Calgary, Alberta-based Enbridge Inc. (TO: ENB, NYSE: ENB) entered into an agreement with Enbridge Income Fund to transfer a package of natural gas and diluent pipeline interests to the Fund for total consideration of $1.76 billion, the company said Sept. 22.
The transfer is scheduled to close in November, the company added. At closing, Enbridge will receive about $421 million in cash. This amount will be supported by $421 million in trust units to Enbridge Income Fund Holdings (TO: ENF), the company said. It will also receive $878 million in a long-term note payable by the Fund that bears 5.5% interest per year. Preferred units of Fund subsidiary Enbridge Commercial Trust, worth $461 million, will also be received, the company added.
Enbridge Income Fund Holdings entered into a bought deal agreement with a group of underwriters for $336 million of subscription receipts. These can be exchanged into common shares of Fund Holdings when the transaction closes, Enbridge noted.
To hold its 19.9% interest in Fund Holdings, Enbridge subscribed for $84 million of Fund Holdings’ common shares. Its overall economic interest in Fund Holdings will decrease to 66.4%, from 67.3%, because of the transfer, the company added.
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