S-4/A 1 d609390ds4a.htm S-4/A S-4/A
Table of Contents

As filed with the Securities and Exchange Commission on November 7, 2018

Registration No. 333-227768

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

Amendment No. 1

to

FORM S-4

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

 

 

ENBRIDGE INC.

(Exact Name of Registrant as Specified in Its Charter)

 

 

 

Canada
  4923
  None

(State or other jurisdiction of

incorporation or organization)

  (Primary Standard Industrial Classification Code Number)   (IRS Employer
Identification No.)

 

 

200, 425 - 1st Street S.W.

Calgary, Alberta T2P 3L8, Canada

Telephone: 1-403-231-3900

(Address, including Zip Code, and Telephone Number, including Area Code, of Registrant’s Principal Executive Offices)

 

 

Kelly L. Gray

Enbridge (U.S.) Inc.

5400 Westheimer Court

Houston, Texas 77056

(713) 627-5400

(Name, Address, including Zip Code, and Telephone Number, including Area Code, of Agent for Service)

 

 

With copies to:

 

Robert E. Buckholz

George J. Sampas

Sullivan & Cromwell LLP

125 Broad Street

New York, New York 10004

Telephone Number: (212) 558-4000

 

Tyler W. Robinson

Vice President & Corporate Secretary

Enbridge Inc.

200, 425 - 1st Street S.W.

Calgary, Alberta T2P 3L8, Canada

Telephone Number: 1-403-231-3900

 

William S. Anderson

Bracewell LLP

711 Louisiana Street, Suite 2300

Houston, Texas 77002

Telephone Number: (713) 221-2300

 

 

Approximate date of commencement of proposed sale of the securities to the public: As soon as practicable after this registration statement is declared effective and upon consummation of the merger described in the enclosed proxy statement/prospectus.

If the securities being registered on this form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, please check the following box.  ☐

If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act of 1933, as amended (the “Securities Act”), check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.   ☐

If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.   ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

 

Large accelerated filer      Accelerated filer  
Non-accelerated filer      Smaller reporting company  
     Emerging growth company  

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act.  ☐

If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction:

Exchange Act Rule 13e-4(i) (Cross-Border Issuer Tender Offer)   ☐

Exchange Act Rule 14d-1(d) (Cross-Border Third-Party Tender Offer)   ☐

 

 

CALCULATION OF REGISTRATION FEE

 

 

Title of Each Class of

Securities to Be Registered

  Amount
to be
Registered(1)
 

Proposed Maximum
Offering Price

Per Unit

  Proposed Maximum
Aggregate
Offering Price(2)
  Amount of
Registration Fee(3)(4)

Common Shares

  30,134,916   N/A   1,011,327,780.96   122,572.93

 

 

(1)

Represents the estimated maximum number of common shares of Enbridge Inc. (“Enbridge”) to be issuable upon completion of the merger with Enbridge Energy Management, L.L.C. (“EEQ”) described herein, at an exchange ratio of 0.335 of an Enbridge common share per listed share of EEQ, the consideration for the merger, based upon 87,086,769 outstanding shares of EEQ not already owned by Enbridge or entities it controls as of October 2, 2018, and 2,868,203 shares of EEQ expected to be issued to persons other than Enbridge or entities it controls in November 2018.

(2)

Pursuant to Rules 457(c) and 457(f)(1) promulgated under the Securities Act and solely for the purpose of calculating the registration fee, the proposed aggregate maximum offering price is the product of (x) $33.56 (the average of the high and low prices of the Enbridge common shares, as reported on the New York Stock Exchange on October 3, 2018, rounded to the nearest cent) multiplied by (y) the estimated number of Enbridge common shares to be registered.

(3)

Computed in accordance with Rule 457(f) under the Securities Act to be $122,572.93, which is equal to 0.0001212 multiplied by the proposed maximum aggregate offering price of $1,011,327,780.96.

(4)

Includes a registration fee of $118,664.70 paid with respect to the 29,174,068 common shares of Enbridge listed in the calculation of registration fee table for the Registration Statement as initially filed on October 10, 2018. An additional registration fee of $3,908.23 is being paid with respect to the additional 960,848 common shares being registered hereby.

 

 

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

 

 

 


Table of Contents

The information in this document is not complete and may be changed. The securities described herein may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This document is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

 

PRELIMINARY PROXY STATEMENT/PROSPECTUS—SUBJECT TO COMPLETION, DATED NOVEMBER 7, 2018

ENBRIDGE ENERGY MANAGEMENT, L.L.C.

MERGER PROPOSAL—YOUR VOTE IS VERY IMPORTANT

[                ]

To the Shareholders of Enbridge Energy Management, L.L.C.:

On September 17, 2018, Enbridge Energy Management, L.L.C., which is referred to as “EEQ”, entered into an Agreement and Plan of Merger (which, as may be amended from time to time, is referred to as the “Merger Agreement”) with Enbridge Inc. (“Enbridge” or “ENB”), Winter Acquisition Sub I, Inc. (“Merger Sub”) and, solely for the purposes of Article I, Section 2.4 and Article X therein, Enbridge Energy Company, Inc. (the “General Partner”). The Merger Agreement provides that Merger Sub will be merged with and into EEQ, with EEQ being the surviving entity and becoming an indirect wholly owned subsidiary of Enbridge (the “Merger”). As a result of the Merger, Enbridge will acquire indirectly all of the outstanding listed shares of EEQ (the “Listed Shares”) that Enbridge and its subsidiaries do not already own.

A special committee composed of independent members of the board of directors of EEQ, which is referred to as the “Special Committee”, and the board of directors of EEQ, which is referred to as the “EEQ Board”, each have determined that the Merger is fair and reasonable to EEQ, including the holders of the outstanding Listed Shares (other than Enbridge and its affiliates), and have approved the Merger Agreement and the Merger. The approval of the Merger Agreement and the Merger by EEQ requires the affirmative vote of the holders of a majority of the outstanding Listed Shares (other than Enbridge and its affiliates) entitled to vote on such matter at a meeting of the holders of Listed Shares. In addition, completion of the Merger is contingent upon the completion of the acquisition by Enbridge of all of the outstanding Class A common units of Enbridge Energy Partners, L.P. (“EEP”) (other than any Class A common units held by Enbridge and its affiliates) in the EEP merger (as defined below).

If the Merger and the EEP merger are successfully completed, each outstanding Listed Share not owned by Enbridge or any of its subsidiaries will be converted into the right to receive 0.335 of an Enbridge common share, which common shares are referred to as “Enbridge common shares” and such exchange ratio is referred to as the “Exchange Ratio”. Based on the number of Enbridge common shares, Listed Shares and EEP Class A common units that are outstanding as of November 5, 2018 (other than any Listed Shares or EEP Class A common units owned by Enbridge or its subsidiaries), the number of Enbridge common shares issued in exchange for Listed Shares as a result of the proposed Merger and the EEP merger would in the aggregate represent approximately 1.7% of the outstanding Enbridge common shares as of November 5, 2018 (or approximately 1.4% if the proposed Merger and the Other Merger Transactions described below were successfully completed, based on the number of Enbridge common shares expected to be issued in the proposed Merger and the Other Merger Transactions in accordance with the respective transaction agreements, and the number of outstanding Enbridge common shares and outstanding shares or units, as the case may be, of each of EEQ, EEP, SEP and ENF (each of SEP and ENF, as defined below), as of November 5, 2018). The actual number of Enbridge common shares issued in the Merger and the EEP merger will be determined by multiplying the Exchange Ratio by the number of issued and outstanding Listed Shares held by Unaffiliated EEP Unitholders and the exchange ratio in the EEP merger by the number of issued and outstanding Class A common units held by the public as of the closing date of the Merger. The actual number of Enbridge common shares issued in each of the SEP merger and the ENF plan of arrangement (each, as defined below) will be determined by multiplying the applicable exchange ratio by the number of publicly held shares or units of the acquired entity as of the closing date of each such transaction.

Enbridge has also entered into definitive agreements to acquire, in separate combination transactions, all of the outstanding equity securities that Enbridge does not already own of (1) EEP, (2) Spectra Energy Partners, LP (“SEP”), and (3) Enbridge Income Fund Holdings Inc. (“ENF”), which transactions are referred to separately as the “EEP merger”, the “SEP merger” and the “ENF plan of arrangement”, respectively, and collectively as the “Other Merger Transactions”.

EEP will hold a special meeting of its unitholders to obtain their approval of the applicable merger agreement. The completion of the Merger is conditioned upon the completion of the EEP merger; however,


Table of Contents

none of the EEP merger, the SEP merger or the ENF plan of arrangement is conditioned on the completion of the Merger or any of the Other Merger Transactions. SEP will solicit consents in order to obtain the requisite approval of the SEP unitholders. The consents of Enbridge and its subsidiaries (other than SEP) to the SEP merger are sufficient to approve the SEP merger and the related merger agreement. The requisite approval of the ENF plan of arrangement by the ENF shareholders was obtained at a special meeting of ENF shareholders held on November 6, 2018.

We are holding a special meeting of EEQ shareholders on December 17, 2018 at 10:00 a.m. local time, at the Hilton Houston Post Oak by the Galleria, 2001 Post Oak Boulevard, Houston, Texas 77056, to obtain your vote to approve the Merger Agreement. Your vote is very important, regardless of the number of Listed Shares that you own. The Merger cannot be completed unless a majority of the outstanding Listed Shares held by the Unaffiliated EEQ Shareholders are voted for the approval of the Merger Agreement at the special meeting. Therefore, your failure to vote your EEQ shares will have the same effect as a vote against approval of the Merger Agreement.

The Special Committee and the EEQ Board each recommend that EEQ shareholders vote FOR the approval of the Merger Agreement and FOR the proposals to waive and amend certain provisions of the limited liability company agreement of EEQ in connection therewith, and the EEQ Board recommends that EEQ shareholders vote FOR the adjournment of the special meeting from time to time if necessary to solicit additional proxies if there are not sufficient votes to approve the Merger Agreement at the time of the special meeting.

EEQ owns all of the i-units of EEP, and all of the units of EEP (other than the Class F units of EEP), including the i-units, will vote on the EEP merger. The manner in which EEQ will vote the i-units is established in the organizational documents of EEQ, which require that EEQ submit to a vote of the EEQ shareholders any matter, including the EEP merger, on which EEQ is entitled to vote the i-units. EEQ will vote its i-units on the EEP merger based upon the manner that the EEQ shareholders have voted their EEQ shares, “for,” “against” or “abstain” at the EEQ special meeting. As a result, the EEQ special meeting agenda includes two proposals related to the EEP merger to determine the manner in which EEQ will vote its i-units. The EEQ Board recommends that EEQ shareholders vote FOR the approval of the two proposals related to the EEP merger. In order to fully inform you with respect to the EEP merger, the accompanying proxy statement/prospectus includes the complete EEP proxy statement/prospectus as Annex D hereto.

The Listed Shares are traded on the New York Stock Exchange (the “NYSE”) under the symbol “EEQ”, and the Enbridge common shares are traded on the NYSE and the Toronto Stock Exchange (the “TSX”) under the symbol “ENB”. The last reported sale price of Enbridge common shares on the NYSE on November 6, 2018, was US$33.12. The last reported sale price of the Listed Shares on the NYSE on November 6, 2018, was US$10.87.

On behalf of the EEQ Board, I invite you to attend the special meeting. Whether or not you expect to attend the special meeting in person, we urge you to submit your proxy as promptly as possible through one of the delivery methods described in the accompanying proxy statement/prospectus.

In addition, we urge you to read carefully the accompanying proxy statement/prospectus (and the documents incorporated by reference into it), which includes important information about the Merger Agreement, the proposed Merger, the Other Merger Transactions and the special meeting. Please pay particular attention to the section titled “Risk Factors ” beginning on page 34 of the accompanying proxy statement/prospectus.

On behalf of the EEQ Board, thank you for your continued support.

 

Sincerely,
Jeffrey A. Connelly

Chairman of the Board of Directors

Enbridge Energy Management, L.L.C.


Table of Contents

NEITHER THE U.S. SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THE MERGER, THE APPROVAL OF THE MERGER AGREEMENT, THE ISSUANCE OF ENBRIDGE COMMON SHARES IN CONNECTION WITH THE MERGER OR ANY OTHER MERGER TRANSACTIONS DESCRIBED IN THE ACCOMPANYING PROXY STATEMENT/PROSPECTUS, OR PASSED UPON THE ADEQUACY OR ACCURACY OF THE DISCLOSURE IN THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

The enforcement by investors of civil liabilities under United States federal securities laws may be affected adversely by the fact that Enbridge is incorporated under the laws of Canada, that at certain points in time, most of its officers and directors may be residents of Canada, that some of the experts named in the accompanying proxy statement/prospectus are residents of Canada, and that all or a substantial portion of the assets of Enbridge and said persons are located outside the United States.

The accompanying proxy statement/prospectus is dated [                ], and is first being mailed to EEQ shareholders on or about [                ].


Table of Contents

ENBRIDGE ENERGY MANAGEMENT, L.L.C.

5400 Westheimer Court

Houston, Texas 77056

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS

To the Shareholders of Enbridge Energy Management, L.L.C.:

Notice is hereby given that a special meeting of shareholders of Enbridge Energy Management, L.L.C., a Delaware limited liability company, which is referred to as “EEQ”, will be held on December 17, 2018 at 10:00 a.m., local time, at the Hilton Houston Post Oak by the Galleria, 2001 Post Oak Boulevard, Houston, Texas 77056, solely for the following purposes:

 

   

Proposal 1: To consider and vote on a proposal to approve the Agreement and Plan of Merger, dated as of September 17, 2018 (as it may be amended from time to time, the “Merger Agreement”), entered into by and among Enbridge Energy Management, L.L.C. (“EEQ”), Enbridge Inc. (“Enbridge” or “ENB”), Winter Acquisition Sub I, Inc. (“Merger Sub”) and, solely for purposes of Article I, Section 2.4 and Article X therein, Enbridge Energy Company, Inc. (the “General Partner”) (the “EEQ Merger Proposal”);

 

   

Proposal 2: To consider and vote on a proposal to waive Section 9.01(a)(v) of the Amended and Restated Limited Liability Company Agreement of EEQ, dated as of October 17, 2002, as amended (the “EEQ LLC Agreement”), in connection with the Merger (the “Waiver Proposal”);

 

   

Proposal 3: To consider and vote on a proposal to adopt an amendment to the EEQ LLC Agreement (the “EEQ LLC Agreement Amendment”) to increase certain voting rights to which the record holders of Listed Shares are entitled (the “EEQ LLC Agreement Amendment Proposal”);

 

   

Proposal 4: To consider and vote on a proposal to approve the adjournment of the special meeting from time to time, if necessary to solicit additional proxies if there are not sufficient votes to approve the EEQ Merger Proposal , the Waiver Proposal or the EEQ LLC Agreement Amendment Proposal, at the time of the special meeting (the “EEQ Adjournment Proposal”);

 

   

Proposal 5: To consider and vote on a proposal to approve the Agreement and Plan of Merger, dated as of September 17, 2018 (as it may be amended from time to time, the “EEP merger agreement”), entered into by and among Enbridge Energy Partners, L.P. (“EEP”), the General Partner, EEQ, Enbridge, Enbridge (U.S.) Inc., Winter Acquisition Sub II, LLC and, solely for purposes of Article I, Article II and Article XI therein, Enbridge US Holdings Inc., in order to determine how the EEP i-units will be voted at the special meeting in which the EEP unitholders will vote on the EEP merger agreement (the “EEP special meeting”) on the proposal to approve the EEP merger agreement (the “EEP Merger Proposal”); and

 

   

Proposal 6: To consider and vote on a proposal to approve the adjournment of the EEP special meeting from time to time, if necessary to solicit additional proxies if there are not sufficient votes to approve the EEP merger agreement at the time of the EEP special meeting, in order to determine how the EEP i-units will be voted at the EEP special meeting on the proposal to approve the EEP merger agreement (the “EEP Adjournment Proposal”, together with the “EEQ Adjournment Proposal”, the “Adjournment Proposals”).

