Enbridge Inc. (NYSE: ENB; TO: ENB) entered into an agreement with a group of underwriters to sell 8 million cumulative redeemable preference shares, series 5, at US $25 per share for distribution to the public.
Enbridge has granted to the underwriters an option, exercisable at any time up to 48 hours prior to the closing of the offering, to purchase up to an additional 2 million series 5 preferred shares. Closing of the offering is expected on Sept. 27.
The holders of series 5 preferred shares will be entitled to receive fixed cumulative dividends at an annual rate of $1.10 per share, payable quarterly on the first day of March, June, September and December, as and when declared by the board of directors of Enbridge, yielding 4.4% per annum, for the initial fixed rate period to but excluding March 1, 2019. The first quarterly dividend payment date is scheduled for Dec. 1, 2013. The dividend rate will reset on March 1, 2019 and every five years thereafter at a rate equal to the sum of the then five-year U.S. Government bond yield plus 2.82%. The series 5 preferred shares are redeemable by Enbridge, at its option, on March 1, 2019 and on March 1 of every fifth year thereafter.
The holders of series 5 preferred dhares will have the right to convert their shares into cumulative redeemable preference shares, series 6, subject to certain conditions, on March 1, 2019 and on March 1 of every fifth year thereafter. The holders of series 6 preferred shares will be entitled to receive quarterly floating rate cumulative dividends, as and when declared by the board of directors of Enbridge, at a rate equal to the sum of the then three-month U.S. Treasury Bill rate plus 2.82%.
The offering is being made only in Canada by means of a prospectus supplement to the base shelf prospectus of the corporation dated June 6. Proceeds will be used to partially fund capital projects, to reduce existing indebtedness and for other general corporate purposes of the corporation and its affiliates.
CIBC, RBC Capital Markets, Scotiabank, and TD Securities Inc. lead the syndicate of underwriters.
Enbridge Inc. operates as an energy transportation and distribution company in the U.S. and Canada. The company is headquartered in Calgary.