Bold restructuring plan bolsters growth, Al Monaco tells BNN

Enbridge is 'putting capital to work,' potenially creating more organic opportunities

Enbridge is “putting capital to work” with Wednesday’s announcement of an historic financial restructuring program, president and CEO Al Monaco tells Canada’s Business News Network (BNN).

The restructuring plan calls for Enbridge Inc. to transfer its Canadian liquids pipelines business and various renewable energy assets, worth an aggregate of $17-billion, to its Canadian affiliate Enbridge Income Fund (EIF).

And during a Thursday interview on BNN’s Business Day program with host Catherine Murray, Mr. Monaco said this bold step – announced alongside a 33-per-cent increase in Enbridge’s next quarterly common share dividend, and a new dividend payout policy range through 2018 – is intended to further enhance the value of the company’s record $44-billion growth capital program for investors.

It could also potentially expedite new organic growth opportunities and asset acquisitions – as Enbridge continues to support North America’s unconventional energy boom with pipeline infrastructure, and aims to strengthen its $4-billion clean energy portfolio.

“We believe, prior to this announcement, that our strategic plan (through 2018) was very solid,” said Mr. Monaco, adding that this restructuring program is intended to “optimize” that plan. “With the combination of the dividend payout, and the drop-down (asset transfer) to Enbridge Income Fund, we could really boost value.

“We’re always searching for ways to try and improve our value in a prudent way – and that’s what we’re doing here.”

Enbridge Inc. shares on the Toronto Stock Exchange (ENB.TO) climbed $5.61 per share to $60.04, a one-day jump of 10.31 per cent, on Thursday.

Enbridge had also announced Wednesday a revised dividend payout policy range of 75 to 85 per cent of adjusted earnings through 2018, as well as a 2015 earnings-per-share (EPS) guidance of $2.05 to $2.35.

In recent months, Enbridge has made two other “drop-down” announcements – a $1.76-billion transfer of a package of natural-gas and diluent pipeline interests to Enbridge Income Fund, and a US$900-million transfer of its 66.7-per-cent interest in the U.S. segment of the company’s Line 67 (formerly known as Alberta Clipper) to affiliate Enbridge Energy Partners, L.P.

In addition to fuelling new investment opportunities for Enbridge Inc. – which has the strongest historic EPS growth track record in the sector – it’s expected that this latest restructuring program will transform Enbridge Income Fund into a higher-growth vehicle.

Enbridge is also examining a similar arrangement in the U.S., which would involve the transfer of its directly held American liquids pipelines assets to Enbridge Energy Partners, L.P., said Mr. Monaco.

“A lot of the attributes that we’re talking about here would be very similar, in terms of potential benefits,” he told BNN. “At this point, we’re still analyzing that possibility.”

Thursday’s full Business Day interview with Mr. Monaco is available online via the BNN website.