Enbridge shares soar on restructuring plan, dividend hike

Thu Dec 4, 2014 11:47am EST
 
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VANCOUVER Dec 4 (Reuters) - Shares of Enbridge Inc rose more than 12 percent on Thursday, a day after the company outlined plans to transfer ownership of its Canadian pipelines to an affiliate and to boosts its dividend by 33 percent.

Canada's largest pipeline operator said late on Wednesday that it will move, or drop down, C$17 billion worth of assets into its subsidiary, Enbridge Income Fund, in an effort to lower financing costs for future growth projects.

Enbridge will remain the operator of the liquids pipeline business, which includes the Calgary-based company's massive Mainline system and regional Oil Sands system.

The plan will allow Enbridge to accelerate dividend growth, while improving funding costs for new projects, reinforcing the company's growth past 2018, Chief Executive Al Monaco said on a conference call on Thursday.

"Our strategies, approach to the business and our priorities will remain exactly as they are today," he said. "But the optimization should enhance our ability to compete for new organic and asset acquisition opportunities."

The company is also mulling a similar restructuring for its U.S. pipeline assets, though Monaco made clear that the idea was still being evaluated.

Enbridge's shares jumped as much as 19.6 percent shortly after the market opened Thursday on the Toronto Stock Exchange, and were trading up 12.1 percent at C$61.00 around mid-morning.

The restructuring comes as rival TransCanada Corp faces mounting pressure from activist investors to overhaul its business, including accelerating drop downs into its U.S.-based affiliate and a spinout of its power business. (Reporting by Julie Gordon; Editing by Phil Berlowitz)