The EEQ Merger Proposal, the Waiver Proposal, the EEQ LLC Agreement Amendment Proposal and the Adjournment Proposals are referred to as the “Proposals”.

These items of business, including the Merger Agreement, the proposed Merger, the proposed Waiver and amendment to the EEQ LLC Agreement, are described in detail in the accompanying proxy statement/prospectus, and the proposals related to the EEP merger agreement and the EEP merger are described in detail in the EEP proxy statement/prospectus attached to the accompanying proxy statement/prospectus as Annex D.


Table of Contents

A special committee composed of independent members of the board of directors of EEQ, which is referred to as the “Special Committee”, and the board of directors of EEQ, which is referred to as the “EEQ Board”, each have, acting in good faith, determined that the Merger Agreement, the transactions contemplated by the Merger Agreement, including the Merger, and the EEQ LLC Agreement Amendment, are fair and reasonable to EEQ, including the holders of the outstanding Listed Shares (other than Enbridge and its affiliates), have approved the Merger Agreement, the transactions contemplated by the Merger Agreement, including the Merger, and the EEQ LLC Agreement Amendment and recommend that the EEQ shareholders vote FOR the EEQ Merger Proposal, FOR the Waiver Proposal and FOR the EEQ LLC Agreement Amendment Proposal, and the EEQ Board recommends that the EEQ shareholders vote FOR the EEQ Adjournment Proposal.

The Special Committee and the EEQ Board and the board of directors of the General Partner, which is referred to as the “GP Board”, each have, acting in good faith, determined that the EEP merger agreement and the transactions contemplated by the EEP merger agreement, including the EEP merger, are fair and reasonable to EEP, including the holders of the outstanding units of EEP (other than Enbridge and its affiliates), have approved the Merger Agreement and the Merger and have recommended that the EEP unitholders, including EEQ, as the holder of EEP’s i-units, vote FOR the EEP Merger Proposal, and the EEQ Board has recommended that the EEP unitholders, including EEQ, as the holder of EEP’s i-units, vote FOR the EEP Adjournment Proposal. The EEQ Board recommends that EEQ shareholders vote FOR the EEP Merger Proposal and FOR the EEP Adjournment Proposal.

Only EEQ shareholders of record as of the close of business on November 5, 2018 are entitled to notice of the special meeting and to vote at the special meeting or at any adjournment or postponement thereof. A list of EEQ shareholders entitled to vote at the special meeting will be available in EEQ’s offices located at 5400 Westheimer Court, Houston, Texas 77056, during regular business hours for a period of ten days before the special meeting, and at the place of the special meeting during the meeting.

YOUR VOTE IS VERY IMPORTANT!

Approval of the EEQ Merger Proposal, the Waiver Proposal and the EEQ LLC Agreement Amendment Proposal by the EEQ shareholders are conditions to the consummation of the Merger and require the affirmative vote of the holders of a majority of the outstanding Listed Shares (other than the Listed Shares owned by Enbridge, the General Partner, Merger Sub or any other direct or indirect wholly owned subsidiary of Enbridge and Listed Shares owned by EEQ or any direct or indirect wholly owned subsidiary of EEQ, and in each case not held on behalf of third parties (collectively, the “Excluded Shares”)) entitled to vote on such matters at a meeting of the holders of Listed Shares. Approval of the EEP merger agreement requires the affirmative vote or consent of (1) the holders of at least 6623% of the outstanding EEP units (other than the EEP Class F units), and (2) the holders of a majority of the outstanding EEP Class A common units (other than EEP Class A common units held by Enbridge and its affiliates) and the outstanding EEP i-units (other than EEP i-units voted at the direction of Enbridge and its affiliates), voting together as a single class, in each case entitled to vote on such matter at the EEP special meeting or any adjournment or postponement thereof. Because the Merger is conditioned upon the completion of the EEP merger, a vote against or to abstain from voting on the proposal to approve the EEP merger agreement is indirectly a vote against the Merger Agreement. Your failure to vote your EEQ shares will have the same effect as a vote against the approval of the Merger Agreement and the EEP merger agreement.

WHETHER OR NOT YOU EXPECT TO ATTEND THE SPECIAL MEETING IN PERSON, WE URGE YOU TO SUBMIT YOUR PROXY AS PROMPTLY AS POSSIBLE (1) THROUGH THE INTERNET, (2) BY TELEPHONE OR (3) BY MARKING, SIGNING AND DATING THE ENCLOSED PROXY CARD AND RETURNING IT IN THE POSTAGE-PAID ENVELOPE PROVIDED. You may revoke your proxy or change your vote at any time by 11:59 p.m., Eastern Time, on the day before the special meeting. If your EEQ shares are held in the name of a bank, broker, nominee, trust company or other fiduciary, please follow the instructions on the voting instruction card furnished to you by them.


Table of Contents

We urge you to carefully read the accompanying proxy statement/prospectus, including all documents incorporated by reference into it, and its annexes before voting your EEQ shares at the special meeting or submitting your voting instructions by proxy.

IF YOU PLAN TO ATTEND THE SPECIAL MEETING:

Please note that space limitations make it necessary to limit attendance to EEQ shareholders. Admission to the special meeting will be on a first-come, first-served basis. Registration will begin at 9:00 a.m., local time, and seating will begin at 9:30 a.m., local time. EEQ shareholders will be asked to present valid picture identification, such as a driver’s license or passport. EEQ shareholders holding Listed Shares in brokerage accounts will also need to bring a copy of the voting instruction card that they received from their broker or other nominee in connection with the special meeting, or a brokerage statement reflecting share ownership as of the record date. Cameras, recording devices and other electronic devices will not be permitted at the special meeting.

 

By order of the board of directors,
Jeffrey A. Connelly

Chairman of the Board of Directors

Enbridge Energy Management, L.L. C.

Houston, Texas

[                ]

 


Table of Contents

ADDITIONAL INFORMATION

This proxy statement/prospectus incorporates important business and financial information about Enbridge and EEQ from other documents that Enbridge and EEQ have filed with the U.S. Securities and Exchange Commission, which is referred to as the “SEC”, and that are contained in or incorporated by reference herein. For a listing of documents incorporated by reference herein, please see the section titled “Where You Can Find More Information” beginning on page 161 of this proxy statement/prospectus. This information is available for you to review through the SEC’s website at www.sec.gov.

You will also be able to obtain copies of documents filed by Enbridge with the SEC from Enbridge’s website at https://www.enbridge.com/ under the “Investment Center” link and then under the heading “Reports and SEC Filings” or copies of documents filed by EEQ with the SEC by accessing EEQ’s website at https://www.enbridgemanagement.com/ under the “Investor Relations” link, and then under the heading “Financial Information”. The information contained on either of Enbridge’s or EEQ’s respective websites is not incorporated into this proxy statement/prospectus and is not a part of this proxy statement/prospectus.

You may request copies of this proxy statement/prospectus and any of the documents incorporated by reference herein or certain other information concerning Enbridge or EEQ, without charge, upon written or oral request to the applicable company’s principal executive offices. The respective addresses and telephone numbers of such principal executive offices are listed below.

 

Enbridge Energy Management, L.L.C.    Enbridge Inc.

5400 Westheimer Court

Houston, Texas 77056

Attention: Corporate Secretary

Telephone: 1-800-481-2804

  

200, 425 - 1st Street S.W.

Calgary, Alberta T2P 3L8, Canada

Attention: Investor Relations

Telephone: 1-800-481-2804

In addition, if you have questions about the Merger or the special meeting, need additional copies of this proxy statement/prospectus or need to obtain proxy cards or other information related to the proxy solicitation, you may contact D.F. King & Co., Inc., EEQ’s proxy solicitor, at the address and telephone numbers listed below. You will not be charged for any of these documents that you request.

D.F. King & Co., Inc.

48 Wall Street, 22nd Floor

New York, NY 10005

Banks and Brokers call: (212) 269-5550

All others call toll-free: (800) 207-3159

Email: Enbridge@dfking.com

To obtain timely delivery of these documents prior to the special meeting, holders of EEQ shares must request the information no later than December 10, 2018 (which is five business days before the date of the special meeting) in order to receive them before the special meeting.

ABOUT THIS PROXY STATEMENT/PROSPECTUS

This proxy statement/prospectus, which forms part of a registration statement on Form S-4 filed with the SEC by Enbridge (File No. 333-227768), constitutes a prospectus of Enbridge under Section 5 of the Securities Act of 1933, as amended (the “Securities Act”), with respect to the Enbridge common shares to be issued to holders of Listed Shares pursuant to the Merger Agreement.

This proxy statement/prospectus also constitutes a notice of meeting and a proxy statement of EEQ under Section 14(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), with respect to the


Table of Contents

special meeting of EEQ shareholders, which is referred to as the “special meeting”, at which EEQ shareholders will be asked to consider and vote on and approve the EEQ Merger Proposal, the Waiver Proposal, the EEQ LLC Agreement Amendment Proposal and the EEP Merger Proposal. In order to fully inform the EEQ shareholders with respect to the EEP merger, this proxy statement/prospectus includes the complete EEP proxy statement/prospectus as Annex D.

We are responsible for the information contained in, and incorporated by reference into, this proxy statement/prospectus. We have not authorized anyone to give you any other information, and we take no responsibility for any other information that others may give you. You should bear in mind that although the information contained in, or incorporated by reference into, this proxy statement/prospectus is intended to be accurate as of the date on the front of such documents, such information may also be amended, supplemented or updated by the subsequent filing of additional documents deemed by law to be or otherwise incorporated by reference into this proxy statement/prospectus. Enbridge’s and EEQ’s business, financial condition, results of operations and prospects may have changed since those dates.

This proxy statement/prospectus does not constitute an offer to sell, or a solicitation of an offer to buy, any securities, or the solicitation of a proxy, in any jurisdiction in which it is unlawful to make any such offer or solicitation.

Enbridge and EEQ have both contributed to the information contained in this proxy statement/prospectus. The information concerning Enbridge contained in, or incorporated by reference into, this proxy statement/prospectus has been provided by Enbridge, and information concerning EEQ contained in, or incorporated by reference into, this proxy statement/prospectus has been provided by EEQ.

Unless otherwise specified, currency amounts referenced in this proxy statement/prospectus are in U.S. dollars.


Table of Contents

CURRENCY EXCHANGE RATE DATA

The following table shows, for the years and dates indicated, certain information regarding the Canadian dollar/U.S. dollar exchange rate. The information is based on the daily exchange rate as reported by the Bank of Canada. Such exchange rate on November 1, 2018 was C$1.3088 = US$1.00.

 

     Period End      Average      Low      High  

Year ended December 31,

(C$ per US$)

           

2017

     1.2545        1.2986        1.2128        1.3743  

2016

     1.3427        1.3248        1.2544        1.4589  

2015

     1.3840        1.2787        1.1728        1.3990  

2014

     1.1601        1.1045        1.0614        1.1643  

2013

     1.0636        1.0299        0.9839        1.0697  

 

     Low      High  

Month ended,

(C$ per US$)

     

November 2018 (through November 1, 2018)

     1.3088        1.3088  

October 2018

     1.2803        1.3142  

September 2018

     1.2905        1.3188  

August 2018

     1.2917        1.3152  

July 2018

     1.3017        1.3255  

June 2018

     1.2913        1.3310  

May 2018

     1.2775        1.3020  

 

Source:

Bank of Canada website. Exchange rates prior to 2017 in the tables above represent daily noon rates. Due to a change in calculation methodology of the rates published by the Bank of Canada, the exchange rates for 2017 onward represent daily average exchange rates.


Table of Contents

FREQUENTLY USED TERMS

This proxy statement/prospectus generally does not use technical defined terms, but a few frequently used terms may be helpful for you to have in mind at the outset. Unless otherwise specified or if the context so requires, the following terms have the meanings set forth below for purposes of this proxy statement/prospectus:

“Canadian Tax Act” refers to the Income Tax Act (Canada), including the regulations promulgated thereunder, as amended from time to time.

“Closing Date” refers to the date on which the Merger is completed.

“EEP” refers to Enbridge Energy Partners, L.P., a publicly-traded Delaware limited partnership.

“EEQ” refers to Enbridge Energy Management, L.L.C., a publicly-traded Delaware limited liability company.

“EEQ LLC Agreement” refers to the Amended and Restated Limited Liability Company Agreement of EEQ, dated as of October 17, 2002, as amended.

“EEQ shareholders” refers to holders of any EEQ shares.

“EEQ shares” refers to the Listed Shares and the Voting Shares of EEQ.

“Effective Time” refers to the time on the Closing Date at which the Merger becomes effective as specified in the certificate of merger of EEQ and Merger Sub to be filed with the Secretary of State of the State of Delaware.

“Enbridge” or “ENB” refers to Enbridge Inc., a Canadian corporation.

“Enbridge shareholders” refers to the holders of Enbridge common shares.

“Exchange Ratio” refers to 0.335 of a validly issued, fully paid and non-assessable Enbridge common share for each Listed Share held by Unaffiliated EEQ Shareholders.

“Excluded Shares” refers to Listed Shares owned by Enbridge, Enbridge Energy Company, Inc., Merger Sub or any other direct or indirect wholly owned subsidiary of Enbridge and Listed Shares owned by EEQ or any direct or indirect wholly owned subsidiary of EEQ, and in each case not held on behalf of third parties.

“General Partner” refers to Enbridge Energy Company, Inc., a Delaware corporation and the general partner of EEP.

“i-unit” refers to the i-units representing limited partner interests of EEP. All i-units are owned by EEQ and the i-units are not publicly traded.

“Listed Share” refers to each listed share of EEQ.

“Merger” refers to the proposed merger of Merger Sub with and into EEQ, pursuant to which EEQ will survive the merger as an indirect wholly owned subsidiary of Enbridge.

“Merger Agreement” refers to the Agreement and Plan of Merger, dated as of September 17, 2018, entered into by and among EEQ, Enbridge, Merger Sub and, solely for purposes of Article I, Section 2.4 and Article X therein, Enbridge Energy Company, Inc.

“Merger Consideration” refers to the conversion of each issued and outstanding Listed Share immediately prior to the Effective Time (other than the Excluded Shares) into the right to receive 0.335 of a validly issued, fully paid and non-assessable Enbridge common share.


Table of Contents

“Merger Sub” refers to Winter Acquisition Sub I, Inc., a Delaware corporation and a wholly owned subsidiary of Enbridge.

