rate synergies
of pre-tax C$540 million
(US$415 million) by 2019. Detailed
plans have been developed to capture a good portion of these
synergies in the current year. In addition, the Company expects
that approximately C$260 million
(US$200 million) of tax savings can
be achieved through utilization of tax losses commencing in
2019.
Guidance for the combined company for 2017 will be provided in
conjunction with the first quarter financial results. Enbridge
expects to provide a business and integration update for investors
in June 2017 and is planning an
investor conference in December, at which time additional detail on
the Company's strategic priorities and long-range financial outlook
will be provided.
Governance and Employee Matters
Enbridge announced today a new Board of Directors that will take
effect as of the closing of the Transaction. Under the terms of the
Transaction, the Board of Directors of Enbridge will consist of
eight members designated by Enbridge, including Mr. Monaco
(President and CEO), and five members designated by Spectra Energy,
including Mr. Ebel as chairman of the board. Besides Mr. Monaco,
the directors designated by Enbridge, all of whom currently serve
as directors of Enbridge, are Marcel R.
Coutu, J. Herb England,
Charles W. Fischer, V. Maureen Kempston Darkes, Rebecca B. Roberts, Dan
C. Tutcher and Catherine L.
Williams. In addition to Mr. Ebel (Chair), the directors
designated by Spectra Energy are Pamela L. Carter, Clarence P. Cazalot, Jr., Michael McShane and Michael E.J. Phelps, all of whom currently serve
as directors of Spectra Energy.
Concurrent with the closing of the Transaction, David A. Arledge (Chair), James J. Blanchard and George K. Petty will be retiring from the
Enbridge board while F. Anthony
Comper, Austin A. Adams,
Joseph Alvarado, Peter B. Hamilton, Miranda C. Hubbs and Michael G. Morris will be retiring from the
Spectra Energy board. Both Mr. Monaco and Mr. Ebel thank those
retiring board members for their contributions to the success of
their respective companies. "We're grateful to those retiring board
members from the two companies for their leadership, dedication,
and guidance. They have provided great stewardship to help build
the two very strong organizations that we are combining."
Mr. Monaco added that he looks forward to welcoming Spectra
Energy employees to Enbridge. "We're bringing together two
exceptional teams with strong values and a shared approach to
safety, our stakeholders and our communities. We will move forward
together, building from our proven strengths to position Enbridge
to deliver infrastructure growth opportunities for our customers
and continue to create value for our shareholders."
As previously announced, the headquarters of the combined
company will be in Calgary,
Alberta. Houston, Texas,
will be the combined company's gas pipelines business unit center;
Edmonton, Alberta, will remain the
business unit center for liquids pipelines, with the business unit
centers for gas distribution continuing to be based
in Ontario. The combined company at close will have
approximately 17,000 employees.
Dividends and Stock Listings
Spectra Energy will make its final common share dividend payment
on March 1, 2017, to Spectra
shareholders of record on February 15,
2017. In January, Enbridge announced a 10 percent increase
in its quarterly common share dividend payable on March 1, 2017, to shareholders of record on
February 15, 2017. It is expected
that the first quarterly common share dividend post-combination
will be payable on June 1, 2017,
subject to board approval, and is expected to include a further
increase to bring the aggregate increase in Enbridge's quarterly
dividend to approximately 15 percent above the prevailing quarterly
rate in 2016.
Trading in shares of Spectra Energy on the New York Stock
Exchange (NYSE) will be suspended effective as of the opening of
trading on February 27, 2017. In
connection with the completion of the Transaction, the shares of
common stock of Spectra Energy will be delisted from the NYSE and
will be de-registered under the U.S. Securities Exchange Act of
1934. Common shares of Enbridge will continue to trade on both the
NYSE and the Toronto Stock Exchange under the symbol "ENB".
Enbridge Energy Partners, L.P. (NYSE: EEP) and Spectra Energy
Partners, LP (NYSE: SEP) will continue to be publicly traded
partnerships headquartered in Houston, Texas. Enbridge Income Fund Holdings Inc.
(TSX: ENF) will remain a publicly traded corporation headquartered
in Calgary, Alberta. At
Transaction closing, Midcoast Energy Partners, L.P. (NYSE:
MEP)(Midcoast) will be a publicly traded partnership headquartered
in Houston; however as announced
on January 27, 2017, all of the
outstanding publicly held common units of Midcoast are expected to
be acquired by an Enbridge affiliate during the second quarter of
2017 and Midcoast would cease to be a publicly listed entity at
that time.
About Enbridge Inc.
Enbridge, a Canadian company, exists to fuel people's quality
of life, and has done so for more than 65 years. A North American
leader in delivering energy, Enbridge has been ranked on the Global
100 Most Sustainable Corporations index for the past eight years.
Enbridge operates the world's longest crude oil and liquids
transportation system across Canada and the
United States and has a significant and growing involvement
in natural gas gathering, transmission and midstream business, as
well as an increasing involvement in power transmission. Enbridge
owns and operates Canada's largest
natural gas distribution company, serving residential, commercial
and industrial customers in Ontario, Quebec, New
Brunswick and New York
State. Enbridge has interests in approximately 2,500 MW of
net renewable and alternative generating capacity, and continues to
expand into wind, solar and geothermal power. Enbridge employs
approximately 9,200 people, primarily in Canada and the
United States and has been ranked 15 times on the annual
Canada's Top 100 Employers list,
including the 2017 index. Enbridge's common shares trade on the
Toronto and New York stock exchanges under the symbol ENB.
For more information, visit www.enbridge.com.
