Enbridge sold off $3.1 billion in secondary assets today to trim debt
Enbridge Inc will sell a U.S. gas pipelines business and part of its renewable energy assets for a combined $3.1 billion, the Canadian pipeline operator said on Wednesday, as it seeks to shed secondary assets and reduce its massive debt load.
Enbridge said it had sealed a $1.75 billion agreement with the Canada Pension Plan Investment Board (CPPIB) to sell a 49 per cent stake in wind and solar power assets in North America and Germany.
The Calgary-based firm will also sell Midcoast Operating LP, its U.S. gas pipelines unit, to an affiliate of private equity firm ArcLight Capital Partners LLC for about $1.44 billion. Midcoast operates facilities to process and treat natural gas and natural gas liquids.
The company has faced pressure from investors to sell assets that are not integral to its main oil and natural gas pipelines business since its US$28 billion purchase last year of U.S.-based Spectra Energy.
Enbridge currently has about US$61 billion in long-term debt.
“The sale of Midcoast is an important step in our shift towards a pure regulated pipeline and utility model,” Enbridge Chief Executive Officer Al Monaco said in a statement.
For the CPPIB, its deal with Enbridge represents the second bet in as many months on renewable energy, as it takes advantage of low prices in the sector. The pension fund manager said last month it would buy U.S. utility NextEra Energy Partners’ wind and solar assets in Ontario for about $582 million.
The CPPIB and Enbridge will also form a joint venture focused on future European offshore wind energy projects.
Both the Midcoast and renewable energy transactions are expected to close in the third quarter.
Enbridge expects to retain its stake in other U.S. renewable power assets, which may be monetized or sold at a later date, it said.
Enbridge’s shares rose 2 per cent to $41.22 on the Toronto Stock Exchange, while its U.S.-listed stock was up 2.8 per cent on Wednesday morning.
© Thomson Reuters 2018