“Midcoast Transaction” refers to the sale by Enbridge (U.S.) Inc., an indirect subsidiary of Enbridge, of Midcoast Operating, L.P. and its subsidiaries (collectively, “Midcoast”) to AL Midcoast Holdings, LLC for cash proceeds of approximately US$1.1 billion less deposits and other customary closing items, as disclosed in Enbridge’s Current Report on Form 8-K, filed with the SEC on August 1, 2018.

“Record Date” refers to the close of business in New York, New York on November 5, 2018.

“special meeting” refers to the special meeting of the holders of outstanding EEQ shares to be held on December 17, 2018.

“Treaty” refers to the Canada-United States Income Tax Convention (1980).

“Unaffiliated EEQ Shareholder” refers to a holder of any Listed Shares, other than Enbridge and its affiliates.

“Voting Share” refers to each voting share of EEQ.


Table of Contents

TABLE OF CONTENTS

 

QUESTIONS AND ANSWERS

     1  

SUMMARY

     11  

Information about the Companies

     11  

The Merger and the Merger Agreement

     12  

Relationship of the Parties to the Merger Agreement

     12  

Merger Consideration

     13  

Required Approval by the EEQ Shareholders

     13  

Recommendation of the Special Committee and the EEQ Board

     13  

Reasons for the Recommendation of the Special Committee

     14  

Opinion of Goldman Sachs  & Co. LLC, Financial Advisor to the Special Committee

     14  

The Special Meeting

     15  

No Enbridge Shareholder Approval Required

     15  

Conditions to the Completion of the Merger

     16  

Termination

     16  

No Dissenters’ or Appraisal Rights

     17  

Regulatory Approvals

     17  

Litigation and Regulatory Reviews/Investigations Related to the Merger

     17  

Security Ownership of Certain Beneficial Owners of EEQ

     18  

Interests of Directors and Executive Officers of EEQ in the Merger

     18  

Material U.S. Federal Income Tax Consequences of the Merger

     19  

Material Canadian Federal Income Tax Consequences of the Merger

     20  

Listing of Enbridge Common Shares

     20  

Delisting and Deregistration of the Listed Shares

     20  

Comparison of Rights of Enbridge Shareholders and EEQ Shareholders

     20  

The Other Merger Transactions

     20  

Risk Factors

     21  

SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF ENBRIDGE

     22  

SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF EEQ

     24  

SELECTED UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION

     25  

COMPARATIVE HISTORICAL AND UNAUDITED PRO FORMA PER SHARE FINANCIAL INFORMATION

     26  

COMPARATIVE SHARE PRICES; DIVIDENDS

     28  

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

     31  

RISK FACTORS

     34  

Risks Related to the Merger

     34  

Risks Related to the Enbridge Common Shares

     39  

Tax Risks Related to the Merger and the Ownership of Enbridge Common Shares Received in the Merger

     41  

Risks Related to Enbridge’s Business

     43  

Risks Related to EEQ’s Business

     43  

INFORMATION ABOUT THE COMPANIES

     44  

Enbridge Inc.

     44  

Enbridge Energy Management, L.L.C.

     44  

Merger Sub

     45  

Other Merger Transactions

     45  

THE SPECIAL MEETING

     46  

Date, Time and Place

     46  

Purpose

     46  

Special Committee and the EEQ Board Recommendation

     46  

Record Date; Outstanding EEQ Shares; Shares Entitled to Vote

     47  

 

-i-


Table of Contents

Quorum

     47  

Required Vote

     47  

Share Ownership of and Voting by Enbridge and EEQ’s Directors and Executive Officers

     48  

Voting of Shares by Holders of Record

     48  

Voting of Shares Held in Street Name

     49  

Revocability of Proxies; Changing Your Vote

     49  

Solicitation of Proxies

     49  

Householding

     50  

Adjournments

     50  

Attending the Special Meeting

     50  

Assistance

     51  

PROPOSAL 1: THE EEQ MERGER PROPOSAL

     52  

Required Vote

     52  

Vote Recommendation

     52  

PROPOSAL 2: THE WAIVER PROPOSAL

     53  

Required Vote

     53  

Vote Recommendation

     53  

PROPOSAL 3: THE EEQ LLC AGREEMENT AMENDMENT PROPOSAL

     54  

Required Vote

     54  

Vote Recommendation

     54  

PROPOSAL 4: THE EEQ ADJOURNMENT PROPOSAL

     55  

Required Vote

     55  

Vote Recommendation

     55  

PROPOSAL 5: THE EEP MERGER PROPOSAL

     56  

Required Vote

     56  

Vote Recommendation

     56  

PROPOSAL 6: THE EEP ADJOURNMENT PROPOSAL

     57  

Required Vote

     57  

Vote Recommendation

     57  

THE MERGER

     58  

Transaction Structure

     58  

Merger Consideration

     58  

Background of the Merger

     58  

Recommendation of the Special Committee

     78  

Recommendation of the EEQ Board

     78  

Reasons for the Recommendation of the Special Committee

     78  

Opinion of Goldman Sachs  & Co. LLC, Financial Advisor to the Special Committee

     83  

Unaudited Financial Projections of Enbridge and EEP

     90  

Reasons of the Enbridge Board for the Merger

     94  

Regulatory Approvals

     94  

Litigation and Regulatory Reviews/Investigations Related to the Merger

     95  

Relationship of the Parties to the Merger Agreement

     96  

Interests of Directors and Executive Officers of EEQ in the Merger

     96  

Indemnification and Insurance

     98  

Listing of Enbridge Common Shares

     98  

The Waiver

     99  

The EEQ LLC Agreement Amendment

     99  

Delisting and Deregistration of the Listed Shares

     99  

Required Approval by the EEQ Shareholders

     99  

No Dissenters’ or Appraisal Rights

     99  

No Enbridge Shareholder Approval Required

     99  

Accounting Treatment of the Merger

     99  

 

-ii-


Table of Contents

THE MERGER AGREEMENT

     100  

Explanatory Note Regarding the Merger Agreement

     100  

The Merger

     100  

Closing and Effective Time of the Merger

     100  

Amendment of the EEQ LLC Agreement

     101  

Organizational Documents of the Surviving Entity

     101  

Merger Consideration

     101  

United States Tax Treatment of the Merger

     102  

Exchange Procedures

     102  

Dividends with Respect to Unexchanged Listed Shares

     103  

Termination of the Exchange Fund

     103  

Lost, Stolen or Destroyed Share Certificates

     104  

Withholding Rights

     104  

Adjustments to Prevent Dilution

     104  

No Dissenters’ Rights

     104  

Representations and Warranties

     105  

Interim Operations

     108  

Change in Recommendation

     110  

Proxy Statement/Prospectus Filing; Information Supplied

     112  

Shareholders Meeting

     113  

Cooperation; Efforts to Consummate

     113  

Stock Exchange Listing and Delisting

     114  

Expenses

     114  

Indemnification; Directors’ and Officers’ Insurance

     115  

Transaction Litigation

     116  

Voting

     116  

Special Committee

     116  

Performance by the EEQ Board

     116  

Conditions to the Completion of the Merger

     117  

Termination

     119  

Payment of EEQ Expenses

     120  

Modification or Amendment

     120  

Waiver of Conditions

     120  

MATERIAL CANADIAN FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER

     121  

In General

     121  

Holders Not Resident in Canada

     121  

MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER

     123  

Certain U.S. Federal Income Tax Consequences

     123  

U.S. Holder Defined

     124  

U.S. Federal Income Tax Consequences of the Merger to U.S. Holders of Listed Shares

     124  

Certain U.S. Federal Income Tax Consequences of Owning and Disposing of Enbridge Common Shares Received in the Merger

     126  

COMPARISON OF RIGHTS OF ENBRIDGE SHAREHOLDERS AND EEQ SHAREHOLDERS

     129  

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS OF EEQ

     153  

Owners of More than Five Percent of the Outstanding Listed Shares

     153  

Security Ownership of the Management and Directors of EEQ and the General Partner

     154  

DESCRIPTION OF ENBRIDGE COMMON SHARES

     156  

NO DISSENTERS’ RIGHTS

     157  

LEGAL MATTERS

     158  

EXPERTS

     159  

Enbridge

     159  

EEQ

     159  

 

-iii-


Table of Contents


Table of Contents

QUESTIONS AND ANSWERS

The following section provides brief answers to certain questions that you may have regarding the Merger Agreement and the proposed Merger. Please note that this section does not address all issues that may be important to you as a holder of EEQ shares. Accordingly, you should carefully read this entire proxy statement/prospectus, including each of the annexes, and the documents that have been incorporated by reference into this proxy statement/prospectus. Please read the section titled “Where You Can Find More Information” beginning on page 161.

 

Q:

Why am I receiving these materials?

 

A:

This proxy statement/prospectus is being provided by the EEQ Board to holders of EEQ shares in connection with the proposed Merger and the issuance of Enbridge common shares to holders of Listed Shares, and the Waiver and amendment to the EEQ LLC Agreement in connection with the proposed Merger.

 

Q:

What are the proposed transactions?

 

A:

Enbridge and EEQ have agreed that Enbridge will acquire EEQ by merging Merger Sub, a wholly owned subsidiary of Enbridge, with and into EEQ, with EEQ surviving the Merger as an indirect wholly owned subsidiary of Enbridge, under the terms of the Merger Agreement described in this proxy statement/prospectus and attached as Annex A to this proxy statement/prospectus. As a result of the Merger, each issued and outstanding Listed Share, other than the Excluded Shares, will be converted into the right to receive 0.335 of an Enbridge common share. The approximately 11.5 million Listed Shares and 7.4 Voting Shares owned by Enbridge and its subsidiaries, as of November 5, 2018, will remain outstanding and will not be affected by the Merger and no consideration will be delivered in respect thereof. The Merger will become effective at the Effective Time.

The completion of the Merger is conditioned upon, among other things, (1) the affirmative vote of the holders of a majority of the outstanding Listed Shares (other than the Excluded Shares) entitled to vote on such matters at a meeting of the holders of Listed Shares to approve the waiver of Section 9.01(a)(v) of the EEQ LLC Agreement in connection with the Merger (the “Waiver”), the EEQ LLC Agreement Amendment and (2) the completion of the EEP merger.

 

Q:

Who is soliciting my proxy?

 

A:

Your proxy is being solicited by the EEQ Board.

 

Q:

When and where is the special meeting?

 

A:

The special meeting will be held on December 17, 2018 at 10:00 a.m., local time, at the Hilton Houston Post Oak by the Galleria, 2001 Post Oak Boulevard, Houston, Texas 77056.

 

Q:

What matters will be voted on at the special meeting?

 

A:

You will be asked to consider and vote on the following proposals:

 

   

Merger Agreement: To approve the Merger Agreement and the Waiver;

 

   

Waiver: To approve the waiver of Section 9.01(a)(v) of the EEQ LLC Agreement in connection with the Merger;

 

   

EEQ LLC Agreement Amendment: To approve the adoption of the EEQ LLC Agreement Amendment to enfranchise each Listed Share with one vote on each matter submitted to a vote or consent of the record holders of Listed Shares;

 

1


Table of Contents
   

EEQ Adjournment: To approve any motion to adjourn the special meeting to a later date to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve the proposal on the Merger Agreement, the Waiver or the EEQ LLC Agreement Amendment;

 

   

EEP Merger Agreement: To approve the EEP merger Agreement in order to determine how the EEP i-units owned by EEQ will be voted at the EEP special meeting on the proposal to approve the EEP merger agreement; and

 

   

EEP Adjournment: To approve any motion to adjourn the special meeting from time to time to a later date to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve the proposal on the EEP merger agreement in order to determine how the EEP i-units owned by EEQ will be voted at the EEP special meeting on the proposal to approve the EEP Adjournment Proposal.

 

Q:

How do the Special Committee and the EEQ Board recommend that I vote on the proposals?

 

A:

The Special Committee and the EEQ Board each recommend that you vote:

 

   

FOR” the EEQ Merger Proposal;

 

   

FOR” the Waiver Proposal; and

 

   

FOR” the EEQ LLC Agreement Amendment Proposal.

The EEQ Board recommends that you vote:

 

   

FOR” any EEQ Adjournment Proposal;

 

   

FOR” the EEP Merger Proposal; and

 

   

FOR” any EEP Adjournment Proposal.

For a discussion of each proposal, see the sections titled “The Merger—Recommendation of the Special Committee” beginning on page 78, titled “The Merger—Recommendation of the EEQ Board” beginning on page 78 and “The Merger—Reasons for the Recommendation of the Special Committee” beginning on page 78.

 

Q:

Who is entitled to vote at the special meeting?

 

A:

Only holders of EEQ shares as of the close of business on November 5, 2018 will be entitled to notice of, and to vote at, the special meeting or any adjournment or postponement thereof. November 5, 2018 is referred to as the “Record Date” for the purposes of the special meeting.

 

Q:

What constitutes a quorum for the special meeting?

 

A:

A quorum is the number of shares that must be present, in person or by proxy, in order for business to be transacted at a meeting of the EEQ shareholders. A quorum of EEQ shareholders is required to approve the Proposals at the special meeting, but not to approve any adjournment of the meeting. The presence, in person or by proxy, of EEQ shareholders representing a majority of the Listed Shares outstanding on the Record Date, other than Listed Shares owned by the General Partner and its affiliates, will constitute a quorum for the special meeting.

 

Q:

What vote is required to approve the proposals?

 

A:

The approval of the EEQ Merger Proposal, including the approval of the Merger Agreement, and the approval of the Waiver Proposal and the EEQ LLC Agreement Amendment Proposal in connection with the Merger each require the affirmative vote of the holders of a majority of the outstanding Listed Shares (other than the Excluded Shares) entitled to vote on such matters at a meeting of the holders of Listed Shares.

 

2


Table of Contents
  Pursuant to the terms of the EEQ LLC Agreement, the special meeting may be adjourned from time to time by the affirmative vote of a majority of the outstanding EEQ shares represented either in person or by proxy at the special meeting, whether or not a quorum exists.

The EEQ shareholders cannot themselves approve the EEP merger agreement. The vote of the EEQ shareholders to approve the EEP Merger Proposal, including the EEP merger agreement, will determine only how the EEP i-units will be voted at the EEP special meeting. Approval of the EEP merger agreement requires the affirmative vote or consent of (1) the holders of at least 6623% of the outstanding EEP units (other than the EEP Class F units), and (2) the holders of a majority of the outstanding EEP Class A common units (other than EEP Class A common units held by Enbridge and its affiliates) and the outstanding i-units (other than i-units voted at the direction of Enbridge and its affiliates), voting together as a single class, in each case entitled to vote on such matter at the EEP special meeting or any adjournment or postponement thereof. If submitted to a vote of EEP unitholders, approval of an adjournment of the EEP special meeting to solicit additional proxies, if there are not sufficient votes to approve the EEP merger agreement at the time of the EEP special meeting, requires (1) if a quorum does not exist, the affirmative vote of the holders of a majority of the outstanding EEP units represented either in person or by proxy at the special meeting or (2) if a quorum does exist, the affirmative vote of 6623% of the outstanding EEP units represented either in person or by proxy at the special meeting.

ENBRIDGE SHAREHOLDERS ARE NOT BEING ASKED FOR A CONSENT OR PROXY AND ENBRIDGE SHAREHOLDERS ARE REQUESTED NOT TO SEND ENBRIDGE A CONSENT OR PROXY.

