Calgary, Alberta-based Enbridge Inc. (NYSE: ENB) proposed, through Enbridge Energy Co. Inc., that Enbridge Energy Co. would drop down its 66.7% interest in the U.S. segment of the Alberta Clipper Pipeline to Enbridge Energy Partners LP (NYSE: EEP) for about $900 million in aggregate principal amount, Enbridge Energy Partners said Sept. 17.
Enbridge Energy Co. Inc. is the general partner of Enbridge Energy Partners, the company added.
The amount consists of about $300 million in cash and about $600 million of new Class E limited partner units that Enbridge Energy Partners will issue to Enbridge Energy Co. Inc., the company said.
The Class E units are able to be converted into Class A units on a one-for-one basis, the company noted. No units would be offered publicly, the company added.
A committee of independent directors, appointed by the board of directors at Enbridge Energy Management LLC, will review the proposal, the company said.
The proposed transaction is scheduled to close by the end this year, the company said.
Its value corresponds to about 11x multiple of the expected EBITDA for 2015, the company said, noting that it should be immediately accretive to distributable cash flow per unit by about 3%.
The U.S. segment of the Alberta Clipper Pipeline is a 36-inch diameter, 325-mile long crude oil pipeline from the U.S. border near Neche, N.D. to Superior, Wis. Its initial capacity is 450,000 barrels per day (bbl/d), the company said.
Enbridge Energy Co. funded two-thirds of the capital costs for the pipeline, which is being expanded in two phases to an 800,000 bbl/d capacity, the company added. For the expansion investments, Enbridge Energy Co. and Enbridge Energy Partners will make separate joint-funding arrangements, the company said.
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