CALGARY, ALBERTA--
NOT FOR DISTRIBUTION TO U.S. NEWS WIRE SERVICES OR FOR
DISSEMINATION IN THE U.S.
Enbridge Inc. announced today that it is creating Enbridge Income
Fund, an opportunity for Canadians to invest directly in stable,
low-risk pipeline assets. Enbridge will be the sponsor and
manager of the Fund and will provide the Fund's initial asset
base. A preliminary prospectus qualifying the issuance of
ordinary trust units to the public was filed today.
On formation, Enbridge intends to transfer to the Fund its 50%
interest in the Canadian segment of the Alliance Pipeline
together with Enbridge's 100% interest in Enbridge Pipelines
(Saskatchewan) Inc. In the future, additional Enbridge Canadian
pipeline assets with stable cash flow streams and limited capital
requirements are expected to be available to the Fund as such
assets mature, and the Fund is able to finance the acquisition of
such assets. The Fund will also pursue third-party Canadian
assets of the requisite quality and financial attributes, and
will be Enbridge's primary acquisition vehicle for mature
Canadian pipeline assets.
Upon completion of the initial public offering, Enbridge expects
to hold an approximate 35-45% interest in the Fund in the form of
subordinated trust units declining to an interest of
approximately 15-20% as additional ordinary trust unit offerings
are undertaken. Enbridge expects to initially hold an additional
temporary interest in a subsidiary of the Fund through preferred
units, which interest is expected to be reduced or eliminated as
the proceeds from additional ordinary trust unit offerings are
used to repurchase the preferred units.
Enbridge expects to record a pre-tax gain on the initial assets
transferred to the Fund, and to receive cash proceeds of
approximately $300-$350 million depending on the size of the
initial public offering and the amount of debt that the Fund can
support. The funds will be applied temporarily to reduce debt,
pending redeployment into new investment opportunities.
Enbridge will provide all management services required for the
Fund to operate, to administer its assets, and to acquire
additional assets. Enbridge will be reimbursed for services
provided, and will have the opportunity to earn an incentive fee
equal to 25% of unitholder cash distributions above a base
distribution level.
"Our launch of the Enbridge Income Fund provides us with a key
tool to further Enbridge's growth strategy," said Patrick D.
Daniel, Enbridge's President & Chief Executive Officer. "We
create value by being operationally excellent managers of energy
delivery assets, and marrying this expertise with the most
effective source of capital for any particular asset. The most
effective source of capital in Canada for mature, stable cash
flow assets has become the income fund. We believe Enbridge
Pipelines (Saskatchewan) Inc. and the Alliance Pipeline's asset
characteristics are ideally suited for an income fund."
Mr. Daniel added, "This new tool will drive Enbridge's earnings
per share growth in two ways. First, it provides a mechanism to
monetize mature pipeline assets on attractive terms, and permit
the redeployment of this capital into higher growth
opportunities. We will continue to be selective in our choice of
investments for this redeployment to ensure our low risk business
profile is maintained. Second, we will benefit from the power of
the incentive distribution mechanism as the Fund acquires
additional mature assets from third parties without requiring
additional capital investment by Enbridge. This parallels our
successful experience in the U.S. with our MLP affiliate,
Enbridge Energy Partners."
The Alliance Canada Pipeline is that portion of the Alliance
System located in Canada, and consists of approximately 1560
kilometres of natural gas mainline pipeline and a series of
lateral pipelines connecting the mainline to 43 receipt
locations, primarily at processing facilities in northwestern
Alberta and northeastern British Columbia. The entire Alliance
system extends 3000 kilometres from Fort St. John, British
Columbia, to Chicago, Illinois, and is designed to transport
approximately 1.325 billion cubic feet of natural gas per day.
It employs a "high pressure dense phase" technology to create
higher transmission efficiency than traditional conventional gas
transmission systems. Alliance commenced operations in late
2000. Enbridge was the first pipeline company to invest in
Alliance and, in conjunction with a number of natural gas
producers, seek to develop alternatives for accessing U.S.
markets.
Enbridge Pipelines (Saskatchewan) Inc. owns and operates the
Enbridge Saskatchewan System and, through wholly owned
subsidiaries, also owns and operates the Westspur, Weyburn and
Virden crude oil and liquids pipeline systems. Collectively
these pipeline systems comprise approximately 328 kilometres of
trunk line and 1995 kilometres of gathering system pipeline and
related terminals and storage facilities. The Saskatchewan
System and Weyburn System are crude oil and liquids gathering
systems located in Saskatchewan and the Virden System is a crude
oil and liquids gathering system located in Manitoba. The
Westspur System is a crude oil and liquids trunk line system
located in southeastern Saskatchewan. It transports crude oil
received from these gathering systems and by truck, and natural
gas liquids from the Steelman gas processing plant, to Cromer,
Manitoba, from where the products are transported primarily to
Eastern Canada and the United States by affiliates of Enbridge.
Enbridge Inc. will host a webcast conference call to discuss this
transaction on May 26, 2003, at 3:00 p.m. Mountain Time (5:00
p.m. Eastern Time). Participants are invited to access the call
at 1-888-575-8232 or at www.enbridge.com/investor. A replay will
be available shortly thereafter at 1-800-408-3053, using the code
1428143#.
This press release does not constitute an offer to sell or a
solicitation of an offer to buy the ordinary trust units in any
jurisdiction. The ordinary trust units offered have not been
registered under the United States Securities Act of 1933, as
amended, and may not be offered or sold within the United States
of America.
Enbridge Inc. is a leader in energy transportation and
distribution in North America and internationally. As a
transporter of energy, Enbridge operates, in Canada and the U.S.,
the world's longest crude oil and liquids transportation system.
The Company also has international operations and a growing
involvement in the natural gas transmission and midstream
businesses. As a distributor of energy, Enbridge owns and
operates Canada's largest natural gas distribution company, which
provides distribution services in Ontario, Quebec and New York
State; and is developing a gas distribution system for the
Province of New Brunswick. Enbridge employs approximately 4,000
people, primarily in Canada, the U.S. and South America.
Enbridge's common shares trade on the Toronto Stock Exchange and
on the New York Stock Exchange. under the symbol ENB.
Information about Enbridge is available on the Company's web site
at www.enbridge.com.
When used in this news release, the words "anticipate", "expect",
"project", "believe", "estimate", "forecast" and similar
expressions are intended to identify forward-looking statements,
which include statements relating to pending and proposed
projects. Such statements are subject to certain risks,
uncertainties and assumptions pertaining to operating
performance, regulatory parameters, weather and economic
conditions and, in the case of pending and proposed projects,
risks relating to design and construction, regulatory processes,
obtaining financing and performance of other parties, including
partners, contractors and suppliers.
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