 

Q:

How are votes counted?

 

A:

To adopt and approve the EEQ Merger Proposal, the Waiver Proposal and the EEQ LLC Agreement Amendment Proposal, you may vote FOR, AGAINST or ABSTAIN. Abstentions will not be counted as votes cast or EEQ shares voting on the proposal to approve the Merger Agreement, but will count for the purpose of determining whether a quorum is present. If you abstain, it will have the same effect as if you voted against the proposal to approve the EEQ Merger Proposal, the Waiver Proposal and the EEQ LLC Agreement Amendment Proposal. Failure to submit your proxy or to attend the meeting will also have the same effect as a vote against the proposal to approve the EEQ Merger Proposal, the Waiver Proposal and the EEQ LLC Agreement Amendment Proposal. In addition, if your EEQ shares are held in the name of a bank, broker, nominee, trust company or other fiduciary, your bank, broker, nominee, trust company or other fiduciary will not be entitled to vote your EEQ shares on the proposal to approve the Merger Agreement in the absence of specific instructions from you. These non-voted EEQ shares will not be counted as present for purposes of determining a quorum and will have the effect of a vote against the approval of the Merger Agreement.

For any EEQ Adjournment Proposal, you may vote FOR, AGAINST or ABSTAIN. If you abstain, it will have the same effect as a vote against this proposal. Failure to submit your proxy and to attend the meeting will have no effect on the outcome of any vote to adjourn the special meeting if a quorum is not present. If a quorum is present, it will have the same effect as a vote against any adjournment proposal. In addition, if your EEQ shares are held in the name of a bank, broker, nominee, trust company or other fiduciary, your bank, broker, nominee, trust company or other fiduciary will not be entitled to vote your EEQ shares on this proposal in the absence of specific instructions from you. These non-voted EEQ shares will not be counted as present for purposes of determining a quorum and will have no effect on the outcome of any vote of the EEQ shareholders to adjourn the special meeting unless a quorum is present.

For the EEP Merger Proposal, you may vote FOR, AGAINST or ABSTAIN. EEQ will vote the EEP i-units in accordance with the number of EEQ shares voted FOR, AGAINST or ABSTAIN with respect to the EEP merger. EEQ shares not voted with respect to the EEP merger will result in EEP i-units being voted as

 

3


Table of Contents

abstentions. At the EEP special meeting, abstentions will not be counted as votes cast or EEQ shares voting on the proposal to approve the EEP merger agreement but will count for the purpose of determining whether a quorum is present. If you abstain or do not vote your EEQ shares with respect to the EEP merger, it will have the same effect as if you voted against the proposal to approve the EEP merger agreement. In addition, if your EEQ shares are held in the name of a bank, broker, nominee, trust company or other fiduciary, your bank, broker, nominee, trust company or other fiduciary will not be entitled to vote your EEQ shares on the proposal to approve the EEP merger agreement in the absence of specific instructions from you. These non-voted shares will not be counted as present for purposes of determining a quorum at the EEP special meeting but will have the effect of a vote against the approval of the EEP merger agreement at the EEP special meeting. Because the Merger is contingent upon the EEP merger, a vote against or to abstain from voting on the proposal to approve the EEP merger agreement is indirectly a vote against the Merger Agreement.

For any EEP Adjournment Proposal, you may vote FOR, AGAINST or ABSTAIN. If submitted to a vote of EEP unitholders, EEQ will vote the EEQ i-units in accordance with the number of EEQ shares voted FOR, AGAINST or ABSTAIN at the special meeting. If you abstain or you do not vote your EEQ shares, it will have the same effect as a vote against this proposal. EEQ shares not voted will result in EEP i-units being voted as abstentions. In addition, if your EEQ shares are held in the name of a bank, broker, nominee, trust company or other fiduciary, your bank, broker, nominee, trust company or other fiduciary also will not be entitled to vote your EEQ shares on this proposal in the absence of specific instructions from you. These non-voted shares will not be counted as present for purposes of determining a quorum at the EEP special meeting and will also result in EEP i-units being voted as abstentions at the EEP special meeting. Accordingly, if you fail to vote your EEQ shares, it will have the same effect as a vote against any EEP Adjournment Proposal at the EEP special meeting.

If you sign your proxy card without indicating how you wish to vote, your shares will be voted FOR the approval of the EEQ Merger Proposal, FOR the approval of the Waiver Proposal, FOR the approval of the EEQ LLC Agreement Amendment Proposal, FOR the EEP Merger Proposal and FOR any Adjournment Proposal, and in accordance with the recommendations of the EEQ Board on any other matters properly brought before the special meeting or the EEP special meeting for a vote.

 

Q:

How do Enbridge and EEQ’s directors and executive officers intend to vote?

 

A:

As of November 5, 2018, Enbridge and its subsidiaries held in the aggregate approximately 11.5 million Listed Shares, representing approximately 11.7% of the outstanding Listed Shares, and approximately 7.4 Voting Shares, representing all of the outstanding Voting Shares. The directors and executive officers of EEQ held and were entitled to vote, in the aggregate, Listed Shares representing less than 1.0% of the outstanding Listed Shares as of November 5, 2018.

Enbridge and its subsidiaries are generally not entitled to vote on the Merger Agreement, but Enbridge has agreed in the Merger Agreement that, subject to limited exceptions, it and its subsidiaries would vote their EEQ shares FOR the EEQ Merger Proposal, FOR the Waiver Proposal and FOR the EEQ LLC Agreement Amendment Proposal (in each case, to the extent that they are entitled to vote). In addition, we believe that Enbridge and its subsidiaries will vote FOR any applicable Adjournment Proposal and FOR the EEP Merger Proposal. We believe EEQ’s directors and executive officers intend to vote all of their EEQ shares FOR the EEQ Merger Proposal, FOR the Waiver Proposal and FOR the EEQ LLC Agreement Amendment Proposal. We believe EEQ’s directors and executive officers intend to vote all of their EEQ shares FOR any applicable Adjournment Proposal and FOR the EEP Merger Proposal.

 

4


Table of Contents
Q:

How will the i-units of EEP be voted by EEQ with respect to the EEP merger?

 

A:

In any matter submitted by EEP for a vote of the holders of the i-units of EEP, including the EEP merger, the i-units of EEP will be voted by EEQ proportionately to the number of affirmative and negative votes cast by holders of the EEQ shares. At the special meeting, the EEP Merger Proposal will be submitted to a vote of EEQ’s shareholders. Following the conclusion of the EEQ shareholder vote at the special meeting, EEQ will vote the i-units of EEP held by it on the EEP merger in proportion to the number of affirmative and negative votes of EEQ voted with respect to the EEP merger at the EEP special meeting. The EEQ Board recommends that you vote FOR the proposals relating to the EEP merger agreement and the EEP special meeting.

 

Q:

What will happen to EEQ as a result of the Merger?

 

A:

If the Merger is successfully completed, Merger Sub will be merged with and into EEQ, with EEQ being the surviving entity, and EEQ will become an indirect wholly owned subsidiary of Enbridge.

 

Q:

What will holders of Listed Shares be entitled to receive in the Merger?

 

A:

At the Effective Time, by virtue of the Merger and without any action on the part of the parties or any holder of EEQ securities, each Listed Share issued and outstanding immediately prior to the Effective Time (other than the Excluded Shares) will be converted into the right to receive 0.335 of an Enbridge common share, which is referred to as the “Merger Consideration”.

If the Exchange Ratio would result in an Unaffiliated EEQ Shareholder being entitled to receive, after aggregating all fractional shares to which such holder would otherwise be entitled to receive in connection with the Merger, a fraction of an Enbridge common share rounding to three decimal places, such holder will receive a cash payment (without interest, rounded down to the nearest cent) in lieu of such fractional Enbridge common share in an amount equal to the product obtained by multiplying (1) the amount of the fractional share interest in an Enbridge common share to which such holder would be entitled rounding to three decimal places and (2) an amount equal to the average of the volume-weighted average price per share of Enbridge common shares on the NYSE (as reported by Bloomberg L.P., or, if not reported therein, in another authoritative source mutually selected by Enbridge and EEQ) on the trading day immediately prior to the Effective Time for ten trading days ending on the fifth full business day immediately prior to the Closing Date. For additional information regarding exchange procedures, please read “The Merger Agreement—Exchange Procedures” beginning on page 102.

 

Q:

What will happen to future dividends on my Listed Shares?

 

A:

Once the Merger is completed, former EEQ shareholders who surrender their Listed Shares in accordance with the Merger Agreement will be eligible, in their capacity as Enbridge shareholders, to receive dividends declared by the board of directors of Enbridge (the “Enbridge Board”) on Enbridge common shares, if any, after the Effective Time of the Merger. Enbridge has a sustained track record of declaring dividends on Enbridge common shares continuing through recent periods and has forecasted that it will continue to do so; however, there is no guarantee that the Enbridge Board will, in the future, declare dividends on Enbridge common shares. See the sections titled “Comparative Share Prices; Dividends” beginning on page 28 and “Risk Factors—Risks Related to the Enbridge Common Shares—Enbridge may not pay any cash dividends to Enbridge shareholders, and Enbridge’s ability to declare and pay cash dividends to Enbridge shareholders, if any, in the future will depend on various factors, many of which are beyond Enbridge’s control.” beginning on page 39.

 

Q:

When do you expect the Merger to be completed?

 

A:

Enbridge and EEQ are working to complete the Merger as soon as possible. A number of conditions must be satisfied before Enbridge and EEQ can complete the Merger, including the completion of the EEP merger.

 

5


Table of Contents
  For more information about these conditions, please read “The Merger Agreement—Conditions to the Completion of the Merger” beginning on page 117. Although Enbridge and EEQ cannot be sure when all of the conditions to the Merger will be satisfied, Enbridge and EEQ expect to complete the Merger as soon as practicable following the effectiveness of the registration statement of which this proxy statement/prospectus forms a part. Assuming timely satisfaction of the necessary closing conditions, Enbridge and EEQ currently expect the Closing Date to occur in the fourth quarter of 2018.

 

Q:

Does the Special Committee and the EEQ Board recommend that Unaffiliated EEQ Shareholders approve the EEQ Merger Proposal, the Waiver Proposal and the EEQ LLC Agreement Amendment Proposal?

 

A:

Yes. The Special Committee and the EEQ Board recommend that the Unaffiliated EEQ Shareholders approve the EEQ Merger Proposal, including the approval of the Merger Agreement and the Waiver Proposal.

The Special Committee and the EEQ Board considered the benefits of the Merger Agreement, the Merger, the Waiver, the EEQ LLC Agreement Amendment and the related transactions as well as the associated risks and, acting in good faith, unanimously (1) determined that the Merger Agreement, the transactions contemplated thereby, including the Merger, and the EEQ LLC Agreement Amendment, are fair and reasonable to EEQ, including the Unaffiliated EEQ Shareholders, and (2) approved the Merger Agreement, the transactions contemplated thereby, including the Merger, and the EEQ LLC Agreement Amendment on the terms and subject to the conditions set forth in the Merger Agreement. The Special Committee recommended that the EEQ Board approve the Merger Agreement, the transactions contemplated thereby, including the Merger, and the EEQ LLC Agreement Amendment. The EEQ Board directed that the Merger Agreement, the waiver of Section 9.01(a)(v) of the LLC Agreement (the “Waiver”) and the EEQ LLC Agreement Amendment be submitted to the shareholders of EEQ for their approval. Each of the Special Committee and the EEQ Board recommends that the shareholders of EEQ approve the EEQ Merger Proposal, the Waiver Proposal and the EEQ LLC Agreement Amendment Proposal.

 

Q:

What happens if I transfer or sell my EEQ shares after the Record Date but before the special meeting or before completion of the Merger?

 

A:

The Record Date is earlier than the date of the special meeting and the date that the Merger is expected to be completed. If you transfer or sell your EEQ shares after the Record Date but before the date of the special meeting, you will retain your right to vote at the special meeting, but you will not have the right to receive the Merger Consideration in the Merger. In order to receive the Merger Consideration, you must hold your EEQ shares through the completion of the Merger.

 

Q:

What do I need to do now?

 

A:

Please vote as soon as possible. Enbridge and EEQ urge you to read carefully this proxy statement/prospectus, including its annexes, and to consider how the Merger affects you as an EEQ shareholder. You should also carefully read the documents referenced under “Where You Can Find More Information” beginning on page 161. In order to fully inform you with respect to the EEP merger, you are encouraged to read the complete EEP proxy statement/prospectus attached as Annex D hereto.

 

Q:

How do I vote?

 

A:

You should simply indicate on your proxy card how you want to vote, and sign and mail your proxy card in the enclosed return envelope as soon as possible so that your EEQ shares will be represented at the special meeting. If you sign and send in your proxy card and do not indicate how you want to vote, your EEQ shares will be voted for approval of the Merger Agreement and for any adjournment proposal. If you fail to

 

6


Table of Contents
  vote your EEQ shares, the effect will be a vote against approval of the Merger Agreement, but it will not affect the vote on any proposal to adjourn the special meeting unless a quorum is present. Because the Merger is contingent upon the EEP merger, a vote against or to abstain from voting on the proposal to approve the EEP merger agreement is indirectly a vote against the Merger Agreement.

If your EEQ shares are held by your banks, brokers, nominees, trust companies or other fiduciaries, see below.

 

Q:

Can I vote by telephone or electronically?

 

A:

If you hold your EEQ shares as an EEQ shareholder of record, you may vote by telephone or by the Internet by following the instructions set forth on the enclosed proxy card.

If your EEQ shares are held by your bank, broker, nominee, trust company or other fiduciary, often referred to as held in “street name”, please contact your bank, broker, nominee, trust company or other fiduciary to determine whether you will be able to vote by telephone or electronically.

 

Q:

If my EEQ shares are held in “street name” by my bank, in a brokerage firm or other nominee, will my bank, brokerage firm or other nominee automatically vote my EEQ shares for me?

 

A:

No. If you hold your EEQ shares in “street name” with a bank, brokerage firm or other nominee, you should follow the instructions provided by your bank, brokerage firm or other nominee.

 

Q:

What does it mean if I receive more than one set of voting materials?

 

A:

You may receive more than one set of voting materials, including multiple copies of this proxy statement/prospectus, the proxy card or the voting instruction form. This can occur if you hold your EEQ shares in more than one brokerage account, if you hold EEQ shares directly as a holder of record and also in “street name”, or otherwise through another holder of record, and in certain other circumstances. If you receive more than one set of voting materials, please vote or return each set separately in order to ensure that all of your EEQ shares are voted.

 

Q:

May I change my vote?

 

A:

Yes. You may change your vote at any time before your proxy is voted at the special meeting, subject to the limitations described below. If you are an EEQ shareholder of record and have properly completed and submitted your proxy card or proxy by telephone or the Internet, you may do this in a number of ways.

 

   

First, you may send EEQ a written notice stating that you would like to revoke your proxy.

 

   

Second, you may complete and submit a new, later-dated proxy card.

If you choose either of these two methods, you must submit your notice of revocation or your new proxy card to the Corporate Secretary of EEQ, at 5400 Westheimer Court, Houston, Texas 77056. You also may submit a later-dated proxy using the telephone or Internet voting procedures on the proxy card. If you choose to revoke your proxy by written notice or submit a later-dated proxy, you must do so by 11:59 p.m., Eastern Time, on the day before the special meeting.

