ACQUISITIONS AND DISPOSITIONS

ASSETS HELD FOR SALE

Canadian Natural Gas Gathering and Processing Businesses

On July 4, 2018, we entered into agreements to sell our Canadian natural gas gathering and processing businesses to Brookfield Infrastructure Partners L.P. and its institutional partners for a cash purchase price of approximately $4.3 billion, subject to customary closing adjustments. Separate agreements were entered into for those facilities currently governed by provincial regulations and those governed by federal regulations (collectively, Canadian Natural Gas Gathering and Processing Businesses assets). On October 1, 2018, we closed the sale of the provincially regulated facilities for proceeds of approximately $2.5 billion. These assets were included within our Gas Transmission and Midstream segment. The sale of the federally regulated facilities is expected to close in mid-2019 for proceeds of approximately $1.8 billion.

During the third quarter of 2018, we classified the Canadian Natural Gas Gathering and Processing Businesses assets as held for sale. As these assets represented a portion of a reporting unit, we allocated a portion of the goodwill of the reporting unit to these assets using a relative fair value approach. As a result of the goodwill allocation, the carrying value of Canadian Natural Gas Gathering and Processing Businesses assets is greater than the sale price consideration less the cost to sell. Therefore, we recorded a goodwill impairment of $1,019 million on the Consolidated Statements of Earnings for the three and nine months ended September 30, 2018. Further, the held for sale classification represented a triggering event and required us to perform a goodwill impairment test for the related reporting unit. The results of the test did not indicate any additional goodwill impairment.

Line 10 Crude Oil Pipeline

In the first quarter of 2018, we satisfied the condition as set out in our agreements for the sale of our Line 10 crude oil pipeline (Line 10), which originates near Hamilton, Ontario and terminates at West Seneca, New York. Our subsidiaries, Enbridge Pipelines Inc. and Enbridge Energy Partners, L.P. (EEP), own the Canadian and United States portions of Line 10, respectively, and the related assets are included in our Liquids Pipeline segment.

We expect to close the sale of Line 10 within one year, subject to regulatory approval and certain closing conditions. As such, during the first quarter of 2018, we classified Line 10 assets as held for sale and measured them at the lower of their carrying value or fair value less costs to sell, which resulted in a loss of $154 million ($95 million after-tax attributable to us) included within Asset impairment on the Consolidated Statements of Earnings for the nine months ended September 30, 2018.

The table below summarizes the presentation of net assets held for sale in our Consolidated Statements of Financial Position:



	September 30, 2018		December 31, 2017
(millions of Canadian dollars)
Accounts receivable and other (current assets held for sale)	154		424
Deferred amounts and other assets (long-term assets held for sale)¹	4,841		1,190
Accounts payable and other (current liabilities held for sale)	(70	)	(315	)
Other long-term liabilities (long-term liabilities held for sale)²	(430	)	(34	)
Net assets held for sale	4,495		1,265


1	Included within Deferred amounts and other assets at September 30, 2018, is property, plant and equipment of $4.1 billion and goodwill of $482 million. Included within Deferred amounts and other assets at December 31, 2017, is property, plant and equipment of $1.1 billion.


2	Included within Other long-term liabilities at September 30, 2018 are deferred tax liabilities of $329 million.

DISPOSITIONS

Renewable Assets

On August 1, 2018, we closed the sale of a 49% interest in all of our Canadian renewable assets, a 49% interest in two United States renewable assets and 49% of our interest in the Hohe See Offshore wind farm and its subsequent expansion, both concurrently under construction in Germany, (collectively, the Renewable Assets) to the Canada Pension Plan Investment Board (CPPIB). Total cash proceeds from the transaction were $1.75 billion. In addition, CPPIB will fund their pro-rata share of the remaining capital expenditures on the Hohe See Offshore wind project. We will maintain a 51% interest in the Renewable Assets and will continue to manage, operate and provide administrative services for these assets.

A loss on disposal of $20 million (€14 million) was included in Other income/(expense) in the Consolidated Statements of Earnings for the sale of 49% of our interest in the Hohe See Offshore wind farm and its subsequent expansion. Subsequent to the sale, the remaining interests in these assets continue to be accounted for as an equity method investment, and are a part of our Green Power and Transmission segment.

Gains of $62 million and $17 million (US$13 million) were included in Additional paid-in capital in the Consolidated Statements of Financial Position for the sale of 49% interest in the Canadian and United States renewable assets, respectively. Subsequent to the sale, because we maintained a controlling interest, these assets continue to be consolidated and are a part of our Green Power and Transmission segment. In addition, we recognized noncontrolling interests in our Consolidated Statements of Financial Position as at September 30, 2018 to reflect the interests that we do not hold (Note 10).

Also, a deferred income tax recovery of $267 million ($196 million attributable to us) was recorded in the nine months ended September 30, 2018 as a result of the agreement entered into during the second quarter of 2018 for the Renewable Assets (Note 12).

In connection with our sale of the Renewable Assets, we have new consolidated and unconsolidated variable interest entities (VIEs) (Note 7).

Midcoast Operating, L.P.

On August 1, 2018, our indirect subsidiary, Enbridge (U.S.) Inc. closed the sale of Midcoast Operating, L.P. and its subsidiaries (collectively, MOLP) to AL Midcoast Holdings, LLC (an affiliate of ArcLight Capital Partners, LLC) for total cash proceeds of $1.4 billion (US$1.1 billion). A loss on disposal of $74 million (US$57 million) was included in Other income/(expense) in the Consolidated Statements of Earnings. MOLP conducted our United States natural gas and natural gas liquids gathering, processing, transportation and marketing businesses, and was a part of our Gas Transmission and Midstream segment.

Upon closing of the sale, we also recorded a liability of $387 million (US$298 million) for future volume commitments retained by us. The associated loss is included in the loss on disposal of $74 million discussed above. As at September 30, 2018, $75 million (US$58 million) and $306 million (US$237 million) were included in Accounts payable and other and Other long-term liabilities, respectively, on the Consolidated Statements of Financial Position.

In the second quarter of 2018, our equity method investment in the Texas Express NGL pipeline system, together with the MOLP assets that have been held for sale since December 31, 2017, also met the conditions for assets held for sale. The $447 million carrying value of Texas Express NGL pipeline system equity investment and an allocated goodwill of $262 million, were included within the disposal group as at June 30, 2018 and subsequently disposed on August 1, 2018.

In the first quarter of 2018, as a result of entering into a definitive sales agreement, the fair value of the assets held for sale as at March 31, 2018 were revised based on the sale price. Accordingly, we recorded a loss of $913 million ($701 million after-tax). This loss has been included within Asset impairment on the Consolidated Statements of Earnings for the nine months ended September 30, 2018.