* Total cost of project pegged at C$300 mln for Enbridge
* Tonbridge shares more than double to C$0.53 (Adds details, background)
CALGARY, Alberta, Aug 16 (Reuters) - Enbridge Inc (ENB.TO) plans to take over a Canada-U.S. power transmission project by buying its cash-strapped developer for C$20 million ($20.4 million), marking an entry for the pipeline operator into electricity transmission.
Enbridge, best known as the main transporter of Canadian oil to the United States, said on Tuesday it had agreed to buy the shares of Tonbridge Power Inc TBZ.V for 54 Canadian cents apiece, giving it control of the Montana Alberta Tie Line project.
The project is a two-phase development that will link Great Falls, Montana, with Lethbridge, Alberta, with a 345 km (214 mile) transmission line.
In June, Tonbridge had said it would need at least C$25 million in additional funding to complete the power line, raising concerns over the project’s future. [ID:nL3E7HN234] It subsequently doubled that estimate.
Following the acquisition, Enbridge will inject the money needed to finish the first 300 megawatt phase and an expansion to 550-600 MW.
The total cost to the company is expected to be C$300 million, with half of that funded by a 30-year loan from the Western Area Power Administration of the U.S. Department of Energy.
Under a plan of arrangement, Enbridge will also repay about C$50 million of debt incurred by Tonbridge.
Tonbridge shareholders are scheduled to vote on the deal on Sept. 26, and holders of more than 20 percent of the stock have said they will vote in favor.
A special committee of Tonbridge’s board said the deal is in shareholders’ best interests.
The offer represents a 116 percent premium over Tonbridge’s closing price of 25 Canadian cents on Aug. 8, the day before the shares were halted on the TSX Venture Exchange.
The stock was up 28 Canadian cents at 53 Canadian cents on Tuesday. Enbridge was off 38 Canadian cents at C$31.09 on the Toronto Stock Exchange.
“The MATL project is the first step in Enbridge’s plans to develop a power transmission growth platform,” Enbridge Chief Financial Officer Richard Bird said in a statement.
Enbridge is a producer of 860 MW of renewable energy through a portfolio of wind, solar and geothermal projects.
It will be entitled to get about C$9 million if the deal falls through, it said.
$1=$0.98 Canadian Reporting by Bhaswati Mukhopadhyay in Bangalore and Jeffrey Jones in Calgary; editing by Rob Wilson