Finally, you may attend the special meeting and vote in person. Simply attending the special meeting, without voting in person, will not revoke your proxy. If your EEQ shares are held in street name and you have instructed a bank, broker, nominee, trust company or other fiduciary to vote your EEQ shares, you must follow the directions received from your bank, broker, nominee, trust company or other fiduciary to change your vote or to vote at the special meeting.

 

7


Table of Contents
Q:

Should holders of Listed Shares tender their Listed Shares now?

 

A:

No. After the Merger is completed, holders of Listed Shares who hold their Listed Shares in certificated or book-entry form will receive written instructions for exchanging their Listed Shares. If you own Listed Shares in “street name”, the Merger Consideration should be credited to your account in accordance with the policies and procedures of your broker or nominee within a few days following the closing date of the Merger. More information on the documentation you are required to deliver to the Exchange Agent can be found in the section titled “The Merger Agreement—Exchange Procedures” beginning on page 102.

Please do not send in your EEQ share certificates now.

 

Q:

Where will Listed Shares and Enbridge common shares trade after the Merger?

 

A:

Listed Shares will no longer be publicly traded following the Merger and will be delisted from the NYSE. Enbridge common shares will continue to trade on the NYSE and the TSX under the symbol “ENB” after the Merger.

 

Q:

What percentage of Enbridge common shares will current Unaffiliated EEQ Shareholders own after the successful consummation of the Merger?

 

A:

If the proposed Merger and the EEP merger are successful, Unaffiliated EEQ Shareholders will collectively receive 29,174,068 Enbridge common shares, which represents approximately 1.7% of the outstanding Enbridge common shares, based on the Exchange Ratio, the exchange ratio agreed in the EEP merger agreement, the number of outstanding Enbridge common shares, EEQ shares and EEP Class A common units (other than any Listed Shares and EEP Class A common units owned by Enbridge and its subsidiaries) as of November 5, 2018 (excluding any Enbridge common shares to be issued in connection with the SEP merger and the ENF plan of arrangement). If, in addition to the proposed Merger and the EEP merger, each Other Merger Transaction is successfully completed, the Merger Consideration would represent approximately 1.4% of the outstanding Enbridge common shares, based on the number of Enbridge common shares to be issued in the proposed Merger and the Other Merger Transactions pursuant to the respective merger agreements and arrangement agreement, and the number of outstanding Enbridge common shares and outstanding shares or units, as the case may be, of each of the EEQ, EEP, SEP and ENF, as of November 5, 2018. The actual number of Enbridge common shares issued in the Merger and the EEP merger will be determined by multiplying the Exchange Ratio by the number of issued and outstanding Listed Shares held by Unaffiliated EEP Unitholders and the exchange ratio in the EEP merger by the number of issued and outstanding Class A common units held by the public as of the closing date of the Merger. The actual number of Enbridge common shares issued in each of the SEP merger and the ENF plan of arrangement will be determined by multiplying the applicable exchange ratio by the number of publicly held shares or units of the acquired entity as of the closing date of each such transaction.

 

Q:    Is

the Merger expected to be taxable to U.S. holders of Listed Shares for U.S. Federal Income Tax purposes?

 

A:

It is intended that, for U.S. federal income tax purposes, (i) the Merger should qualify as a “reorganization” within the meaning of Section 368(a) of the Code and should not result in gain recognition to U.S. holders of Listed Shares except for any gain or loss that may result from the receipt by such holder of cash in lieu of a fractional Enbridge common share, and (ii) the Merger should not result in gain recognition to U.S. holders of Listed Shares pursuant to Section 367(a) of the Code, assuming that, in the case of any such holder who would be treated as a “five-percent transferee shareholder” (within the meaning of Treasury Regulations Section 1.367(a)-3(c)(5)(ii)) of Enbridge following the Merger, provided that such holder enters into a five-year gain recognition agreement in the form provided in Treasury Regulations Section 1.367(a)-8 (cumulatively, the “Intended Tax Treatment”). Neither EEQ nor Enbridge intends to request a ruling from

 

8


Table of Contents
  the Internal Revenue Service (the “IRS”) regarding the United States federal income tax consequences of the Merger. Accordingly, no assurance can be given that the IRS will not challenge the Intended Tax Treatment or that a court would not sustain such a challenge.

Assuming the Merger qualifies for the Intended Tax Treatment, the United States federal income tax consequences to U.S. holders (as defined herein) of Listed Shares generally are as follows:

 

   

A U.S. holder of Listed Shares receiving Enbridge common shares in exchange for Listed Shares pursuant to the Merger should not recognize any gain or loss, except for any gain or loss that may result from the receipt by such holder of cash in lieu of a fractional Enbridge common share.

 

   

A U.S. holder of Listed Shares who receives cash in lieu of a fractional Enbridge common share pursuant to the Merger generally should be treated as having received such fractional share in the Merger and then as having received cash in redemption of such fractional share. Gain or loss generally will be recognized based on the difference between the amount of cash received in lieu of the fractional share and the portion of the U.S. holder’s aggregate tax basis in the Listed Shares surrendered which is allocable to the fractional share.

EEQ shareholders should read the sections titled “Material U.S. Federal Income Tax Consequences of the Merger” beginning on page 123 and “Material Canadian Federal Income Tax Consequences of the Merger” beginning on page 121) and consult their own tax advisors regarding the Canadian and United States federal income tax consequences of the Merger to them in their particular circumstances, as well as tax consequences arising under the laws of any state, local or non-U.S. taxing jurisdiction.

 

Q:

What are the expected U.S. federal income tax consequences for an EEQ shareholder as a result of the ownership of Enbridge common shares after the Merger is completed?

 

A:

Enbridge is a corporation organized under the laws of Canada that is treated as a corporation for U.S. federal income tax purposes, and thus, Enbridge and its subsidiaries (and not the Enbridge shareholders) are subject to taxation on their taxable income. A distribution of cash by Enbridge to a shareholder who is a U.S. holder (as defined in the section titled “Material U.S. Federal Income Tax Consequences of the Merger” beginning on page 123) will generally be included in such U.S. holder’s income as ordinary dividend income to the extent of Enbridge’s current and accumulated “earnings and profits” as determined under U.S. federal income tax principles. Any portion of the cash distributed to Enbridge shareholders by Enbridge after the Merger that exceeds Enbridge’s current and accumulated earnings and profits will be treated as a non-taxable return of capital reducing a U.S. holder’s adjusted tax basis in such U.S. holder’s Enbridge common shares and, to the extent the distribution exceeds such shareholder’s adjusted tax basis, as capital gain from the sale or exchange of such Enbridge common shares. However, Enbridge does not expect to calculate earnings and profits in accordance with U.S. federal income tax principles. Accordingly, each Enbridge shareholder should expect to generally treat distributions made by Enbridge as dividends. See the section titled “Material U.S. Federal Income Tax Consequences of the Merger” beginning on page 123 for a more complete discussion of the expected U.S. federal income tax consequences of owning and disposing of Enbridge common shares received in the Merger.

 

Q:

What are the expected Canadian federal income tax consequences for an EEQ shareholder as a result of the ownership of Enbridge common shares after the Merger is completed?

 

A:

Dividends paid or credited, or deemed to be paid or credited, on Enbridge common shares to a Non-Canadian Resident Holder (as defined in the section titled “Material Canadian Federal Income Tax Consequences of the Merger” beginning on page 121) generally will be subject to Canadian withholding tax at a rate of 25% of the gross amount of the dividend, unless the rate is reduced under the provisions of an applicable income tax convention between Canada and the Non-Canadian Resident Holder’s jurisdiction of residence. For example, the rate of withholding tax under the Treaty applicable to a Non-Canadian Resident

 

9


Table of Contents
  Holder who is a resident of the United States for purposes of the Treaty, is the beneficial owner of the dividend and is entitled to all of the benefits under the Treaty, generally will be 15%. Enbridge will be required to withhold the required amount of withholding tax from the dividend, and to remit the withheld tax to the CRA for the account of the Non-Canadian Resident Holder.

A Non-Canadian Resident Holder will not be subject to tax under the Canadian Tax Act on any capital gain realized on a disposition of Enbridge common shares, unless the shares are “taxable Canadian property” and the shares are not “treaty-protected property” (as those terms are defined in the Canadian Tax Act) of the Non-Canadian Resident Holder at the time of the disposition. See the section titled “Material Canadian Federal Income Tax Consequences of the Merger” beginning on page 121 for a more complete discussion of the expected Canadian federal income tax consequences of owning and disposing of Enbridge common shares received in the Merger.

 

Q:

Are holders of Listed Shares entitled to appraisal rights?

 

A:

No. Holders of Listed Shares do not have appraisal rights under applicable law or contractual appraisal rights under the EEQ LLC Agreement or the Merger Agreement.

 

Q:

What happens if the Merger is not completed?

 

A:

If the Merger Agreement is not completed for any reason, you will not receive any form of consideration for your Listed Shares in connection with the Merger. Instead, EEQ will remain a public limited liability company and the Listed Shares will continue to be listed and traded on the NYSE.

 

Q:

Enbridge has also entered into acquisition agreements in respect of the Other Merger Transactions. What impact will these transactions have on the Merger?

 

A:

Enbridge has also entered into acquisition agreements to acquire, in separate combination transactions, all of the outstanding equity securities that Enbridge does not already own of (i) EEP, (ii) SEP and (iii) ENF. The completion of the Merger is conditioned upon and subject to the completion of the EEP merger. In the event of the successful completion of any or all of the Other Merger Transactions, Enbridge expects to issue additional Enbridge common shares in exchange for the equity interests acquired in such transactions. See the section titled “Risk Factors—Risks Related to the Enbridge Common Shares—There may be future dilution of the Enbridge common shares, including as a result of any Enbridge common shares issued in connection with the Other Merger Transactions, which could adversely affect the market price of Enbridge common shares.” beginning on page 40.

 

Q:

Whom do I call if I have further questions about the Merger Agreement or the Merger?

 

A:

If you have any questions about the Merger or if you need additional copies of this proxy statement/prospectus or the enclosed proxy card, you should contact D.F. King & Co., Inc., which is acting as the proxy solicitation agent and information agent in connection with the Merger.

D.F. King & Co., Inc.

48 Wall Street, 22nd Floor

New York, NY 10005

Banks and Brokers call: (212) 269-5550

All others call toll-free: (800) 207-3159

Email: Enbridge@dfking.com

 

10


Table of Contents

SUMMARY

This summary highlights selected information included in this proxy statement/prospectus and does not contain all the information that may be important to you. To fully understand the Merger Agreement and the transactions contemplated thereby and for a more complete description of the terms of the Merger Agreement, you should read carefully this entire proxy statement/prospectus, including the annexes, as well as the documents incorporated by reference into this proxy statement/prospectus, and the other documents to which you are referred. In addition, Enbridge and EEQ incorporate by reference important business and financial information about Enbridge and EEQ into this document, as further described in the section titled “Where You Can Find More Information” beginning on page 161. You may obtain the information incorporated by reference into this document without charge by following the instructions in the section titled “Where You Can Find More Information” beginning on page 161. Each item in this summary includes a page reference directing you to a more complete description of that item. In addition, in order to fully inform you with respect to the EEP merger, you are encouraged to read the complete EEP proxy statement/prospectus attached as Annex D hereto.

Information about the Companies (page 44)

Enbridge Inc.

200, 425 - 1st Street S.W.

Calgary, Alberta T2P 3L8, Canada

Phone: 1-403-231-3900

Enbridge is a North American energy infrastructure company with strategic business platforms that include an extensive network of crude oil, liquids and natural gas pipelines, regulated natural gas distribution utilities and renewable power generation assets. Enbridge delivers an average of 2.9 million barrels of crude oil each day through its Mainline and Express Pipeline, and accounts for approximately 62% of United States-bound Canadian crude oil exports. Enbridge also moves approximately 22% of all natural gas consumed in the United States, serving key supply basins and demand markets. Its regulated utilities serve approximately 3.7 million retail customers in Ontario, Quebec and New Brunswick. Enbridge also has interests in more than 1,700 megawatts (MW) of net renewable power generation capacity in North America and Europe. Enbridge has ranked on the Global 100 Most Sustainable Corporations index for the past nine years. Enbridge was incorporated on April 13, 1970 under the Companies Ordinance of the Northwest Territories and was continued under the Canada Business Corporations Act (the “Canada Corporations Act”) on December 15, 1987. Enbridge indirectly holds all of the outstanding equity interests of Merger Sub, an indirect wholly owned subsidiary formed in Delaware for the sole purpose of completing the Merger.

Enbridge is a public company and the Enbridge common shares trade on both the TSX and the NYSE under the ticker symbol “ENB”. Enbridge’s principal executive offices are located at 200, 425 - 1st Street S.W., Calgary, Alberta T2P 3L8, Canada, and its telephone number is 1-403-231-3900.

Enbridge Energy Management, L.L.C.

5400 Westheimer Court

Houston, Texas 77056

Phone: (713) 627-5400

EEQ is a publicly-traded Delaware limited liability company that is a limited partner of EEP, through its ownership of i-units, a special class of the EEP’s limited partner interests. EEQ’s only investment is its limited partner interest in EEP. EEQ is structured as an alternative to direct investment in master limited partnerships for investors without the complications associated with partnership tax reporting.



 

11


Table of Contents

As of November 5, 2018, EEQ owned approximately 21.9% of the outstanding units of EEP. At November 5, 2018, the General Partner owned 100% of EEQ’s 7.4 Voting Shares, as well as approximately 11.7% of the Listed Shares, which represent limited liability company interests in EEQ and are publicly traded on the NYSE. The remaining approximately 88.3% of the Listed Shares are held by the public.

EEQ’s performance depends entirely on the operations and management of EEP. Under a delegation of control agreement among EEQ, EEP and the General Partner, EEQ manages EEP’s business and affairs. The General Partner is an indirect, wholly-owned subsidiary of Enbridge.

Under the EEP Partnership Agreement, except for the available cash that EEP is required to retain in respect of the i-units, EEP distributes all of its available cash to the General Partner and limited partners on a quarterly basis. EEQ does not, however, receive distributions of cash in respect of the i-units EEQ owns and does not otherwise have any cash flow attributable to EEQ’s ownership of the i-units.

EEQ’s executive offices are located at 5400 Westheimer Court, Houston, Texas 77056, and its telephone number is (713) 627-5400.

Merger Sub

5400 Westheimer Court

Houston, Texas 77056

Phone: (713) 627-5400

Merger Sub, a Delaware corporation and an indirect wholly owned subsidiary of Enbridge, was formed solely for the purpose of facilitating the Merger. Merger Sub has not carried on any activities or operations to date, except for those activities incidental to its formation and undertaken in connection with the transactions contemplated by the Merger Agreement. By operation of the Merger, Merger Sub will be merged with and into EEQ. As a result, EEQ will survive the Merger as a wholly owned subsidiary of Enbridge. Upon completion of the Merger, Merger Sub will cease to exist as a separate entity.

Merger Sub’s principal executive offices are located at 5400 Westheimer Court, Houston, Texas 77056, and its telephone number is (713) 627-5400.

