Enbridge Files Prospectus Supplements to Enable an At-the-Market Equity Issuance Funding Option for its Acquisitions

Rhea-AI Summary

Enbridge announced the filing of Canadian and U.S. securities to enable an at-the-market equity issuance program (ATM Option).

The ATM Option permits Enbridge to issue and sell up to $2.75 billion of common shares to fund its recent acquisitions of three U.S. natural gas utilities from Dominion Energy.

Alternative funding options include the issuance of senior unsecured notes, hybrid debt, and a capital recycling program.

Sales will be made through the Toronto Stock Exchange, New York Stock Exchange, or other marketplaces at prevailing market prices.

The ATM Option will be carried out through agreements with a syndicate of sales agents led by BMO Nesbitt Burns and BMO Capital Markets.

Positive

• Enbridge gains flexibility in funding its acquisitions with an ATM Option of up to $2.75 billion.
• The ATM Option allows shares to be sold at prevailing market prices, potentially optimizing the proceeds.
• The program is supported by a syndicate of reputable sales agents, including BMO Nesbitt Burns and BMO Capital Markets.
• Enbridge has alternative funding options such as senior unsecured notes, hybrid debt, and capital recycling.

Negative

• Issuing up to $2.75 billion in common shares may dilute existing shareholders' equity.
• Market volatility could affect the amount of funds raised through the ATM Option.
• Relying on equity issuance may indicate a lack of sufficient internal cash flow or other funding sources.

Insights

Financial Analyst

The announcement that Enbridge has filed prospectus supplements for an at-the-market equity issuance program (ATM Option) is noteworthy for several reasons. This move provides Enbridge with flexibility in funding its acquisitions of three U.S. natural gas utilities from Dominion Energy. The ATM Option allows the company to issue up to $2.75 billion worth of common shares at prevailing market prices. This option is generally considered less dilutive than a traditional secondary offering, as shares are sold incrementally over time rather than in a lump sum.

However, there are potential drawbacks. Issuing new shares can dilute existing shareholder equity, potentially putting downward pressure on the stock price in the short term. On a positive note, the flexibility to issue shares as needed provides a means to raise capital without significantly impacting the market. Investors should observe how Enbridge manages the balance between raising funds and maintaining shareholder value.

Moreover, Enbridge's strategy to keep various funding options open, such as issuing senior unsecured notes and hybrid debt, indicates a prudent financial strategy. This diversification in funding sources can help mitigate risks associated with any particular funding method, ensuring that the acquisitions can proceed smoothly.

Given the potential for both positive and neutral impacts, it is essential for investors to monitor the utilization of the ATM Option closely and its effects on share price and company leverage.

Market Research Analyst

The implementation of the ATM Option reflects Enbridge's commitment to securing the necessary funds for its acquisitions while maintaining various funding avenues. This diversification in financial strategy is particularly significant in the energy sector, where market conditions can be volatile.

From a market perspective, the acquisitions from Dominion Energy are likely to enhance Enbridge's footprint in the U.S. natural gas market. This could potentially increase its market share and revenue streams in the long run. Furthermore, the flexibility of the ATM Option allows Enbridge to tap into favorable market conditions to raise capital, which can be a strategic advantage. It's worth noting that the energy sector's growth prospects and regulatory landscape can significantly influence these dynamics.

For retail investors, understanding the broader market implications of these acquisitions and Enbridge's funding strategy is essential. While the immediate dilution risk may pose concerns, the long-term growth potential through increased market share and revenue streams could offset this. It is also important to consider how these acquisitions align with Enbridge's overall growth strategy and how effectively they can integrate these utilities into their existing operations.

