Mr. Graham White reports

ENBRIDGE REACHES AGREEMENT TO TRANSFER CANADIAN LIQUIDS PIPELINES BUSINESS AND RENEWABLE ENERGY ASSETS TO ENBRIDGE INCOME FUND FOR $30.4 BILLION PLUS INCENTIVE/PERFORMANCE RIGHTS

Enbridge Inc. has reached agreement with Enbridge Income Fund Holdings Inc. to transfer its Canadian liquids pipelines business, held by Enbridge Pipelines Inc. (EPI) and Enbridge Pipelines Athabasca Inc. (EPA), and certain Canadian renewable energy assets to the fund for consideration payable at closing valued at $30.4-billion. The transaction is subject to customary regulatory approvals and closing conditions, as well as a vote of the public shareholders of Enbridge Income Fund Holdings, which is expected to occur in August, 2015.

Highlights:

• $30.4-billion transfer of the Canadian Mainline, the Regional oil sands system and Canadian renewable energy assets to Enbridge Income Fund;
• Transaction supports higher dividend payout and positions Enbridge to extend its industry leading growth rate beyond 2018;
• Available cash flow from operations growth expected to average approximately 18 per cent from 2014 to 2018;
• 33-per-cent-per-share dividend growth in 2015, as previously announced;
• 14- to 16-per-cent-per-share expected annual average dividend growth from 2016 to 2018;
• Transformation of Enbridge Income Fund Holdings to a premier liquids pipelines investment vehicle in Canada;
• Enbridge to remain as manager and operator of transferred assets.

The transaction is a key component of Enbridge's financial strategy optimization introduced in December of last year, which included an increase in the company's targeted dividend payout. It advances the company's sponsored vehicle strategy and supports Enbridge's previously announced 33-per-cent dividend increase in 2015 and expected annual average dividend per share (DPS) growth of 14 to 16 per cent from 2016 through to 2018. It also positions Enbridge to extend its industry-leading DPS growth beyond 2018. The transaction is expected to provide Enbridge with an alternative source of financing for its enterprise-wide growth initiatives, and enhance its competitiveness for new organic growth opportunities and asset acquisitions.

In conjunction with the execution of the transaction, Enbridge will commence employing supplemental cash flow metrics as part of its normal course quarterly reporting of financial performance and in its guidance. Among other measures, management also expects to utilize available cash flow from operations (ACFFO) to assess the performance of its base business and expected growth program, as well as its dividend outlook. ACFFO is currently expected to grow at a compound average annual rate of approximately 18 per cent from 2014 to 2018 (the company's current long-range planning horizon), inclusive of the impacts of the transaction. Going forward, the company will express its dividend payout range as a percentage of ACFFO rather than adjusted earnings. The target dividend payout policy range will be 40 to 50 per cent of ACFFO, which is approximately equivalent to the previous payout range of 75 to 85 per cent of adjusted earnings.

The transaction will significantly increase the fund's scale and scope, and create a transparent source of long-term growth driven by the $15-billion low-risk, commercially secured growth program embedded within the transferred business, $2-billion of which is already in service. ENF's dividend is expected to be increased by approximately 10 per cent on closing and by an expected further 10 per cent at the beginning of 2016 and each year thereafter through 2019.

"We are very pleased to have reached an agreement with the fund on what we believe is truly a win-win transaction for shareholders of both Enbridge and Enbridge Income Fund Holdings," said Al Monaco, president and chief executive officer, Enbridge. "For Enbridge, this transaction and our previously announced increase in dividend payout enhances the value of our existing assets and industry-leading $44-billion capital program. Strategically, we believe the transaction should allow us to further improve our competitiveness to capture new investment opportunities and position Enbridge to deliver industry-leading growth beyond 2018. The change to our structure is expected to generate even greater shareholder value from our business plan by reducing our overall cost of equity capital, allowing us to accelerate dividend growth and further diversify our sources of funding. Adopting an ACFFO reporting metric and guidance will more clearly convey the compelling cash flow and dividend growth that we expect our reliable business model will generate through the current planning horizon and beyond.

"For the fund, the transaction will be transformational. It will provide greater asset scale and more visible sources of low-risk growth, and we believe it will position the fund as the premier liquids pipelines vehicle in Canada. The combination of asset quality, visible growth and superior dividend growth helps establish ENF and the fund as highly effective, and sustainable sources of equity and debt capital."

Consideration

The consideration payable at closing valued at approximately $30.4-billion (based on ENF 20-day volume-weighted average price (VWAP) of $35.44 per common share as at June 18, 2015) will be subject to customary closing adjustments and represents a valuation multiple of 13.8 times the 2015 earnings before interest, taxes, depreciation and amortization (second half annualized) projected to be generated by the transferred assets.