The Merger and the Merger Agreement (pages 58 and 100)

The terms and conditions of the Merger are contained in the Merger Agreement, which is attached to this document as Annex A and is incorporated by reference herein in its entirety. You are encouraged to read the Merger Agreement carefully, as it is the legal document that governs the Merger.

The Special Committee and the EEQ Board have unanimously approved the Merger Agreement. The Merger Agreement provides for the acquisition by Enbridge of the outstanding Listed Shares not already owned by Enbridge and its subsidiaries through the Merger of Merger Sub, a wholly owned subsidiary of Enbridge, with and into EEQ with EEQ continuing as the surviving company. Each Unaffiliated EEQ Shareholder will be entitled to receive 0.335 of an Enbridge common share in exchange for each Listed Share that such holder owns immediately prior to the Effective Time of the Merger.

Relationship of the Parties to the Merger Agreement (page 96)

Under a delegation of control agreement among EEQ, the General Partner and EEP, the General Partner has delegated to EEQ, subject to limited exceptions, all of its rights and powers to manage and control the business



 

12


Table of Contents

and affairs of EEP and its operating limited partnerships. All directors of the General Partner are elected annually and may be removed by Enbridge (U.S.) Inc., as the sole shareholder of the General Partner, an indirect and wholly owned subsidiary of Enbridge. All directors of EEQ are elected and may be removed by the General Partner, as the sole holder of the Voting Shares. All of the directors and executive officers of the General Partner hold identical positions with EEQ. Certain executive officers and directors of Enbridge are also executive officers and directors of the General Partner and EEQ. J. Herbert England serves as a member of the boards of directors of all three companies.

In addition to its indirect ownership of all of the outstanding Voting Shares, Enbridge also indirectly owns approximately 11.5 million Listed Shares, representing in the aggregate approximately 11.7% of EEQ’s total outstanding limited liability company interests.

See the section titled “The MergerRelationship of the Parties to the Merger Agreement” beginning on page 96.

Merger Consideration (page 58)

At the Effective Time, by virtue of the Merger and without any action on the part of the parties or any holder of EEQ securities, each Listed Share issued and outstanding immediately prior to the Effective Time (other than the Excluded Shares) will be converted into the right to receive Enbridge common shares in exchange for such holder’s Listed Shares at the Exchange Ratio. Enbridge will not issue any fractional Enbridge common shares in the Merger. For additional information regarding exchange procedures, please read “The MergerMerger Consideration” beginning on page 58.

Required Approval by the EEQ Shareholders (page 99)

The approval of the Merger Agreement, the Merger and the Waiver by EEQ, and the approval of the EEQ LLC Agreement Amendment by EEQ require the affirmative vote of the holders of a majority of the outstanding Listed Shares (other than the Excluded Shares) entitled to vote on such matters at a meeting of the holders of Listed Shares. The special meeting may be adjourned from time to time by the affirmative vote of a majority of the outstanding EEQ shares represented either in person or by proxy at the special meeting, whether or not a quorum exists.

Recommendations of the Special Committee and the EEQ Board (page 78)

The Special Committee and the EEQ Board considered the benefits of the Merger Agreement, the Merger, the Waiver, the EEQ LLC Agreement Amendment and the related transactions as well as the associated risks and, acting in good faith, unanimously (1) determined that the Merger Agreement, the transactions contemplated thereby, including the Merger, and the EEQ LLC Agreement Amendment, are fair and reasonable to EEQ, including the Unaffiliated EEQ Shareholders, and (2) approved the Merger Agreement, the transactions contemplated thereby, including the Merger, and the EEQ LLC Agreement Amendment on the terms and subject to the conditions set forth in the Merger Agreement. The Special Committee recommended that the EEQ Board approve the Merger Agreement, the transactions contemplated thereby, including the Merger, and the EEQ LLC Agreement Amendment. The EEQ Board directed that the Merger Agreement, the Waiver and the EEQ LLC Agreement Amendment be submitted to the shareholders of EEQ for their approval. Each of the Special Committee and the EEQ Board recommends that the shareholders of EEQ approve the EEQ Merger Proposal, including the Merger, the Waiver Proposal and the EEQ LLC Agreement Amendment Proposal. For a discussion of the many factors considered by the Special Committee and the EEQ Board in making their determination and approval, please read “The Merger—Recommendation of the Special Committee” beginning on page 78 and “The Merger—Recommendation of the EEQ Board” beginning on page 78.



 

13


Table of Contents

The Special Committee and the EEQ Board each recommend that EEQ shareholders vote FOR the approval of the EEQ Merger Proposal, FOR the approval of the Waiver Proposal and FOR the approval of the EEQ LLC Agreement Amendment Proposal, and the EEQ Board has recommended that EEQ shareholders vote FOR the adjournment of the special meeting from time to time if necessary to solicit additional proxies if there are not sufficient votes to approve the EEQ Merger Proposal, the Waiver Proposal or the EEQ LLC Agreement Amendment Proposal at the time of the special meeting.

The EEQ Board recommends that the EEQ shareholders vote FOR the approval of the two proposals related to the EEP merger.

Reasons for the Recommendation of the Special Committee (page 78)

The Special Committee consists of three independent directors: Jeffrey A. Connelly, William S. Waldheim and Dan S. Westbrook. The Special Committee retained Bracewell LLP (“Bracewell”) and Morris, Nichols, Arsht & Tunnell LLP (“MNAT”) as its independent legal advisors. The Special Committee also retained Morris James LLP (“Morris James”) as its independent legal advisor with respect to considering the Derivative Action (as defined below). In addition, the Special Committee retained Goldman Sachs & Co. LLC (“Goldman Sachs”) as its independent financial advisor. The Special Committee oversaw the performance of the legal and financial due diligence by its advisors, conducted an extensive review and evaluation of the Merger and conducted negotiations with Enbridge and its representatives with respect to the Exchange Ratio and the Merger Agreement.

The Special Committee considered the benefits of the Merger Agreement and the Merger, as well as the associated risks, and on September 17, 2018, unanimously (1) determined that the Merger Agreement and the transactions contemplated thereby and the EEQ LLC Agreement Amendment are fair and reasonable to EEQ, including the Unaffiliated EEQ Shareholders, (2) approved the Merger Agreement and the transactions contemplated thereby and the EEQ LLC Agreement Amendment, (3) approved the execution, delivery and performance of the Merger Agreement by EEQ, (4) recommended that the Board approve the Merger Agreement, the EEQ LLC Agreement Amendment, the execution, delivery and performance of the Merger Agreement by EEQ and the consummation of the transactions contemplated thereby and (5) recommended that the Board submit the Merger Agreement and the EEQ LLC Agreement Amendment to a vote of the EEQ shareholders and recommend the approval of the Merger Agreement and the transactions contemplated thereby and the EEQ LLC Agreement Amendment by the EEQ shareholders.

The Board directed that the Merger Agreement be submitted to the EEQ shareholders for their approval. The Board recommends that the EEQ shareholders approve the Merger Agreement and the transactions contemplated thereby, including the Merger.

Opinion of Goldman Sachs & Co. LLC, Financial Advisor to the Special Committee (page 83)

Goldman Sachs delivered its opinion to the Special Committee that, as of September 17, 2018, and based upon and subject to the factors and assumptions set forth therein, the Exchange Ratio pursuant to the Merger Agreement was fair from a financial point of view to the holders (other than Enbridge and its affiliates) of Listed Shares.

The full text of the written opinion of Goldman Sachs, dated September 17, 2018, which sets forth the assumptions made, procedures followed, matters considered and limitations on the review undertaken in connection with the opinion, is attached as Annex B. Goldman Sachs provided advisory services and its opinion for the information and assistance of the Special Committee in connection with its consideration of the Merger. The Goldman Sachs opinion is not a recommendation as to how any holder of Listed Shares should vote with respect to the Merger or any other matter. Pursuant to an engagement letter between the Special Committee, EEQ



 

14


Table of Contents

and Goldman Sachs, EEQ has agreed to pay Goldman Sachs a transaction fee of US$3,000,000, US$200,000 of which became payable upon the execution of such engagement letter and the remainder of which became payable upon the execution of the Merger Agreement. Goldman Sachs may receive an additional fee of up to US$1,500,000 at the Special Committee’s sole discretion.

The Special Meeting (page 46)

Date, Time and Place of the Special Meeting (page 46)

The special meeting will be held on December 17, 2018 at 10:00 a.m., local time, at the Hilton Houston Post Oak by the Galleria, 2001 Post Oak Boulevard, Houston, Texas 77056.

Record Date; Outstanding EEQ Shares; Shares Entitled to Vote (page 47)

The Record Date for the special meeting is November 5, 2018. Only holders of outstanding EEQ shares as of the close of business on the Record Date will be entitled to receive notice of, and to vote at, the special meeting or any adjournment or postponement thereof.

A complete list of EEQ shareholders entitled to vote at the special meeting will be available for inspection at EEQ’s principal place of business during regular business hours for a period of no less than ten days before the special meeting and at the place of the special meeting during the meeting. See the section titled “The Special Meeting—Record Date; Outstanding Shares; Shares Entitled to Vote” beginning on page 47.

Required Vote (page 47)

The approval of the EEQ Merger Proposal, the Waiver Proposal and the EEQ LLC Agreement Amendment Proposal by EEQ require the affirmative vote of the holders of a majority of the outstanding Listed Shares (other than the Excluded Shares) entitled to vote on such matters at a meeting of the holders of Listed Shares. Accordingly, an EEQ shareholder’s failure to submit a proxy or to vote in person at the special meeting or to abstain from voting, or the failure of an EEQ shareholder who holds his or her EEQ shares in “street name” through a bank, broker, nominee, trust company or other fiduciary to give voting instructions to such bank, broker, nominee, trust company or other fiduciary, will have the same effect as a vote against approval of the Merger Agreement, the waiver of Section 9.01(a)(v) of the EEQ LLC Agreement in connection with the Merger and the EEQ LLC Agreement Amendment.

The special meeting may be adjourned from time to time by the affirmative vote of a majority of the outstanding EEQ shares represented either in person or by proxy at the special meeting, whether or not a quorum exists.

Because the Merger is contingent upon the completion of the EEP merger, a vote against or to abstain from voting on the EEP Merger Proposal is indirectly a vote against the Merger Agreement. Pursuant to the EEP Partnership Agreement, adjournment of the EEP special meeting from time to time by limited partner action, if necessary to solicit additional proxies, if there are not sufficient votes to approve the EEP merger agreement at the time of the EEP special meeting, requires (1) if a quorum does not exist, the affirmative vote of the holders of a majority of the outstanding EEP units represented either in person or by proxy at the special meeting or (2) if a quorum does exist, the affirmative vote of 6623% of the outstanding EEP units represented either in person or by proxy at the special meeting.

No Enbridge Shareholder Approval Required (page 99)

The approval of the Merger Agreement and the Merger by Enbridge does not require the affirmative vote or consent of the Enbridge shareholders.



 

15


Table of Contents

Conditions to the Completion of the Merger (page 117)

The completion of the Merger is subject to the concurrent consummation of the EEP merger. The completion of the merger is also subject to satisfaction or waiver of certain customary closing conditions, including (i) the Merger Agreement, the EEQ LLC Agreement Amendment and the Waiver having been approved by the affirmative vote of the holders of a majority of the outstanding Listed Shares, other than the Excluded Shares, entitled to vote on such matters at a meeting of the holders of Listed Shares (the “Requisite Company Vote”), (ii) the Enbridge common shares issuable in connection with the Merger having been approved for listing on the NYSE and the TSX, subject to official notice of issuance, (iii) the expiration or termination of any waiting period (and any extension thereof) applicable to the Merger under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the “HSR Act”), (iv) the absence of any governmental order prohibiting the consummation of the Merger or the other transactions contemplated by the Merger Agreement and (v) the registration statement having become effective under the Securities Act. The obligations of Enbridge and Merger Sub to consummate the Merger are also conditioned upon the accuracy of the representations and warranties of EEQ as of the date of the Merger Agreement and as of the closing (subject to customary materiality qualifiers), the performance in all material respects by EEQ of all obligations required to be performed by EEQ under the Merger Agreement at or prior to closing .and receipt of an officer’s certificate evidencing the satisfaction of the foregoing. The obligation of EEQ to consummate the Merger is conditioned upon the accuracy of the representations and warranties of Enbridge and Merger Sub as of the date of the Merger Agreement and as of closing (subject to customary materiality qualifiers), the performance in all material respects by Enbridge and Merger Sub of all obligations required to be performed by them under the Merger Agreement at or prior to closing, receipt of an officer’s certificate evidencing the satisfaction of the foregoing and receipt of a tax opinion stating that the Merger should be treated as a reorganization under Section 368(a) of the Internal Revenue Code for U.S. federal income tax purposes.

Termination (page 119)

Enbridge and EEQ may terminate the Merger Agreement and abandon the Merger at any time prior to the Effective Time of the Merger by mutual written consent of Enbridge and EEQ, by action of the Enbridge Board and the EEQ Board, with the approval of the Special Committee.

The Merger Agreement may also be terminated and the Merger abandoned by either the Enbridge Board or the EEQ Board, with the approval of the Special Committee, if:

 

   

the Merger has not been consummated by March 18, 2019 (the “Outside Date”);

 

   

the Requisite Company Vote is not obtained at the special meeting or at any adjournment or postponement thereof taken in accordance with the Merger Agreement;

 

   

any applicable law or governmental order permanently restraining, enjoining or otherwise prohibiting consummation of the Merger has become final and nonappealable; or

 

   

the EEP merger agreement has been terminated in accordance with its terms.

The Merger Agreement may be terminated and the Merger abandoned by Enbridge prior to the Effective Time if (i) the Special Committee changes its recommendation with respect to approval of the Merger Agreement prior to receipt of the Requisite Company Vote or (ii) there has been a breach by EEQ of any representation, warranty, covenant or agreement set forth in the Merger Agreement, or if any such representation or warranty has become untrue after the date of the Merger Agreement, such that certain conditions to the obligations of Enbridge and Merger Sub to close would not be satisfied and such breach or failure to be true and correct is not curable prior to the Outside Date or, if curable prior to the Outside Date, is not cured within the earlier of 60 days after notice thereof is given by Enbridge to EEQ or the Outside Date. The Merger Agreement may be terminated and



 

16


Table of Contents

the Merger abandoned by EEQ (by action of the EEQ Board with Special Committee approval) prior to the Effective Time if there has been a breach by Enbridge or Merger Sub of any representation, warranty, covenant or agreement set forth in the Merger Agreement, or if any such representation or warranty has become untrue after the date of the Merger Agreement, such that certain conditions to the obligations of EEQ to close would not be satisfied and such breach or failure to be true and correct is not curable prior to the Outside Date or, if curable prior to the Outside Date, is not cured within the earlier of 60 days after notice thereof is given by EEQ to Enbridge or the Outside Date.

For further discussion, please read the section titled “The Merger Agreement—Termination” beginning on page 119.

No Dissenters’ or Appraisal Rights (page 99)

Holders of Listed Shares do not have appraisal rights under applicable law or contractual appraisal rights under the EEQ LLC Agreement or the Merger Agreement.

Regulatory Approvals (page 94)

In connection with the Merger, Enbridge intends to make all required filings under the Securities Act and the Exchange Act, as well as any required filings or applications with the NYSE and the TSX.