CALGARY, AB, May 16, 2024 /PRNewswire/ - Enbridge Inc. (TSX: ENB) (NYSE: ENB) (Enbridge or the Company) announced today that it has made certain Canadian and U.S. securities filings to enable an at-the-market equity issuance program (the ATM Option). The ATM Option provides Enbridge with additional flexibility to partially fund its previously announced acquisitions of three U.S. natural gas utilities from Dominion Energy, Inc. (the Acquisitions) and the Company intends that proceeds would be used for that purpose. The Company continues to have a variety of alternative funding options available to it for the Acquisitions, including the issuance of senior unsecured notes and junior subordinated (hybrid) debt, and its ongoing capital recycling program.

Pursuant to the ATM Option, Enbridge may issue and sell, at its discretion, up to $2.75 billion (or the U.S. dollar equivalent) of common shares of the Company (Common Shares) from treasury to the public from time to time, at the market prices prevailing at the time of sale through the Toronto Stock Exchange, the New York Stock Exchange or any other marketplace in Canada or the United States where the Common Shares may be traded, and, as a result, prices at which the Common Shares are sold may vary among purchasers and during the period of any distribution.

Distributions of Common Shares, if any, pursuant to the ATM Option will be made through "at-the-market distributions" as defined in National Instrument 44-102 – Shelf Distributions and in sales deemed to be "at the market offerings" as defined in Rule 415 promulgated under the U.S. Securities Act of 1933, as amended, or as otherwise permitted by applicable laws, in each case,  pursuant to the terms of an equity distribution agreement (the Equity Distribution Agreement) dated May 15, 2024 entered into between the Company and a syndicate of sales agents led by BMO Nesbitt Burns Inc. in Canada and BMO Capital Markets Corp. in the United States (the lead sales agents), and including CIBC Capital Markets, National Bank Financial Markets, Scotiabank, TD Securities, Barclays, BofA Securities, Citigroup, Deutsche Bank Securities, Mizuho, Wells Fargo Securities, RBC Capital Markets, ATB Capital Markets, Desjardins Capital Markets and Morgan Stanley.

The ATM Option is being made in Canada only pursuant to a Canadian prospectus supplement dated May 15, 2024 (the Canadian Prospectus Supplement) to the Company's Canadian short form base shelf prospectus dated September 5, 2023 (the Canadian Prospectus) and in the United States only pursuant to a U.S. prospectus supplement dated May 15, 2024 (the U.S. Prospectus Supplement) to the Company's U.S. base prospectus (the U.S. Prospectus) included in its U.S. registration statement on Form S-3 filed with the U.S. Securities and Exchange Commission (the SEC) on July 29, 2022. Before making an investment in the Common Shares, potential investors should read the Canadian Prospectus and the Canadian Prospectus Supplement or the U.S. Prospectus and the U.S. Prospectus Supplement, as applicable, for more information about Enbridge and the ATM Option. Copies of the Canadian Prospectus, the Canadian Prospectus Supplement, and the Equity Distribution Agreement are available on SEDAR+ (http://www.sedarplus.ca) and copies of the U.S. Prospectus, the U.S. Prospectus Supplement and the Equity Distribution Agreement are available on the SEC's website (http://www.sec.gov). Potential investors can request copies of the Canadian Prospectus and the Canadian Prospectus Supplement or the U.S. Prospectus and the U.S. Prospectus Supplement, as applicable, from the lead sales agents by contacting:

I.        in Canada: BMO Nesbitt Burns Inc., Brampton Distribution Centre C/O The Data Group of Companies, 9195 Torbram Road, Brampton, Ontario, L6S 6H2, by telephone at 905-791-3151 Ext. 4312, or by email at torbramwarehouse@datagroup.ca.  

II.        in the United States: BMO Capital Markets Corp., Attn: Equity Syndicate Department, 151 W 42nd Street, 32nd Floor, New York, NY 10036, by telephone at (800) 414-3627 or by email at bmoprospectus@bmo.com.

This press release does not constitute an offer to sell or the solicitation of any offer to buy securities, nor will there be any sale of the securities, in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.