The consideration that Enbridge will receive upon closing will be $18.7-billion of units in the fund structure, comprising $3-billion of fund units and $15.7-billion of equity units of Enbridge Income Partners LP (EIPLP), currently an indirect subsidiary of the fund. The fund will also assume debt of EPI and EPA of $11.7-billion. In addition, a portion of Enbridge's transaction consideration is expected to be received over time in the form of units which carry temporary performance distribution rights (TPDR) as described more fully below. The TPDRs are designed to allow Enbridge to capture increasing value from the secured growth embedded within the transferred businesses; however, the cash flows derived from this incentive mechanism will be deferred (until such time as the units are convertible to a class of cash paying units as more fully described below). These growing cash flows attributable to Enbridge in the latter years of the company's five-year planning horizon and beyond are expected to help sustain strong continuing dividend growth.

Enbridge will continue to earn from the fund a base incentive through management fees and incentive distribution rights, which entitle it to receive 25 per cent of the preincentive distributable cash flow above a base distribution threshold of $1.295 per unit, adjusted for a tax factor (unchanged from the current incentive sharing formula). In addition, Enbridge will receive the TPDR, a payment equivalent to 33 per cent of preincentive distributable cash flow above the base distribution of $1.295 per unit. The TPDR will be paid in the form of Class D units of EIPLP and will be issued each month until the later of the end of 2020 or 12 months after the Canadian Line 3 replacement program enters service. The Class D unitholders will receive a distribution each month equal to the per unit amount paid on Class C units of EIPLP, but to be paid in kind in additional Class D units. Each Class D unit is convertible into a cash paying Class C unit of EIPLP on the fourth anniversary of the year of its issuance.

The fund units and equity units of EIPLP (excluding Class D units) will pay a per-unit cash distribution equivalent to the per-unit cash distribution that the fund pays on its units held by ENF. The fund units, EIPLP equity units and existing preferred units of Enbridge Commercial Trust (ECT) also include an exchange right, whereby they may be converted into common shares of ENF.

Financial outlook

The transaction is expected to be accretive to adjusted earnings per share (EPS) by approximately 2 per cent. The expected accretion reflects the benefits of growing incentive fees to Enbridge and reduced equity financing requirements at Enbridge of approximately $3-billion, the amount of external equity capital expected to be raised by ENF through 2018.

The impact of the transaction on adjusted earnings per share is lower than the 10-per-cent accretion previously announced. The original proposal contemplated that preference units would form part of the consideration paid to Enbridge; however, the terms were amended upon finalization of the transaction to replace such preference units with common units. As a result of this change, the earnings attributable to Enbridge will be lower than originally anticipated as its equity interest arising from this transaction will no longer have a priority claim on the net assets of the fund upon liquidation. The change impacts earnings but does not result in a change to the parties' cash flow entitlements.

Based on the company's current long-range plan and after taking into account the impact of the transaction, the company anticipates annual average adjusted EPS growth of between 10 per cent and 12 per cent through 2018 and expected annual average DPS growth of 14 to 16 per cent from 2016 through to 2018.

Financing plan

To acquire an increasing ownership interest in the fund, the financing plan contemplates the issuance by ENF of $600-million to $800-million of public equity per year in one or more tranches through 2018 to finance an increasing investment in the Canadian liquids pipelines business. In total, Enbridge expects approximately $3-billion of its forecasted future equity requirements will be satisfied through ENF through 2018. Enbridge has agreed to backstop the equity financing required by ENF to undertake the growth program embedded in the assets it will acquire in the transaction. The amount of public equity issued by ENF will be adjusted as necessary to match its capacity to raise equity financing on favourable terms.

At the time the transaction was originally proposed in December, 2014, Enbridge announced that it was considering the potential to allow certain of its noteholders to exchange a portion of their Canadian-dollar-denominated Enbridge term notes for Canadian-dollar-denominated term debt of the fund. After further consideration, including feedback from investors, financial advisers and credit rating agencies, the company has concluded that it will not offer the contemplated debt exchange.

Development opportunities

The Canadian liquids pipelines business is expected to have future organic growth opportunities beyond the current inventory of secured projects. The fund will have a first right to execute any such projects that fall within the footprint of the Canadian liquids pipelines business. Should the fund choose not to proceed with a specific growth opportunity, Enbridge may pursue such opportunity.

Ownership

Upon closing of the transaction, Enbridge's overall economic interest in the fund, including all of its direct and indirect interests in the fund group structure, is expected to be approximately 90 per cent. As ENF executes its expected financing plan and increases its ownership in the fund over time, Enbridge's economic interest is expected to decline to approximately 80 per cent by the end of 2018.

Fund governance

Enbridge will continue to act as the manager of the fund, and operator and commercial developer of the Canadian liquids pipelines business. This will ensure continuity of management and operational expertise, with a continuing commitment to the safe and reliable operation of the system.

As a result of its significant ownership interest, Enbridge will have the right to appoint a majority of the trustees of the board of ECT for as long as the company holds a majority economic interest in the fund group structure. A formal conflicts committee will be established to review material transactions and arrangements involving Enbridge or its fund group affiliates.

