ENBRIDGE CUTS INTO DEBT WITH US$2.5B ASSET SALES.

Company planning to unload more

CALGARY/NEW YORK • Enbridge Inc. took a leap forward in efforts to trim the pile of debt it took on with last year’s US$28.6 billion purchase of Spectra Energy Corp., announcing the sale of a U.S. natural gas business and stakes in some renewable-energy assets.

Enbridge on Wednesday agreed to sell its Midcoast Operating LP gas midstream unit to Arclight Capital Partners for US$1.12 billion. The pipeline giant also said it’s transferring its Canadian renewable-power assets, a wind farm in Colorado, a solar project in Nevada and a stake in two German offshore wind projects to a joint venture with the Canada Pension Plan Investment Board for US$1.36 billion.

With the divestitures, Enbridge is making good on a goal of selling at least US$2.33 billion in assets this year to whittle down the US$14.5 billion in borrowings from the Spectra deal, which diversified the company into North American gas pipelines. That debt load has weighed on Enbridge shares, sending them down 18 per cent this year through Tuesday, the fourth-worst performance in the S&P/TSX energy index.

More sales may be on the horizon. Enbridge also is said to have hired Royal Bank of Canada to sell a group of Canadian gathering and processing assets that could fetch more than US$1.56 billion. The assets, located in British Columbia and Alberta, were owned by Spectra.

Longer-term, Enbridge has identified US$7.76 billion in non-core assets that it plans to unload. Still, the debt remains a concern, with Moody’s Investors Service Inc. in December downgrading Enbridge’s rating, saying the divestiture plan was “insufficient to improve

the financial profile of the company in a timely manner.”

“The sale of Midcoast is an important step in our shift towards a pure regulated pipeline and utility model,” Enbridge chief executive Officer Al Monaco said.

For the CPPIB, its deal with Enbridge represents the second bet in as many months on renewable energy, as it takes advantage of low prices in the sector. The pension fund manager said last month it would buy U.S. utility Nextera Energy Partners’ wind and solar assets in Ontario for about $582 million.

The CPPIB and Enbridge will also form a joint venture focused on future European offshore wind energy projects.

Both the Midcoast and renewable energy transactions are expected to close in the third quarter.

Enbridge expects to retain its stake in other U.S. renewable power assets, which may be monetized or sold at a later date, it said.

Enbridge shares rose 1.7 per cent to $41.14 at 9:49 a.m. in Toronto.

Canadian Imperial Bank of Commerce acted as Enbridge’s financial adviser on the renewables deal. Citigroup Inc. was financial adviser on the Midcoast sale.

The Midcoast assets Enbridge is selling include gas and natural gas liquids gathering, processing, transportation and marketing operations in Texas, Oklahoma and Louisiana.