In addition, to complete the Merger, EEQ and Enbridge must make certain filings, submissions and notices to obtain required authorizations, approvals, consents or expiration or termination of waiting periods from U.S. and Canadian governmental and regulatory bodies, including antitrust and other regulatory authorities. EEQ and Enbridge are not currently aware of any material governmental filings, authorizations, approvals or consents that are required prior to the parties’ completion of the Merger other than those described in the section titled “The Merger—Regulatory Approvals” beginning on page 94.

The Merger is not reportable under the HSR Act, and therefore no filings with respect to the Merger are required with the United States Federal Trade Commission (“FTC”) or the United States Department of Justice Antitrust Division (the “DOJ”) because at the Effective Time, Enbridge will already hold more than 50% of the outstanding EEP units and the acquisition of additional EEP units (which are the only interests held by EEQ) is not subject to the HSR Act’s filing requirements.

Litigation and Regulatory Reviews/Investigations Related to the Merger (page 95)

Judy Mesirov v. Enbridge Energy Co., Inc. et al.

On July 20, 2015, plaintiff Peter Brinckerhoff, individually and as trustee of the Peter R. Brinckerhoff Trust, filed a Verified Class Action and Derivative Complaint in the Court of Chancery of the State of Delaware (the “Complaint”) against the General Partner, Enbridge, EEQ, Enbridge Pipelines (Alberta Clipper) L.L.C., Enbridge Energy, Limited Partnership, EEP, and the following individuals: Jeffrey A. Connelly, Rebecca B. Roberts, Dan A. Westbrook, J. Richard Bird, J. Herbert England, C. Gregory Harper, D. Guy Jarvis, Mark A. Maki, and John K. Whelen (collectively, the “Director Defendants”) (the “Derivative Action”).

On February 28, 2018, plaintiff Peter Brinckerhoff filed a Motion for Leave to File a Verified Third Amended Complaint and a Motion to Intervene on behalf of a proposed new plaintiff, Judy Mesirov (either plaintiff Peter Brinckerhoff or plaintiff July Mesirov, as applicable, the “Derivative Action Plaintiff”) (subsequently amended). On April 3, 2018, all defendants filed their briefs in support of their motions to dismiss the Third Amended Complaint. Plaintiff Peter Brinckerhoff has now been dismissed as a named plaintiff. All direct claims have now been dismissed. Currently, the claims remaining in the case are now derivative claims



 

17


Table of Contents

(the “Derivative Claims”) for (i) breach of contract (including equitable remedies of rescission or reformation) against the General Partner, EEQ, Enbridge Energy Management, L.L.C., Enbridge, the Director Defendants, and Enbridge Pipelines (Alberta Clipper) L.L.C and Enbridge Energy, Limited Partnership and (ii) aiding and abetting a breach of contract against Simmons. On September 28, 2018, the Derivative Action Plaintiff filed a Fifth Amended Complaint, adding Enbridge and the Director Defendants as defendants to the Derivative Claims.

If the EEP merger closes and Enbridge acquires all of the outstanding Class A common units of EEP, the Derivative Action Plaintiff will lose standing to continue her Derivative Claims on behalf of EEP, and Enbridge will become the owner of such Derivative Claims, effectively extinguishing the Derivative Claims. Trial in the Derivative Action is currently scheduled for the second quarter of 2019.

Security Ownership of Certain Beneficial Owners of EEQ (page 153)

As of November 5, 2018, Enbridge and its subsidiaries held in the aggregate approximately 11.5 million Listed Shares, representing approximately 11.7% of the outstanding Listed Shares, and approximately 7.4 Voting Shares, representing all of the outstanding Voting Shares. The directors and executive officers of EEQ held and were entitled to vote, in the aggregate, Listed Shares representing less than 1.0% of the outstanding Listed Shares as of November 5, 2018.

Enbridge and its subsidiaries are generally not entitled to vote on the Merger Agreement, but Enbridge has agreed in the Merger Agreement that, subject to limited exceptions, it and its subsidiaries would vote their EEQ shares FOR the EEQ Merger Proposal, FOR the Waiver Proposal and FOR the EEQ LLC Agreement Amendment Proposal (in each case, to the extent that they are entitled to vote). In addition, we believe that Enbridge and its subsidiaries will vote FOR any applicable Adjournment Proposal and FOR the EEP Merger Proposal. We believe EEQ’s directors and executive officers who are not affiliates of the General Partner intend to vote all of their EEQ shares FOR the EEQ Merger Proposal, FOR the Waiver Proposal and FOR the EEQ LLC Agreement Amendment Proposal. We believe EEQ’s directors and executive officers intend to vote all of their EEQ shares FOR any applicable Adjournment Proposal and FOR the EEP Merger Proposal.

Interests of Directors and Executive Officers of EEQ in the Merger (page 96)

EEQ does not have any employees. EEQ has entered into agreements with the General Partner and several of its affiliates to provide EEQ with the necessary services and support personnel, who act on EEQ’s behalf as EEQ’s agents. None of the individuals who has served as a director or executive officer at EEQ or Enbridge since the beginning of 2017 has any agreements or understandings with Enbridge, EEQ or any other party with respect to any type of compensation (whether present, deferred or contingent) that is based on or otherwise relates to the Merger.

EEQ’s directors and executive officers may have other interests in the Merger that may differ from, or are in addition to, the interests of EEQ shareholders generally. All directors and officers of the General Partner hold identical positions with EEQ. These interests include the following:

 

   

six of the ten directors of EEQ hold positions at Enbridge or its subsidiaries (other than EEQ or the General Partner);

 

   

seven directors, including three non-management directors, of EEQ own Enbridge common shares. Those directors, individually and in the aggregate, own shares representing less than 1.0% of the Enbridge common shares outstanding as of November 5, 2018;

 

   

all of the executive officers of EEQ hold positions at Enbridge or its subsidiaries (other than EEQ or the General Partner);



 

18


Table of Contents
   

11 individuals who serve as executive officers of EEQ own Enbridge common shares, which, individually and in the aggregate, represent less than 1.0% of the Enbridge common shares outstanding as of November 5, 2018;

 

   

the three directors on the Special Committee also serve on the EEP Special Committee;

 

   

seven of the ten directors of the General Partner and EEQ, including two directors on the Special Committee, are defendants in the Derivative Action; and

 

   

all of the directors and executive officers of EEQ have the right to indemnification under the EEQ LLC Agreement and the Merger Agreement. In addition, all of the directors and officers of Enbridge have the right to indemnification under the organizational documents of Enbridge and indemnification agreements with Enbridge.

The members of the Special Committee and the EEQ Board were aware of and considered these interests, among other matters, when they approved the Merger Agreement and when they recommended that EEQ shareholders approve the Merger. These interests are described in more detail in the section titled “The Merger—Interests of Directors and Executive Officers of EEQ in the Merger” beginning on page 96.

Material U.S. Federal Income Tax Consequences of the Merger (page 123)

It is intended that, for U.S. federal income tax purposes, (i) the Merger should qualify as a “reorganization” within the meaning of Section 368(a) of the Code and should not result in gain recognition to U.S. holders of Listed Shares except for any gain or loss that may result from the receipt by such holder of cash in lieu of a fractional Enbridge common share, and (ii) the Merger should not result in gain recognition to U.S. holders of Listed Shares pursuant to Section 367(a) of the Code, assuming that, in the case of any such holder who would be treated as a “five-percent transferee shareholder” (within the meaning of Treasury Regulations Section 1.367(a)-3(c)(5)(ii)) of Enbridge following the Merger, provided that such holder enters into a five-year gain recognition agreement in the form provided in Treasury Regulations Section 1.367(a)-8 (cumulatively, the “Intended Tax Treatment”). Neither EEQ nor Enbridge intends to request a ruling from the IRS regarding the United States federal income tax consequences of the Merger. Accordingly, no assurance can be given that the IRS will not challenge the Intended Tax Treatment or that a court would not sustain such a challenge.

Assuming the Merger qualifies for the Intended Tax Treatment, the United States federal income tax consequences to U.S. holders (as defined herein) of Listed Shares generally are as follows:

 

   

A U.S. holder of Listed Shares receiving Enbridge common shares in exchange for Listed Shares pursuant to the Merger should not recognize any gain or loss, except for any gain or loss that may result from the receipt by such holder of cash in lieu of a fractional Enbridge common share.

 

   

A U.S. holder of Listed Shares who receives cash in lieu of a fractional Enbridge common share pursuant to the Merger generally should be treated as having received such fractional share in the Merger and then as having received cash in redemption of such fractional share. Gain or loss generally will be recognized based on the difference between the amount of cash received in lieu of the fractional share and the portion of the U.S. holder’s aggregate tax basis in the Listed Shares surrendered which is allocable to the fractional share.

EEQ shareholders should read the sections titled “Material U.S. Federal Income Tax Consequences of the Merger” beginning on page 123 and “Material Canadian Federal Income Tax Consequences of the Merger” beginning on page 121) and consult their own tax advisors regarding the Canadian and United States federal income tax consequences of the Merger to them in their particular circumstances, as well as tax consequences arising under the laws of any state, local or non-U.S. taxing jurisdiction.



 

19


Table of Contents

Material Canadian Federal Income Tax Consequences of the Merger (page 121)

A Non-Canadian Resident Holder will not be subject to tax under the Canadian Tax Act on any capital gain realized on a disposition of Listed Shares pursuant to the Merger, unless the Listed Shares are “taxable Canadian property”, and are not “treaty-protected property” (as those terms are defined in the Canadian Tax Act) of the Non-Canadian Resident Holder, at the time of the disposition. See the section titled “Material Canadian Federal Income Tax Consequences of the Merger” beginning on page 121.

Listing of Enbridge Common Shares (page 98)

The completion of the Merger is conditioned upon the approval for listing of Enbridge common shares issuable pursuant to the Merger Agreement on the TSX and the NYSE, subject to official notice of issuance.

Delisting and Deregistration of the Listed Shares (page 99)

Enbridge expects that, as promptly as practicable after the Effective Time, the Listed Shares currently listed on the NYSE will cease to be listed on the NYSE and will be deregistered under the Exchange Act.

Comparison of Rights of Enbridge Shareholders and EEQ Shareholders (page 129)

The differences between the rights of Enbridge shareholders and EEQ shareholders result from differences between the organizational documents, governing law and type of organizational structure of Enbridge and EEQ. Enbridge is a Canadian corporation. As a result, EEQ shareholders who receive Enbridge common shares in the Merger will be principally governed by the Canada Corporations Act. EEQ is a Delaware limited liability company. Ownership interests in a Delaware limited liability company are fundamentally different from ownership interests in a Canadian corporation. The rights of Enbridge shareholders are governed by the Enbridge Articles of Continuance and Certificates and Articles of Amendment, which is referred to as “Enbridge’s articles”, Enbridge General By-Law No. 1, as amended, and Enbridge By-Law No. 2, which is referred to collectively as “Enbridge’s by-laws”, and the Canada Corporations Act. The rights of EEQ shareholders are governed by the EEQ LLC Agreement and the Delaware Limited Liability Company Act (the “DLLCA”). The key differences are described in the section titled “Comparison of Rights of Enbridge Shareholders and EEQ Shareholders” beginning on page 129.

The Other Merger Transactions (page 45)

On August 24, 2018, Enbridge and SEP announced that they entered into the SEP merger agreement on the same day under which Enbridge will acquire all of the outstanding public units of SEP, subject to the approval of the SEP unitholders. Under the terms of the SEP merger agreement, SEP public unitholders will receive 1.111 Enbridge common shares for each outstanding public unit of SEP.

On September 18, 2018, Enbridge and EEP announced that they entered into the EEP merger agreement on September 17, 2018 under which Enbridge will acquire all of the outstanding Class A common units of EEP, subject to the approval of the EEP unitholders. Under the terms of the EEP merger agreement, EEP unitholders (other than Enbridge and its subsidiaries) will receive 0.335 of an Enbridge common share for each Class A common unit of EEP, which is at parity with the exchange ratio in the Merger. The Merger is conditional upon the consummation of the EEP Merger.

Also on September 18, 2018, Enbridge and ENF announced that they entered into the arrangement agreement on September 17, 2018 (as amended, the “arrangement agreement”) under which Enbridge will acquire all of the issued and outstanding public common shares of ENF, subject to customary closing conditions.



 

20


Table of Contents

Under the terms of the arrangement agreement, each common share of ENF will be exchanged for 0.7350 of an Enbridge common share and cash of C$0.45 per common share of ENF, subject to adjustment for certain dividends declared on the Enbridge common shares and the common shares of ENF. The requisite approval of the ENF plan of arrangement by the ENF shareholders was obtained at a special meeting of ENF shareholders on November 6, 2018. Following the special meeting of ENF shareholders, ENF also received the final approval of the Court of Queen’s Bench of Alberta with respect to the ENF plan of arrangement.

Risk Factors (page 34)

The Merger and an investment in Enbridge common shares involve risks, some of which are related to the Merger. In considering the Merger, you should carefully consider the information about these risks set forth under the section titled “Risk Factors” beginning on page 34, together with the other information included in, or incorporated by reference into, this proxy statement/prospectus.



 

21


Table of Contents

SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF ENBRIDGE

The following table sets forth the selected historical consolidated financial data of Enbridge as of and for the periods indicated. The selected historical consolidated financial data as of and for the years ended December 31, 2017, 2016, 2015, 2014 and 2013 were derived from Enbridge’s audited consolidated financial statements included in its annual reports on Form 10-K. The selected historical consolidated financial data as of September 30, 2018 and 2017 and for the nine months ended September 30, 2018 and 2017 were derived from the unaudited consolidated interim financial statements of Enbridge included in its quarterly reports on Form 10-Q.

The information set forth below is not necessarily indicative of future results and should be read together with the other information contained in Enbridge’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017 and its Quarterly Report on Form 10-Q for the quarter ended September 30, 2018, including the sections titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and related notes therein. See the section titled “Where You Can Find More Information” beginning on page 161.

 

    For the
nine months ended
September 30,
    For the fiscal years ended December 31,  
    2018(1)     2017(1)     2017(1)     2016(1)     2015(1)     2014     2013  

(millions of Canadian dollars, except per share amounts)

    (Unaudited)    

Consolidated Statements of Earnings:

               

Operating Revenues

  $ 34,816     $ 31,489     $ 44,378     $ 34,560     $ 33,794     $ 37,641     $ 32,918  

Operating Income

    3,303       4,532       1,571       2,581       1,862       3,200       1,365  

Earnings/(loss) from continuing operations

    2,050       3,201       3,266       2,309       (159     1,562       490  

(Earnings)/loss attributable to noncontrolling interests and redeemable noncontrolling interests

    (352     (633     (407     (240     410       (203     135  

Earnings attributable to controlling interests

    1,698       2,568       2,859       2,069       251       1,405       629  

Earnings/(loss) attributable to common shareholders

    1,426       2,322       2,529       1,776       (37     1,154       446  

Common Share Data:

               

Earnings/(loss) per common share

               

Basic

  $ 0.84     $ 1.57     $ 1.66     $ 1.95     $ (0.04   $ 1.39     $ 0.55  

Diluted

    0.84       1.56       1.65       1.93       (0.04     1.37       0.55  

Dividends paid per common share

    2.013       1.803       2.41       2.12       1.86       1.40       1.26  

 

    As at
September 30,
    As at December 31,  
    2018(1)     2017(1)     2017(1)     2016(1)     2015(1)     2014     2013  

(millions of Canadian dollars)

    (Unaudited)    

Consolidated Statements of Financial Position:

               

Total Assets(2)

  $ 163,223     $ 163,441     $ 162,093     $ 85,209     $ 84,154     $ 72,280     $ 57,196  

Long-term debt, less current portion

    58,707       61,434       60,865       36,494       39,391       33,423       22,357  

 

(1)

Enbridge’s Consolidated Statements of Earnings and Consolidated Statements of Financial Position data reflect the following acquisitions, dispositions and impairment.

