Enbridge Income Fund Reaches Agreement to Acquire Canadian Liquids Pipelines Business and Renewable Energy Assets from Enbridge Inc. for $30.4 Billion plus Incentive/Performance Rights

CALGARY, ALBERTA--(Marketwired - June 19, 2015) - Enbridge Income Fund Holdings Inc. (TSX:ENF) (the Company) and Enbridge Income Fund (the Fund) announced today that an agreement has been entered into with Enbridge Inc. and IPL System Inc., a wholly-owned subsidiary of Enbridge Inc. (collectively, Enbridge), to acquire Enbridge's Canadian Liquids Pipelines business, comprised of Enbridge Pipelines Inc. (EPI) and Enbridge Pipelines Athabasca Inc. (EPA), and certain Canadian renewable energy assets for consideration payable at closing of $30.4 billion plus certain Incentive/Performance Rights discussed below (the Transaction). A joint special committee (the Special Committee) of the independent trustees of the Board of Trustees (ECT Board) of Enbridge Commercial Trust (ECT) and the independent directors of the Board of Directors of the Company (the Company Board) was formed to review and consider the Transaction, conduct due diligence and negotiate the terms of the Transaction. The Special Committee concluded that the proposed Transaction is in the best interests of ECT, the Fund and the Company and is fair to ECT, the Fund and the Company and the shareholders of the Company (other than Enbridge), and recommended that the ECT Board and the Company Board approve the proposed Transaction. The Transaction is subject to satisfaction of closing conditions, including regulatory approvals, the approval of the shareholders of the Company (other than Enbridge and its related parties) and completion of pre-closing transactions which include a previously planned transfer by EPI to Enbridge subsidiaries of EPI's U.S. pipeline assets.

The Transaction will be transformative for the Fund, significantly increasing its business scale and scope, as well as providing a highly transparent source of long-term growth based on $15 billion of low risk, commercially secured growth associated with the acquired assets; $2 billion of which is already in-service and the balance of which is expected to come into service by 2018. The Company will benefit from this secured growth and expects to increase its dividend by an expected 10 percent following closing of the Transaction, anticipated to be in early September 2015, and by a further expected 10 percent increase at the beginning of 2016 and each year thereafter through 2019.

The consideration payable at closing will be comprised of $18.7 billion in equity consideration through the issuance of securities of the Fund and Enbridge Income Partners L.P. (EIPLP), an indirect subsidiary of the Fund, and the assumption of debt with a book value of $11.7 billion. Enbridge will be entitled to earn a 25%, reduced by a tax factor, incentive distribution right (the IDR) on pre-incentive distributions, subject to a base distribution threshold of $1.295 per ordinary unit of the Fund (Fund Unit) (consistent with the current incentive sharing formula). In addition, in light of the $13 billion of secured growth capital yet to come into service which will generate significant cash flow and dividend growth for the Company's shareholders, Enbridge will be entitled to earn a 33% temporary performance distribution right (the TPDR, and together with the IDR, the Incentive/Performance Rights) on pre-incentive distributions, subject to a base distribution threshold of $1.295 per Fund Unit, as described in more detail below.

"We are pleased to have entered into an agreement today with Enbridge to acquire a package of highly strategic infrastructure businesses that will materially enhance the Fund's position as a premier energy infrastructure investment vehicle," said Perry Schuldhaus, the President of the Company. "The Transaction significantly transforms the scale of the Fund's business, provides it with a low risk source of secured growth and supports an expected 10 percent increase in the Company's dividend following closing with further anticipated dividend growth through 2019. Furthermore, the Fund will continue to benefit from Enbridge's operating expertise, including its world-class major projects capabilities, as Enbridge will continue to act as the Administrator of the Fund."

Asset Summary

The Canadian Liquids Pipelines business consists of the Canadian Mainline System held in EPI and the Regional Oil Sands system held in EPA, both of which will be transferred to EIPLP. This business also has an associated secured growth capital program of $15 billion, of which $2 billion is already in service. The $13 billion of growth capital remaining is expected to come into service by 2018 and $3 billion has already been spent.

