By Chester Dawson
CALGARY, Alberta--Pipeline operator Enbridge Inc. said Wednesday
it plans to increase its dividend by 33% and transfer ownership of
its Canadian pipelines to affiliates in a bid to lower funding
costs for future expansion and new projects.
The Calgary-based company said it would shift ownership of its
Canadian pipeline assets to a subsidiary known as Enbridge Income
Fund and then raise up to 800 million Canadian dollars ($703
million) in equity over the next three years through yet another
affiliate that is publicly listed, called Enbridge Income Fund
Holdings Inc. The complex maneuver, dubbed a "drop down," is
designed to allow Enbridge to funnel money from one fund to another
without diluting its own shares.
"Our plan to transfer the Canadian Liquids Pipelines business to
Enbridge Income Fund comes after an extensive review of the
potential to further enhance the value of our [C]$44 billion growth
program and lower the cost of funding for that program and for new
investment opportunities," Chief Executive Al Monaco said in a
statement.
Enbridge said it would boost its dividend in the first quarter
of next year to 46.5 Canadian cents a share, up from C$0.35 in the
fourth quarter of 2014. It also projected adjusted earnings per
share next year of C$2.05 to C$2.35, up from its 2014 full-year
estimate of C$1.84 to $2.04.
The combined value of the pipeline assets involved in the
financial re-engineering plan totals C$17 billion and includes the
Canadian segment of the Alberta Clipper pipeline, the company said.
That pipeline, also known as Line 67, is awaiting U.S. government
approval of a planned expansion to 800,000 barrels a day.
Enbridge said it also is considering a similar move to
restructure its U.S. assets by transferring them to an affiliate
called Enbridge Energy Partners L.P.
In September, the company forecast 10% to 12% average annual
growth in adjusted earnings per share over the next four years,
which is below the 14% average annual adjusted EPS it has reported
over the past four years.
Write to Chester Dawson at chester.dawson@wsj.com
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