Special committee process

To conduct its assessment of the transaction, the fund and ENF were represented by a joint special committee of independent directors of ENF and independent trustees of ECT, supported by independent financial, technical and legal advisers. The joint special committee recommended the transaction, and the boards of ECT and ENF have approved the terms, and the ENF board has recommended that ENF shareholders vote in favour of the transaction at ENF's special meeting of shareholders expected to occur in August, 2015. BMO Nesbitt Burns Inc. and Norton Rose Fulbright Canada LLP acted as advisers to ENF and the fund.

RBC Capital Markets acted as financial adviser to Enbridge.

Closing conditions and timeline

The transaction is subject to receipt of customary regulatory approvals and a vote of ENF shareholders, which is expected to occur in August, 2015, with closing expected to follow shortly thereafter. Required approvals include Toronto Stock Exchange, Competition Bureau and Transport Canada.

Enbridge has obtained exemptive relief from the Ontario Securities Commission from requirements to obtain a formal valuation and to obtain approval from its minority shareholders in connection with the transaction.

Summary terms

Assets and growth projects transferred:

• The Canadian liquids pipelines business, comprising the Canadian liquids pipelines Mainline system held through EPI, the Regional oil sands system held by EPA, recontracting and development rights for the Hardisty crude oil storage assets, and the residual interest in the Canadian portion of the Southern Lights pipeline;
• Renewable assets comprising the Massif du Sud, Lac Alfred and Saint Robert Bellarmin wind projects in Quebec, and the Blackspring Ridge wind project in Alberta;
• $15-billion program of commercially secured growth projects, $2-billion of which is already in service;
• Canadian Mainline -- eastern access, Canadian Mainline expansion, Canadian Mainline system terminal flexibility and connectivity, Edmonton to Hardisty, Canadian Line 3 replacement program;
• Alberta regional -- Norealis, Surmont, Sunday Creek, Woodland, Regional oil sands optimization, Norlite, AOC Hangingstone, JACOS Hangingstone.

Earnings before interest, taxes, depreciation and amortization of contributed assets:

• Approximately $2.2-billion (second half of 2015 annualized);
• Growing thereafter as commercially secured growth projects come into service.

Value of consideration:

• $30.4-billion (based on ENF 20-day VWAP of $35.44 per common share as of June 18, 2015).

Consideration:

• 84.7 million ordinary trust units of the fund;
• 443 million Class C units of EIPLP (EIPLP is a limited partnership owned by the fund which holds directly or indirectly all of the fund's operating assets);
• Assumption of $11.7-billion of debt held in EPI and EPA;
• The fund units and EIPLP Class C units are entitled to the same distribution as paid on the ECT preferred units currently held by Enbridge and on the fund units held by ENF.

Base incentive:

• $7.9-million plus 25 per cent of preincentive distributable cash flow from the fund above a threshold of $1.295/unit adjusted for a tax factor (unchanged from current incentive-sharing formula).

Temporary performance distribution right (TPDR):

• Equivalent to 33 per cent of preincentive distributable cash flow from the fund above $1.295/unit;
• Paid to Enbridge in the form of EIPLP Class D units;
• EIPLP Class D units will pay distributions at the same rate as EIPLP Class C units; however, payment will be in the form of additional EIPLP Class D units;
• All EIPLP Class D units will be convertible into cash-paying EIPLP Class C units four years after their year of issuance;
• Expires the later of 2020 or one year after the Canadian Line 3 replacement program in-service date.

Management and operations:

• Enbridge will retain the employees.
• Enbridge will remain as the operator of the Canadian liquids pipelines business.
• Enbridge will continue to serve as the manager of the fund.

Governance:

• ECT trustee composition amended to seven of 11 trustees appointed by Enbridge so long as Enbridge holds a majority economic interest in the fund structure;
• Enhanced provisions to protect public shareholders of ENF (including establishment of a formal conflicts committee comprising directors independent of Enbridge management and board).

Development opportunities:

• Fund to have first right with respect to growth opportunities within the footprint of the existing Canadian liquids pipelines business.

Exchange right:

• ECT preferred units, fund units and EIPLP Class C units held by Enbridge are exchangeable for ENF common shares.

Financing obligation:

• Enbridge will have the obligation to finance the fund's equity requirement for the commercially secured growth projects transferred as part of this transaction through 2020 (or to the final equity financing of the Canadian Line 3 replacement program) to the extent not financed by the fund.

Conference call

Enbridge will hold a conference call on Friday, June 19, at 8:30 a.m. ET (6:30 a.m. MT) to discuss today's announcement. Analysts, members of the media and other interested parties can access the call toll-free at 1-800-708-4539 from within North America and outside North America at 1-847-619-6396, using the access code of 40052978 followed by the pound key. The call will be audio webcast live. A webcast replay and podcast will be available approximately two hours after the conclusion of the event and a transcript will be posted to the website within 24 hours. The replay will be available toll-free at 1-888-843-7419 within North America and outside North America at 1-630-652-3042 (access code 40052978 followed by the pound key) until June 26, 2015.

The conference call will begin with presentations by the company's president and chief executive officer, and the chief financial officer, followed by a question-and-answer period for investment analysts. A question-and-answer period for members of the media will then immediately follow.

We seek Safe Harbor.