The Canadian Mainline System includes a number of large diameter crude oil, NGL and refined products pipelines receiving hydrocarbon liquids at, and making deliveries to, various locations in Western Canada and connecting to the U.S. Mainline System owned by Enbridge Energy Partners L.P. at the Canada/U.S. border near Gretna, Manitoba. The western Canada segment of the Mainline System includes the Canadian segment of the Alberta Clipper pipeline, currently undergoing an expansion to an ultimate capacity of 800,000 bpd; the Canadian segment of the Line 3 replacement project (the Line 3 Replacement Project); the Edmonton to Hardisty Expansion Program; and the Canadian Mainline System Terminal Flexibility and Connectivity Program. The Canadian Mainline System also includes a number of pipelines in eastern Canada.

The Regional Oil Sands system includes a number of trunk line and lateral pipelines collecting synthetic crude oil and diluted bitumen from eight different producing oil sands projects for delivery to the hub terminal locations at Edmonton and Hardisty, Alberta. This system also includes Enbridge's 70% interest in the Norlite diluent pipeline currently under development. The Regional Oil Sands System growth capital program also includes the Norealis Pipeline, Surmont Phase 2 Expansion, Sunday Creek Expansion, Woodland Pipeline Extension, Regional Oil Sands Optimization Project, AOC Hangingstone Lateral and JACOS Lateral.

The Canadian renewable energy assets include a 50 percent interest in the Saint Robert Bellarmin wind farm, a 67.5 percent interest in Lac Alfred wind farm and an 80 percent in the Massif du Sud wind farm, all in Quebec and a 50 percent interest in the Blackspring Ridge wind farm in Alberta, which have a combined generation capacity of 830 MW.
Enbridge will also transfer all of the issued and outstanding units or shares, as applicable of subsidiaries which own: (a) the Canadian segment of the Southern Lights diluent pipeline system (the Fund currently indirectly holds Class A units which entitle it to certain cash flows) and (b) three recently renewed storage contracts at the Hardisty Contract Terminal (the Terminal). In addition, Enbridge will forego its existing expansion rights for the Terminal and Hardisty Storage Caverns (the Fund indirectly owns the storage caverns and terminal at Hardisty).

The Company expects to deliver a management information circular (Circular) to its shareholders in connection with a meeting of the Company's shareholders to consider approval of the Transaction. Reference should be made to the Circular for a more detailed description of the assets to be acquired by the Fund pursuant to the Transaction.

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 the first right to execute any such opportunities 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.

Financing Plan of the Fund

The Fund intends to finance the consideration payable at closing as follows:

Fund Sources of Financing
(billions of Canadian dollars)
Fund trust units issued to Enbridge (84.65 million units at $35.44 per unit)	$ 3.0
EIPLP Class C units issued to Enbridge (442.95 million units at $35.44 per unit)	15.7
Assumed EPI and EPA debt	11.7
Note: Unit issue prices equivalent to the volume-weighted average price (VWAP) of the common shares of the Company as calculated for the 20 day period ending June 18, 2015.	$30.4

The Fund Units and the Class C units of EIPLP (the Class C units) to be issued to Enbridge will pay a per unit cash distribution to their respective holders in the same amount, as is paid on the existing ECT Preferred Units (all of which are currently held by Enbridge) and existing Fund Units. The EIPLP Class C units will be newly created and will be voting and rank pari passu with the EIPLP Class A units with respect to liquidation. The Company, the Fund, ECT and EIPLP will enter into an agreement with Enbridge whereby the Fund Units held by Enbridge, the ECT Preferred Units and the Class C units may be exchanged into Common Shares on a one-to-one basis. Enbridge must immediately sell any Common Shares issued pursuant to the exercise of such exchange right to the extent they result in Enbridge holding more than 19.9% of the outstanding Common Shares.

The TPDR will be paid in the form of EIPLP Class D units until the later of the end of 2020 or 12 months after the Line 3 Replacement Project enters service. The EIPLP Class D units will be newly created and will receive per unit distributions (of equivalent value to those paid on the Fund Units, ECT Preferred Units and EIPLP Class C units) in the form of additional EIPLP Class D units. The EIPLP Class D units will be exchangeable four years after their issuance into Class C units, which have a cash distribution entitlement thereby aligning with the cash generation of the commercially secured capital program.