ABOUT SPECTRA ENERGY CORP
Spectra Energy Corp (NYSE: SE), a FORTUNE 500 company,
is one of North America's leading pipeline and
midstream companies. Based in Houston, Texas, the company's operations in the
United States and Canada include approximately
21,000 miles of natural gas and crude oil pipelines; approximately
300 billion cubic feet of natural gas storage; 5.6 million barrels
of crude oil storage; as well as natural gas gathering, processing,
and local distribution operations. Spectra Energy is the general
partner of Spectra Energy Partners, LP (NYSE: SEP), one
of the largest pipeline master limited partnerships in the
United States and owner of the natural gas and crude oil
assets in Spectra Energy's U.S. portfolio. Spectra Energy also has
a 50 percent ownership in DCP Midstream, LLC, which is the
general partner of DCP Midstream, LP (NYSE: DCP), the
largest natural gas liquids producer and the largest natural gas
processor in the United
States, and the largest gathering and processing master
limited partnership in the United
States. Spectra Energy has served North American customers
and communities for more than a century. For more information,
visit www.spectraenergy.com.
FORWARD-LOOKING INFORMATION
This news release includes certain forward looking statements
and information (FLI) to provide Enbridge and Spectra Energy
shareholders and potential investors with information about
Enbridge, Spectra Energy and their respective subsidiaries and
affiliates, including each company's management's respective
assessment of Enbridge, Spectra Energy and their respective
subsidiaries' future plans and operations, which FLI may not be
appropriate for other purposes. FLI is typically identified by
words such as "anticipate", "expect", "project", "estimate",
"forecast", "plan", "intend", "target", "believe", "likely" and
similar words suggesting future outcomes or statements regarding an
outlook. All statements other than statements of historical fact
may be FLI. In particular, this news release contains FLI
pertaining to, but not limited to, information with respect to the
following: the Transaction; the combined company's scale, financial
flexibility and growth program; future business prospects and
performance; annual cost, revenue and financing benefits; the
expected ACFFO per share growth; future shareholder returns; annual
dividend growth and anticipated dividend increases and payment
dates; payout of distributable cash flow; financial strength and
ability to fund capital program and compete for growth projects;
credit ratings; run-rate and tax synergies; potential asset
dispositions; leadership and governance structure; head
office and business center locations; delisting and de-registration
of the common stock of Spectra Energy; the proposed merger of
Midcoast with an indirect wholly-owned subsidiary of Enbridge; and
investor communications plans.
Although we believe that the FLI is reasonable based on the
information available today and processes used to prepare it, such
statements are not guarantees of future performance and you are
cautioned against placing undue reliance on FLI. By its nature, FLI
involves a variety of assumptions, which are based upon factors
that may be difficult to predict and that may involve known and
unknown risks and uncertainties and other factors which may cause
actual results, levels of activity and achievements to differ
materially from those expressed or implied by these FLI, including,
but not limited to, the following: the realization of
anticipated benefits and synergies of the Transaction and the
timing thereof; the success of integration plans; the focus of
management time and attention on the Transaction and other
disruptions arising from the Transaction; expected future ACFFO;
estimated future dividends; financial strength and flexibility;
debt and equity market conditions, including the ability to access
capital markets on favourable terms or at all; cost of debt and
equity capital; expected supply and demand for crude oil, natural
gas, natural gas liquids and renewable energy; prices of crude oil,
natural gas, natural gas liquids and renewable energy; economic and
competitive conditions; expected exchange rates; inflation;
interest rates; changes in tax laws and tax rates; credit ratings;
completion of growth projects; anticipated in-service dates;
capital project funding; success of hedging activities; the ability
of management of Enbridge, its subsidiaries and affiliates to
execute key priorities, including those in connection with the
Transaction and the proposed merger of Midcoast with an indirect
wholly-owned subsidiary of Enbridge; availability and price of
labour and construction materials; operational performance and
reliability; customer, shareholder, regulatory and other
stakeholder approvals and support; regulatory and legislative
decisions and actions; public opinion; and weather. We
caution that the foregoing list of factors is not exhaustive.
Additional information about these and other assumptions, risks and
uncertainties can be found in applicable filings with Canadian and
U.S. securities regulators, including any proxy statement,
prospectus or registration statement filed in connection with the
Transaction. Due to the interdependencies and correlation of these
factors, as well as other factors, the impact of any one
assumption, risk or uncertainty on FLI cannot be determined with
certainty.
Except to the extent required by law, we assume no obligation to
publicly update or revise any FLI, whether as a result of new
information, future events or otherwise. All FLI in this news
release is expressly qualified in its entirety by these cautionary
statements.
NON-GAAP MEASURES
This news release makes reference to non-GAAP measures,
including ACFFO and ACFFO per share. ACFFO is defined as cash
flow provided by operating activities before changes in operating
assets and liabilities (including changes in environmental
liabilities) less distributions to non-controlling interests and
redeemable non-controlling interests, preference share dividends
and maintenance capital expenditures, and further adjusted for
unusual, non-recurring or non-operating factors. Management of
Enbridge believes the presentation of these measures gives useful
information to investors and shareholders as they provide increased
transparency and insight into the performance of Enbridge.
Management of Enbridge uses ACFFO to assess performance and to set
its dividend payout target. These measures are not measures
that have a standardized meaning prescribed by generally accepted
accounting principles in the United
States of America (U.S. GAAP) and may not be comparable with
similar measures presented by other issuers. Additional information
on Enbridge's use of non-GAAP measures can be found in Enbridge's
Management's Discussion and Analysis (MD&A) available on
Enbridge's website and www.sedar.com.
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SOURCE Spectra Energy Corp; Enbridge Inc.