Forward-Looking Statements

This news release contains both historical and forward-looking statements within the meaning of Section 27A of the U.S. Securities Act of 1933, as amended, and Section 21E of the U.S. Securities Exchange Act of 1934, as amended, and forward-looking information within the meaning of Canadian securities laws (collectively, forward-looking statements). Forward-looking statements have been included to provide potential investors with information about Enbridge. This information may not be appropriate for other purposes. Forward-looking statements are typically identified by words such as "anticipate", "believe", "estimate", "expect", "forecast", "intend", "likely", "plan", "project", "target" and similar words suggesting future outcomes or statements regarding an outlook. Forward-looking statements included in this news release include, but are not limited to, statements with respect to the following: the potential distribution of Common Shares pursuant to the ATM Option, the aggregate value of Common Shares which may be issued pursuant to the ATM Option, the anticipated benefits and impacts of the ATM Option, the expected use of net proceeds, if any, from the ATM Option and the closing of the remaining Acquisitions.

Although Enbridge believes these forward-looking statements are reasonable based on the information available on the date such statements are made and on processes used to prepare the information, such statements are not guarantees of future events and readers are cautioned against placing undue reliance on forward-looking statements. By their nature, these statements involve a variety of assumptions, known and unknown risks and uncertainties and other factors, which may cause actual events to differ materially from those expressed or implied by such statements.

Enbridge's forward-looking statements are subject to risks and uncertainties, including, but not limited to the size and terms of the potential distribution of Common Shares pursuant to the ATM Option, and those risks and uncertainties discussed in this news release and in the Company's other filings with Canadian and United States securities regulators. The impact of any one risk, uncertainty or factor on a particular forward-looking statement is not determinable with certainty as these are interdependent and Enbridge's future course of action depends on management's assessment of all information available at the relevant time. Except to the extent required by applicable law, Enbridge assumes no obligation to publicly update or revise any forward-looking statements made in this news release or otherwise, whether as a result of new information, future events or otherwise. All subsequent forward-looking statements, whether written or oral, attributable to Enbridge or persons acting on its behalf, are expressly qualified in their entirety by these cautionary statements.

About Enbridge Inc. 

At Enbridge, we safely connect millions of people to the energy they rely on every day, fueling quality of life through our North American natural gas, oil or renewable power networks and our growing European offshore wind portfolio. We're investing in modern energy delivery infrastructure to sustain access to secure, affordable energy and building on two decades of experience in renewable energy to advance new technologies including wind and solar power, hydrogen, renewable natural gas and carbon capture and storage. We're committed to reducing the carbon footprint of the energy we deliver, and to achieving net zero greenhouse gas emissions by 2050. Headquartered in Calgary, Alberta, Enbridge's common shares trade under the symbol ENB on the Toronto (TSX) and New York (NYSE) stock exchanges.

FOR FURTHER INFORMATION PLEASE CONTACT:

Media
Toll Free: (888) 992-0997
Email: media@enbridge.com 

Investment Community
Toll Free: (800) 481-2804 
Email: investor.relations@enbridge.com

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SOURCE Enbridge Inc.

FAQ

What is the Enbridge ATM Option announced on May 16, 2024?

The ATM Option allows Enbridge to issue and sell up to $2.75 billion of common shares to fund its acquisitions.

How will Enbridge use the proceeds from the ATM Option?

The proceeds will be used to fund the acquisitions of three U.S. natural gas utilities from Dominion Energy.

What are the alternative funding options for Enbridge besides the ATM Option?

Alternative funding options include the issuance of senior unsecured notes, hybrid debt, and a capital recycling program.

Who are the lead sales agents for Enbridge's ATM Option?

The lead sales agents are BMO Nesbitt Burns in Canada and BMO Capital Markets in the United States.

Where will Enbridge's common shares be sold under the ATM Option?

Common shares will be sold through the Toronto Stock Exchange, New York Stock Exchange, or other marketplaces.