Financing Plan of the Company

The Company's current financing plan contemplates the issuance in one or more tranches by the Company of $600 million to $800 million of public equity per year through 2018, with the proceeds to be used to acquire additional Fund Units, thereby increasing the Company's ownership interest in the Fund. The Fund will use the proceeds from the sale of the additional Fund Units to fund future growth capital. The amount of public equity issued by the Company in the future will be adjusted as necessary to match its capacity to raise equity funding on favourable terms.

To the extent that the Company chooses not to fund any portion of the growth capital, Enbridge will be required until December 31, 2020 to provide the Fund with equity financing for such projects, unless the project is related to the Line 3 Replacement Project in which case Enbridge's obligation to fund the equity requirements for such project until it is placed into service.

Effect of the Transaction on Ownership of the Fund and Company

Through its ownership of Common Shares, Fund Units, ECT Preferred Units, and EIPLP Class C units, Enbridge's post-closing economic interest in the Company, the Fund and its subsidiaries, taken as a whole, is expected to be approximately 90 percent. If the Company successfully implements its current financing plan, Enbridge's economic interest in the Company, the Fund and its subsidiaries, taken as a whole, is expected to increase between the closing of the Transaction and the end of 2018, with Enbridge's interest reduced to approximately 80 percent by the end of 2018.

Governance

The Transaction contemplates certain changes in governance. For so long as Enbridge holds a majority economic interest in the Fund entities, it will have the right to appoint a majority of the Trustees on the Board of Trustees of ECT (the ECT Board). To address potential conflicts of interest, a conflicts committee comprised of independent Trustees will be established to review material transactions and arrangements involving Enbridge or its affiliates.
Enbridge will continue to act as the Administrator of the Fund and the Manager of ECT and the Company, and will be the operator of the Canadian Liquids Pipelines business, which will ensure continuity of management and operational expertise, with an ongoing commitment to the safe and reliable operation of the pipeline systems. All employees of EPI will be transferred to a wholly-owned subsidiary of Enbridge prior to closing of the Transaction and Enbridge will assume all employee obligations.

Special Committee Recommendation and Board Approval

The Special Committee reviewed and considered the Transaction, conducted due diligence and negotiated the terms of the Transaction. The Special Committee concluded that the proposed Transaction is in the best interests of ECT, the Fund and the Company and is fair to ECT, the Fund and the Company and the shareholders of the Company (other than Enbridge), and recommended that the ECT Board and the Company Board approve the proposed Transaction. The Special Committee retained independent technical, market, legal, tax and financial advisors, including Norton Rose Fulbright Canada LLP as legal counsel and BMO Nesbitt Burns Inc. (BMO Capital Markets) as financial advisor. The Special Committee also retained an independent engineering, safety and integrity advisor to conduct due diligence and an independent commodity market consultant to provide views on North American crude oil fundamentals, supply, demand and pricing.

The terms of the Transaction were negotiated by the Special Committee with the assistance of its legal and financial advisors. BMO Capital Markets verbally delivered a valuation and fairness opinion to the Special Committee. Subject to the assumptions, limitations and qualifications setout therein, the fairness opinion concluded that, as of June 18, 2015, the consideration to be paid pursuant to the Transaction is fair from a financial point of view to ECT, the Fund, the Company and the shareholders of the Company (other than Enbridge). The valuation and fairness opinion was one of a number of factors taken into account by the Special Committee in making its unanimous recommendation that the ECT Board and the Company Board approve the Transaction.

Both the ECT Board and the Company Board considered the recommendation of the Special Committee and the advice given to the Special Committee by its independent advisors and the Company Board also considered the Company's participation in the Transaction. The ECT Board (with the Trustees who are also current or former officers or directors of Enbridge abstaining) unanimously concluded that the Transaction is in the best interests of the Fund and ECT, and in the best interests and fair to each of the unitholders of the Fund and ECT, in each case other than Enbridge, and unanimously approved the Transaction.

The Company Board (with directors who are also directors or former officers of Enbridge abstaining) concluded that the Transaction is in the best interests of the Company and fair to the Company and its shareholders (other than Enbridge) and unanimously recommended approval of the Transaction by its shareholders.

