On June 19, 2015, Enbridge Income Fund Holdings Inc. (EIFH) and Enbridge Income Fund (the Fund) announced 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 from Enbridge its Canadian Liquids Pipelines business, comprised of Enbridge Pipelines Inc. (EPI) and Enbridge Pipelines Athabasca Inc., and certain Canadian renewable energy assets for consideration payable at closing of $30.4 billion plus certain Incentive/Performance Rights that are referred to below (the Transaction). A joint special committee (the Special Committee) of the Board of Directors of EIFH (the EIFH Board) and the Board of Trustees (ECT Board) of Enbridge Commercial Trust (ECT) 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 EIFH and is fair to ECT, the Fund and EIFH and the shareholders of EIFH (other than Enbridge), and recommended that the ECT Board and the EIFH Board approve the proposed Transaction. The Transaction is subject to satisfaction of closing conditions, including regulatory approvals, the approval of the shareholders of EIFH (other than Enbridge and its related parties) and completion of pre-closing transactions which include a previously planned transfer of EPI's U.S. pipeline assets to subsidiaries of Enbridge Inc.
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, Enbridge will also 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.
Norton Rose Fulbright acted for the Special Committee on all aspects of the Transaction. The team was led by Justin Ferrara and included Robert Engbloom, Ryan Keays, Dion Legge, Alan Harvie, Rujuta Patel, Thierry Dorval, Steve Malas, Amar Leclair-Ghosh, Thomas Collopy, Jason Giborski, Robert Joseph, Grant Stevens, Jordan Sharkey, Adam Lamoureux and Burke Vindevoghel.