Enbridge Hikes Dividend, Announces Canadian Restructuring; Provides 2015 Outlook

(RTTNews) - Canadian oil and gas pipelines operator Enbridge, Inc. (ENB, ENB.TO) on Wednesday hiked its quarterly dividend by 33 percent and said it plans to transfer its Canadian liquids pipelines business to its Canadian affiliate, Enbridge Income Fund or EIF, under a restructuring plan.

In addition, the company announced a new dividend payout policy range of 75 percent to 85 percent of adjusted earnings. The company also provided earnings outlook for fiscal 2015 in line with analysts' estimates. Enbridge further said it is reviewing a restructuring plan to drop down its U.S. liquids pipeline assets to Enbridge Energy Partners, L.P. (EEP).

Enbridge expects the dividend and restructuring actions to enhance the value to investors of the company's organic growth capital program as well as boost the competitiveness of its funding costs for new organic growth opportunities and asset acquisitions.

Enbridge's plan to transfer the Canadian liquids pipelines business to Enbridge Income Fund comes after an extensive review of the potential to further enhance the value of its $44 billion growth program and lower the cost of funding for that program and for new investment opportunities.

Looking ahead to fiscal 2015, Enbridge forecast adjusted earnings in a range of C$2.05 to C$2.35 per share. Analysts expect the company to report earnings of per share for the year. Analysts expect the company to report earnings of C$2.24 per share for the year.

The company noted that the outlook is before reflecting accretion resulting from the transfer of its Canadian liquids pipelines business, which is expected to be about 10 percent on an annualized basis.

The Canadian liquids pipelines business is comprised of Enbridge Pipelines Inc. or EPI and Enbridge Pipelines (Athabasca) Inc. or EPA, in addition to certain renewable energy assets.

Enbridge Income Fund Holdings Inc. or EIFH (ENF.TO) is expected to acquire an increasing interest in the assets through investments in the equity of EIF over a period of several years in amounts consistent with its equity funding capability.

Based on Enbridge's current planning and financing assumptions, EIFH's resulting dividend growth rate is expected to average about 10 percent per year from 2015 through 2018 through a combination of the organic growth of the assets and its increasing interest in the assets.

The Canadian restructuring plan has been approved in principle by Enbridge's board of directors, but remains subject to finalization of preliminary internal reorganization steps in addition to internal and external consents as well as approvals.

Enbridge said its quarterly common share dividend will increase by 33 percent to C$0.465 per share, with the next dividend payable March 1, 2015 to shareholders of record on February 16, 2015.

Enbridge's board has also approved a revised dividend payout policy range of 75 percent to 85 percent of adjusted earnings, up from the previous payout policy range of 60 percent to 70 percent.

The company expects the payout rate to increase from the lower end of the new range in 2015 to the higher end by 2018, as the funding of its current record organic growth capital program progresses. Based on current planning assumptions, Enbridge expects its resulting annual dividend growth rate to average between 14 percent and 16 percent from 2015 to 2018.

Enbridge said it also has under review a potential parallel U.S. restructuring plan that would involve transfer of its directly held U.S. Liquids Pipelines assets to its U.S. affiliate, Enbridge Energy Partners, L.P. (EEP). This review, currently underway, has not yet progressed to a conclusion.

The company noted that an independent committee of the EEP's board of directors is currently considering the terms of the proposed transfer to EEP of Enbridge's 67 percent interest in the U.S. segment of the Alberta Clipper pipeline, which is expected to be completed by the end of 2014.

ENB closed Wednesday's trading at $47.88, up $1.71 or 3.7 percent on a volume of 1.15 million shares.