March 16, 2001
ENB) and Midcoast Energy Resources Inc. of Houston (AMEX: MRS)
today announced that the companies have entered into a definitive
merger agreement under which Enbridge will acquire all of the
common shares of Midcoast for US $27 per share in cash. The
closing of the transaction is subject to approval by the Midcoast
shareholders at a meeting expected to be held during the second
quarter of 2001, and to regulatory approvals. It is anticipated
that necessary approvals would be received in time to permit
closing of the merger by the end of the second quarter 2001.
Midcoast Energy is a rapidly growing Houston-based company engaged
in energy transportation and services in both the U.S. and Canada.
Areas of greatest focus include intrastate and interstate natural
gas pipeline transmission and gathering and processing, in the
U.S. Gulf Coast and Mid-Continent regions. Midcoast has a strong
track record of growth through both acquisition and organic
development.
Total consideration for the shares would be approximately US $350
million based on 13 million Midcoast shares. Enbridge will also
assume approximately US $250 million of Midcoast's long-term debt
resulting in a total transaction value of US $600 million, or
approximately Cdn. $900 million.
Enbridge and its U.S. subsidiary, Lakehead Pipe Line Company,
Inc., which is the general partner of Lakehead Pipe Line Partners,
L.P. (NYSE: LHP) have previously announced a strategy of utilizing
the Partnership as a vehicle for growth through the acquisition of
mature energy transportation assets, including purchase of such
assets from other Enbridge affiliates. While no decisions have
been reached regarding transfers of any Midcoast assets to the
Partnership, the acquisition of Midcoast by Enbridge will expand
the portfolio of assets available for possible transfer to the
Lakehead Partnership.
Patrick D. Daniel, President & Chief Executive Officer of Enbridge
Inc., commented: "The acquisition will enhance Enbridge's strong
growth profile and represents a significant step in increasing our
North American footprint. It furthers several strategic
objectives including obtaining a significant presence in the U.S.
Gulf Coast and Mid-Continent regions, increasing our exposure to
natural gas assets and adding to the scale of our U.S. operations.
The risk profile of Midcoast's business is similar to Enbridge
with limited exposure to natural gas or natural gas liquids
commodity prices."
Mr. Daniel also said, "Dan Tutcher, President & CEO of Midcoast,
and his team have been very effective in developing Midcoast to
its present state. We plan to retain this group, along with their
Houston location, excellent contacts and knowledge of Gulf Coast
and Mid-Continent opportunities. Going forward, this team will
play a key role in our U.S. development and growth strategy,
including the acquisition of mature cash generating assets by the
Lakehead Partnership. Mr. Tutcher will become a senior member of
our Enbridge executive leadership group."
Enbridge estimates that the acquisition will contribute earnings
of Cdn $30 million and will be accretive to earnings by
approximately Cdn $0.05 per share in 2002, the first full year
after the acquisition. Further accretion potential exists from
the possible future transfer of part or all of the Midcoast assets
to the Lakehead Partnership. Enbridge intends to initially
finance the Midcoast acquisition through its existing credit
capacity.
The merger agreement contains customary non-solicitation
provisions and a termination fee payable to Enbridge by Midcoast
of US $15 million under certain circumstances. In addition,
insiders holding approximately 12% of the outstanding shares have
agreed to vote in favor of the transaction.
Enbridge will host a conference call at 8:00 a.m. Eastern Time
(6:00 a.m. Mountain Time) on Friday, March 16, 2001. The call
will be web-cast live and will be available on the Enbridge web
site at www.enbridge.com/investor. A post conference playback
will be available on the web site following the live web-cast.
Please access the webcast prior to the above noted time.
Midcoast is a Houston-based pipeline company with regional offices
in Texas, Alabama, Kansas, Louisiana, Mississippi and Alberta,
Canada. The company transports, gathers, processes and markets
natural gas and other petroleum products through over 80 company
owned pipelines covering approximately 4,100 miles in 10 states,
Canada and the Gulf of Mexico. Information regarding Midcoast is
available on the company's web site at www.midcoastenergy.com.
Enbridge Inc. is a leader in energy transportation, distribution
and services. As a transporter of energy, Enbridge operates, in
Canada and the U.S., the world's longest crude oil and liquids
pipeline system. The Company also is involved in liquids
marketing and international energy projects, and has a growing
involvement in natural gas transmission and midstream businesses.
As a distributor of energy, Enbridge owns and operates Canada's
largest natural gas distribution company, which provides gas and
retail services in Ontario, Quebec and New York State; is
developing a gas distribution network for the province of New
Brunswick; and is involved in the distribution of electricity. In
addition, Enbridge provides retail energy products and services to
a growing number of Canadian and U.S. markets. The Company
employs approximately 5,500 people, primarily in Canada, the U.S.
and South America. Enbridge common shares trade on the Toronto
Stock Exchange in Canada under the symbol "ENB" and on the NASDAQ
National Market in the U.S. under the symbol "ENBR". Information
about Enbridge is available on the Company's web site at
This news release includes forward-looking statements regarding
future events and the future financial performance of Enbridge.
All forward-looking statements are based on Enbridge's beliefs as
well as assumptions made by and information currently available to
Enbridge. When used herein, words such as "believes," "expects,"
"intends," "forecasts," "projects," and similar expressions,
identify forward-looking statements. These statements reflect
Enbridge's current views with respect to future events and are
subject to various risks, uncertainties and assumptions pertaining
to operating performance, regulatory parameters, commodity prices,
weather and economic conditions and, in the case of pending and
proposed projects, risks relating to design and construction,
regulatory processes, financing and performance of other parties,
including partners, contractors and suppliers and other risks
discussed in Enbridge's regulatory filings, including its Annual
Information Form and Annual Report for the year ended December 31,
1999. If one or more of these risks or uncertainties materialize,
or if the underlying assumptions prove incorrect, actual results
may vary materially from those described in the forward-looking
statement. Except as required by applicable securities laws,
Enbridge does not intend to update these forward-looking
statements.