Enbridge to consolidate assets in $11.4 billion restructuring

Pipeline operator Enbridge Inc is consolidating its pipeline assets after a U.S. energy regulator proposed a tax overhaul in March that removes certain benefits for master limited partnerships.

Enbridge said on Thursday it would bring its independent units and liquids and gas pipeline assets under a single listed entity in stock deals valued at $11.4 billion.

Separately, Williams Cos also said it would buy out the remaining stake in master limited partnership William Partners LP in a $10.5 billion all-stock deal.

The U.S. Federal Energy Regulatory Commission (FERC) had said that MLPs, largely oil and natural gas pipeline firms, will no longer be allowed to recover an income tax allowance as part of the fees they charge to shippers under a “cost of service” rate structure.

“Under the newly changed FERC tax policy, holding certain interstate pipelines in MLP structures is highly unfavourable to unitholders and is no longer advantageous,” Enbridge said in a statement.

Enbridge said it would buy outstanding shares of its various corporate units, including Spectra Energy Partners and Enbridge Energy Partners.

The transaction will not hurt its three-year financial outlook, the company said. It also added that the restructuring will not affect the stakes held by shareholders in its corporate units.

Enbridge, which has been trying to recast itself as a pipeline utility, has been under pressure to sell non-core assets and reduce its debt pile of $60.87 billion as of Dec. 31.

The company has been saddled with debt following its $28 billion takeover of U.S.-based Spectra Energy last year. Earlier this month, it sold some assets worth $2.5 billion.

© Thomson Reuters 2018