Special Meeting of Shareholders

The Company will seek the approval of its shareholders (other than Enbridge and its related parties) at a special meeting (the Meeting) called to consider the Transaction, which will be held on August 20, 2015. Shareholders of record on July 10, 2015 will be entitled to attend and vote at the Meeting. Shareholders are encouraged to carefully review and consider the Circular in respect of the Meeting, which will be filed on SEDAR at www.sedar.com concurrent with the mailing of the materials for the Meeting. The BMO Capital Markets valuation and fairness opinion will be summarized and appended in the Circular.

ABOUT ENBRIDGE INCOME FUND HOLDINGS INC.

Enbridge Income Fund Holdings Inc. is a publicly traded corporation. The Company, through its investment in Enbridge Income Fund, holds high quality, low risk energy infrastructure assets. The Fund's assets include a portfolio of liquids transportation and storage businesses, Class A units entitling the holder to receive defined cash flows from the Southern Lights Pipeline, a 50 percent interest in the Alliance Pipeline and interests in more than 500 megawatts of renewable and alternative power generation capacity. Information about Enbridge Income Fund Holdings Inc. is available on the Company's website at www.enbridgeincomefund.com.

FORWARD-LOOKING INFORMATION

Forward-looking information, or forward-looking statements, have been included in this news release to provide information about the Company and the Fund, including management's assessment of the Company's and the Fund's plans and operations. This information may not be appropriate for other purposes. Forward-looking statements are typically identified by words such as "anticipate", "expect", "project", "estimate", "forecast", "plan", "intend", "target", "believe" and similar words suggesting future outcomes or statements regarding an outlook. Forward-looking information or statements included or incorporated by reference in this document include, but are not limited to, statements with respect to: expectations regarding, and anticipated impact of, the Transaction; dividend increase expectations; satisfaction of closing conditions and the obtaining of consents and approvals required to complete the Transaction; effect, results and perceived benefits of the Transaction, including with respect to the consideration to be paid; expected timing and completion of the Transaction; financing requirements and plans; expected future sources of financing; and future growth opportunities.

Although the Company and the Fund believe these forward-looking statements are reasonable based on the information available on the date such statements are made and processes used to prepare the information, such statements are not guarantees of future performance 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 results, levels of activity and achievements to differ materially from those expressed or implied by such statements. Material assumptions include assumptions about: expected timing and terms of the Transaction; anticipated completion of the Transaction; satisfaction of all closing conditions and receipt of regulatory and shareholder consents and approvals with respect to the Transaction; impact of the Transaction and dividend expectations; debt and equity market conditions; expected supply and demand for crude oil, natural gas and natural gas liquids; prices of crude oil, natural gas and natural gas liquids; expected exchange rates; inflation; interest rates; availability and price of labour and pipeline construction materials; operational reliability; anticipated in-service dates and weather. Assumptions regarding the expected supply of and demand of crude oil, natural gas, NGL and renewable energy, and the prices of these commodities, are material to and underlie all forward-looking statements. These factors are relevant to all forward-looking statements as they may impact current and future levels of demand for the Fund's services and products. Similarly, exchange rates, inflation and interest rates impact the economies and business environments in which the Fund operates and may impact levels of demand for the Fund's services and cost of inputs, and are therefore inherent in all forward-looking statements. Due to the interdependencies and correlation of these macroeconomic factors, the impact of any one assumption on a forward-looking statement cannot be determined with certainty, particularly with respect to estimated future dividends. The most relevant assumptions associated with forward-looking statements on the Transaction and dividend, including estimated completion date and expected future cash flows, include: estimated future distributions of the Fund; expected market conditions; and the ability of the Company and the Fund to access capital markets on favourable terms or at all.

The Company's and the Fund's forward-looking statements are subject to risks and uncertainties pertaining to the Transaction, dividend expectations, operating performance, regulatory parameters, project approval and support, weather, economic and competitive conditions, changes in tax law and tax rates, exchange rates, interest rates, commodity prices and supply and demand for commodities, including but not limited to those risks and uncertainties discussed in this news release and in the Company's and the Fund's other filings with Canadian 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 the Company's and the Fund'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, the Company and the Fund assume 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 the Company, the Fund, or persons acting on their behalf, are expressly qualified in their entirety by these cautionary statements.

Readers should be cautioned that there is no assurance that the planned Transaction will be completed in the manner contemplated, or at all, or that the current market conditions and the assumptions and forecasts based on such market conditions will not materially change.