Enbridge Agrees To Transfer $1.76 Bln Of Assets To Enbridge Income Fund

(RTTNews) - Energy transportation and distribution company Enbridge Inc (ENB, ENB.TO) Monday 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 transfer is subject to receipt of customary regulatory approvals and is expected to close in November 2014.

Enbridge will receive on closing approximately $421 million in cash, $878 million in the form of a long term note payable by the Fund and bearing interest of 5.5 percent per annum, and $461 million in the form of preferred units of Enbridge Commercial Trust, a subsidiary of the Fund.

The note is expected to be repaid by the Fund on an expedited basis through the issuance of lower cost public debt, as with the prior transfers completed in 2011 and 2012. The Fund will issue $421 million of trust units to Enbridge Income Fund Holdings (ENF.TO) to fund the cash component of the consideration.

ENF has entered into a bought deal agreement with a group of underwriters for $336 million of subscription receipts exchangeable into ENF common shares on closing of the transaction. Enbridge has subscribed for $84 million of ENF common shares to maintain its interest in ENF at 19.9 percent. Enbridge's overall economic interest in the Fund will decrease slightly from 67.3 percent to 66.4 percent as a result of the transfer.