By Judy McKinnon
Enbridge Inc. (ENB) said Wednesday it is proposing to transfer
its majority stake in the U.S. segment of a pipeline running from
Alberta's oil sands to the U.S. Midwest to its Enbridge Energy
Partners L.P. (EEP) affiliate.
Calgary, Alberta-based Enbridge said it aims to transfer its
66.7% stake in the U.S. segment of the Alberta Clipper Pipeline in
exchange for about $900 million of cash and equity units in its
U.S. affiliate.
Enbridge Energy Partners already owns the other 33.3% stake in
the pipeline.
"This is the latest in a series of actions which Enbridge has
taken to enhance (Enbridge Energy Partner's) distributable cash
flow and restore its effectiveness as one of the sources of low
cost funding for Enbridge's organic growth opportunities," Enbridge
Chief Financial Officer J. Richard Bird said in a news release.
The so-called drop-down proposal, which includes cash of about
$300 million plus $600 million of equity units of the affiliate, is
expected to close by year-end. The units would boost Enbridge's
stake in its U.S. affiliate to about 36% from 34%, it said.
The deal is expected to immediately increase Enbridge Energy
Partners' distributable cash flow per unit by about 3%, Enbridge
said, and won't require its affiliate to issue any equity in the
public market.
The U.S. segment of Alberta Clipper is a 325-mile crude oil
pipeline running from the U.S. border near Neche, N.D. to Superior,
Wis.
Separately, Enbridge Energy Partners said Enbridge is aiming to
use drop-down deals as a source of low-cost funding for its own
broader growth capital program.
Enbridge received approval in June from the Canadian government
for its proposed 7.9 billion Canadian dollar ($7.2 billion)
Northern Gateway pipeline to Canada's west coast, but the project
still faces legal challenges, ongoing opposition from environmental
groups and a number of conditions that must be met before
proceeding.
Write to Judy McKinnon at judy.mckinnon@wsj.com
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