IPPToday #244: Enbridge and Brookfield agree US$3.3 billion natural gas sale
- Brookfield Infrastructure
- AL Midcoast Holdings
- Canada Pension Plan Investment Board (CPPIB)
- Royal Bank of Canada (RBC)
- Torys LLP
Related M&A Transactions
- Enbridge sells Canadian natural gas gathering & processing (G&P) businesses to Brookfield Infrastructure
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Enbridge Inc. has entered into definitive agreements to sell its natural gas gathering and processing (G&P) business based in Canada to Brookfield Infrastructure and its institutional partners for a cash purchase price of CAD4.31 billion (US$3.29 billion).
The G&P business includes 19 natural gas processing plants and liquids handling facilities located in the Montney, Peace River Arch, Horn River and Liard basins in British Columbia (B.C.) and Alberta, with a total operating capacity of 3.3 billion cubic feet of gas a day and 3,550 km of natural gas gathering pipelines.
The sale does not include Enbridge's regulated natural gas transmission assets, such as the Westcoast transmission system in British Columbia and the Alliance pipeline that carries natural gas from western Canada to Chicago.
Separate sale agreements have been entered into for those facilities currently governed by provincial regulations (Alberta and B.C.), and those governed by federal National Energy Board regulations. The transaction involving the sale of the provincially regulated facilities is expected to close in 2018, while the transaction involving the sale of the federally regulated facilities is anticipated to close in mid-2019.
Proceeds from these transactions provide significant additional financing flexibility going forward as the Company continues to execute on its current portfolio of secured growth projects.
The sale is part of Enbridge's transformation as a business, as the company intends to move to a pure play regulated pipeline and utility business model. It follows two major divestments announced earlier this year, which also sought to progress this transformation.
In May, the company announced the sale of it's U.S. natural gas and natural gas liquids (NGL) gathering, processing, transportation and marketing businesses to AL Midcoast Holdings, and also the divestment of a 49% stake in renewable assets to Canada Pension Plan Investment Board (CPPIB).
AL Midcoast Holdings has agreed to acquire the businesses, which are based in Texas, Oklahoma and Louisiana, for US$1.12 billion. CPPIB has agreed to pay CAD1.75 billion (US$1.43 billion) for 49% stakes in 17 wind and solar assets with a total generation capacity of around 1.8 GW. Both transactions are expected to close in the third quarter of this year.
As well as streamlining the business, these agreements bring the total of Enbridge's asset monetizations announced in 2018 to roughly CAD7.5 billion (US$5.7 billion), more than double the company's initial target of CAD3 billion (US$2.29 billion).
RBC Capital Markets acted as financial advisor and Torys LLP acted as legal advisors to Enbridge on this latest transaction.