 

   

2018—Midcoast Operating, L.P. impairment, Canadian natural gas gathering and processing businesses goodwill impairment, Line 10 impairment and other impairment

 

   

2017—The combination of Enbridge and Spectra Energy Corp (“Spectra Energy”) through a stock-for-stock merger transaction that closed on February 27, 2017, acquisition of public interest in

 

22


Table of Contents
 

Midcoast Energy Partners, L.P., the income tax benefit due to the enactment of the Tax Cuts and Jobs Act by the United States in December 2017 and other impairment

 

   

2016—Sandpiper Project impairment, gain on disposition of South Prairie Region assets, Tupper Plants acquisition and other impairment

 

   

2015—Goodwill impairment

 

(2)

Enbridge combined cash and cash equivalents and other amounts previously presented as bank indebtedness where the corresponding bank accounts are subject to pooling arrangements.

 

23


Table of Contents

SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF EEQ

The following table sets forth the selected historical consolidated financial data of EEQ as of and for the periods indicated. The selected historical consolidated financial data as of and for the years ended December 31, 2017, 2016, 2015, 2014 and 2013 were derived from EEQ’s audited consolidated financial statements included in its annual reports on Form 10-K. The selected historical consolidated financial data as of September 30, 2018 and 2017 and for the nine months ended September 30, 2018 and 2017 were derived from the unaudited consolidated interim financial statements of EEQ included in its quarterly reports on Form 10-Q.

The information set forth below is not necessarily indicative of future results and should be read together with the other information contained in EEQ’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017 and its Quarterly Report on Form 10-Q for the quarter ended September 30, 2018, including the sections titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and related notes therein. See the section titled “Where You Can Find More Information” beginning on page 161.

 

     As of and for the
nine months ended
September 30,
    For the fiscal years ended December 31,  
(in millions, except per share amounts)    2018     2017(1)     2017(1)     2016(2)     2015(3)     2014     2013  
     (Unaudited)              

Equity income (loss) from investment in EEP

     (6     (8     (43     (122     (380     44       (26

Income tax benefit (expense)

     2       3       14       2       (132     (17     8  

Net income (loss)

     (4     (5     (29     (120     (512     27       (18

Net income (loss) per share, (basic and diluted)

     (0.04     (0.06     (0.34     (1.54     (7.26     0.41       (0.33

Weighted average shares outstanding

     94       85       86       78       71       66       54  

Equivalent distribution value per share(4)

     1.050       1.283       1.63       2.33       2.31       2.20       2.17  

Number of additional shares distributed

     8.81       5.71       7.94       8.57       4.98       4.56       3.77  

Total assets

     1       1       1       1       133       742       1,271  

 

(1)

Equity loss from investment and net loss for the year ended December 31, 2017 were impacted by the discontinuance of equity method accounting at March 31, 2016, which limited the loss to the amortization of accumulated other comprehensive income.

(2)

Equity loss from investment and net loss for the year ended December 31, 2016 were affected by curing losses and by the discontinued application of the equity method of account when the carrying amount of an investment in EEP was reduced to zero. For further information, see EEQ’s Annual Report on Form 10-K for year ended December 31, 2017, incorporated by reference herein. This was also the cause of the decrease in total assets at December 31, 2016, when compared to total assets at December 31, 2015.

(3)

Net income for the year ended December 31, 2015 was affected by EEQ’s pre-tax pro-rated share of the allocation needed to cure the capital account deficits of EEP’s Class A common units and Class B common units of US$362 million. Net income was also impacted by the recognition of a full valuation allowance on EEQ’s deferred tax asset, which resulted in additional tax expense of US$275 million. For further information, see EEQ’s Annual Report on Form 10-K for year ended December 31, 2017, incorporated by reference herein. This was also the cause of the decrease in total assets at December 31, 2015, when compared to total assets at December 31, 2014.

(4)

Represents the cash distribution paid on each common unit of EEP for each period shown. As more fully discussed in EEQ’s Annual Report on Form 10-K for year ended December 31, 2017, EEQ receives distributions of additional i-units rather than cash.

 

24


Table of Contents

SELECTED UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION

The following selected unaudited pro forma consolidated financial information is derived from the unaudited pro forma consolidated statements of Enbridge. The pro forma adjustments have been prepared as if the Merger and the Other Merger Transactions occurred on September 30, 2018, in the case of the unaudited pro forma condensed consolidated statements of financial position, and on January 1, 2017, in the case of the unaudited pro forma condensed consolidated statements of earnings for the nine months ended September 30, 2018 and the year ended December 31, 2017. In addition, the pro forma adjustments have been prepared as if the Midcoast Transactions occurred on January 1, 2017, in the case of the unaudited pro forma condensed consolidated statements of earnings for the nine months ended September 30, 2018 and the year ended December 31, 2017. The following selected unaudited pro forma consolidated financial information is for illustrative and informational purposes only and is not necessarily indicative of the results that might have occurred had such transactions taken place on January 1, 2017, for consolidated statements of earnings purposes, and September 30, 2018, for consolidated statements of financial position purposes, and is not intended to be a projection of future results. Future results may vary significantly from the results reflected because of various factors, including those discussed in the section titled “Risk Factors” beginning on page 34 of this proxy statement/prospectus. The following selected unaudited pro forma consolidated financial information should be read in conjunction with the Unaudited Pro Forma Condensed Consolidated Financial Statements section and related notes beginning on page F-1 of this proxy statement/prospectus.

 

     For the
nine months ended
September 30,
2018
     For the
year ended
December 31, 2017
 
(millions of Canadian dollars, except per share amounts)    (Unaudited)  

Consolidated Statements of Earnings:

  

Operating Revenues

   $ 33,120      $ 41,209  

Operating Income

     4,199        6,285  

Earnings/(loss) from continuing operations

     2,638        6,808  

(Earnings)/loss attributable to noncontrolling interests and
redeemable noncontrolling interests

     21        (39

Earnings attributable to controlling interests

     2,659        6,769  

Earnings/(loss) attributable to common shareholders

     2,387        6,439  

Common Share Data:

     

Earnings / (loss) per common share

     

Basic

   $ 1.20      $ 3.54  

Diluted

     1.20        3.52  

 

     As at September 30, 2018  

(millions of Canadian dollars)

     (Unaudited)  

Pro Forma Condensed Consolidated Statements of Financial Position:

  

Total Assets

   $ 163,123  

Long-term debt, less current portion

     58,707  

 

25


Table of Contents

COMPARATIVE HISTORICAL AND UNAUDITED PRO FORMA PER SHARE FINANCIAL INFORMATION

Presented below are Enbridge’s and EEQ’s historical and pro forma per share data for the year ended December 31, 2017 and nine months ended September 30, 2018. Except for the historical information for the year ended December 31, 2017, the information provided in the table below is unaudited. This information should be read together with the historical consolidated financial statements and related notes of Enbridge and EEQ filed by each with the SEC, and incorporated by reference in this proxy statement/prospectus, and with the unaudited pro forma condensed consolidated financial statements included in the Unaudited Pro Forma Condensed Consolidated Financial Statements section beginning on page F-1.

The pro forma consolidated and pro forma consolidated equivalent per share information gives effect to the Merger, the Midcoast Transaction (except in the case of the book value per share/unit information, which does not reflect any adjustments for the Midcoast Transaction, as it was completed on August 1, 2018) and the Other Merger Transactions as if such transactions had been completed as of the applicable date. Such pro forma information is presented for illustrative purposes only and is not necessarily indicative of the operating results that would have occurred if the Merger, the Midcoast Transaction or Other Merger Transactions had been completed as of the beginning of the periods presented or the financial position that would have occurred if the Merger or Other Merger Transactions had been completed as of the beginning of the periods presented, nor is it necessarily indicative of the future operating results or financial position of the consolidated company. The pro forma information, although helpful in illustrating the financial characteristics of the consolidated company under one set of assumptions, does not reflect the benefits of expected cost savings, opportunities to earn additional revenue, the impact of restructuring, or other factors that may result as a consequence of the Merger or other transactions and, accordingly, does not attempt to predict or suggest future results.

 

    Nine Months Ended     Year Ended  
    September 30, 2018     December 31, 2017  

Enbridge Historical Data:

(C$)

   

Basic earnings per common share

    $  0.84     $ 1.66  

Diluted earnings per common share

    $  0.84     $ 1.65  

Dividends declared per common share for the period

    $2.013     $ 2.41  

Book value per share(1)

    $35.26     $ 34.30  

EEQ Historical Data:

(US$)

   

Basic loss per Listed Share

    $(0.04   $ (0.34

Diluted loss per Listed Share

    $(0.04   $ (0.34

Dividends declared per Listed Share for the period(2)

    $  1.05     $ 1.633  

Book value per Listed Share(1)

    $  0.01     $ 0.01  

Pro Forma Consolidated Data—Enbridge:

(C$)

   

Basic earnings per common share(3)

    $  1.20     $ 3.54  

Diluted earnings per common share(3)

    $  1.20     $ 3.52  

Dividends declared per common share for the period(4)

    $2.013     $ 2.41  

Book value per common share at period end(1), (5)

    $34.68     $ n/a  

 

26


Table of Contents
    Nine Months Ended     Year Ended  
    September 30, 2018     December 31, 2017  

Equivalent Pro Forma Consolidated—EEQ(6):

(C$)

   

Basic earnings per Listed Share

  $ 0.40     $ 1.19  

Diluted earnings per Listed Share

  $ 0.40     $ 1.18  

Dividends declared per Listed Share for the period

  $ 0.67     $ 0.81  

Book value per Listed Share at period end

  $ 11.62     $ n/a  

 

(1)

Historical book value per Enbridge common share or Listed Share represents total equity before noncontrolling interests and redeemable noncontrolling interests at period end divided by the number of Enbridge common shares or Listed Shares, as applicable, outstanding as of period end.

(2)

Under the terms of the EEQ LLC Agreement, except in connection with EEQ’s liquidation, EEQ does not pay distributions on the Listed Shares in cash, but instead makes distributions on the Listed Shares in additional shares or fractions of shares.

(3)

Amounts are included under “Pro Forma Results” in the unaudited pro forma condensed consolidated statement of earnings included in the Unaudited Pro Forma Condensed Consolidated Pro Forma Financial Statements section on p. F-1.

(4)

For the purpose of the pro forma financial information, it was assumed that all Enbridge common shares issued in connection with the Merger and Other Merger Transactions will receive the same dividend rate as existing Enbridge common shares. The actual dividend declared per share may differ from the pro forma information for the periods to which such transactions are given effect.

(5)

The pro forma consolidated data—Enbridge, book value per common share was calculated as follows (in Canadian dollars in millions, except per share amounts):

 

     As of September 30, 2018  

Pro forma total Enbridge Inc. shareholders’ equity

   $ 70,056  

Divided by: Pro forma consolidated number of shares outstanding as of date of record

     2,020  

Book value per share (pro forma)

   $ 34.68  

 

(6)

Determined by multiplying the pro forma consolidated data—Enbridge disclosed above by the Exchange Ratio of 0.335 of an Enbridge common share per each Listed Share.

 

27


Table of Contents

COMPARATIVE SHARE PRICES; DIVIDENDS

Enbridge common shares are currently listed on the TSX and the NYSE under the symbol “ENB” and the Listed Shares are currently listed on the NYSE under the symbol “EEQ”. The table below sets forth, for the periods indicated, the per share high and low sales prices for Enbridge common shares as reported on the TSX and the NYSE and for the Listed Shares as reported on the NYSE. Numbers have been rounded to the nearest whole cent.

 

     Enbridge
Common Shares
     Enbridge
Common Shares
     EEQ
Listed Shares
 
     TSX      NYSE      NYSE  
     High      Low      High      Low      High      Low  
     (in C$)      (in US$)      (in US$)  

Annual information for the past five calendar years

                 

2017

     58.28        43.91        44.52        34.39        26.53        12.03  

2016

     59.19        40.03        45.77        27.43        26.45        14.27  

2015

     66.14        40.17        54.43        29.19        39.62        19.11  

2014

     65.13        45.45        57.19        41.08        40.86        26.17  

2013

     49.17        41.47        47.87        39.70        32.85        26.72  

Quarterly information for the past two years and subsequent quarters

                 

2018

                 

Fourth Quarter
(through November 1, 2018)

     44.02        39.40        34.00        29.98        11.48        10.14  

Third Quarter

     47.54        41.66        36.57        32.15        11.74        9.98  

Second Quarter

     47.50        37.36        36.11        29.00        10.27        8.38  

First Quarter

     51.04        38.08        41.21        29.54        14.81        8.51  

2017

                 

Fourth Quarter

     52.59        43.91        42.10        34.39        16.23        12.03  

Third Quarter

     53.00        48.98        42.31        39.01        15.93        13.42  

Second Quarter

     57.75        49.61        42.92        37.37        19.00        14.45  

First Quarter

     58.28        53.87        44.52        40.25        26.53        16.50  

2016

                 

Fourth Quarter

     59.18        53.91        45.09        39.70        26.45        22.17  

Third Quarter

     59.19        50.76        45.77        38.58        25.67        21.73  

Second Quarter

     55.05        48.73        43.39        37.02        23.46        16.47  

First Quarter

     51.31        40.03        39.40        27.43        23.12        14.27  

The above table shows only historical data. You should obtain current market quotations for Enbridge common shares and Listed Shares, as the market prices of such securities will fluctuate between the date of this proxy statement/prospectus and the date on which the Merger is completed, at times in between and thereafter. You can obtain these quotations from publicly-available sources.

 

28


Table of Contents

Comparison of the Market Prices of Enbridge Common Shares and Listed Shares and Implied Value of the Merger Consideration Payable for Each Listed Share

The following table presents the closing price per share of Enbridge common shares on the TSX and the NYSE and of the Listed Shares on the NYSE, in each case on (a) September 17, 2018, the last full trading day prior to the public announcement of the signing of the Merger Agreement, and (b) November 6, 2018, the last practicable trading day prior to the filing of this proxy statement/prospectus with the SEC. This table also shows the estimated implied value of the Merger Consideration payable for each Listed Share, which was calculated by multiplying the closing price of Enbridge common shares on the NYSE on those dates by the Exchange Ratio of 0.335.

 

     Enbridge
common
shares
     Enbridge
common
shares
     EEQ
Listed
Shares
     Implied
value per
EEQ Listed
Share
 

Date

   TSX      NYSE      NYSE      NYSE  
     (C$)      (US$)      (US$)      (US$)  

September 17, 2018

   $ 44.70      $ 34.28      $ 10.80      $ 11.48  

November 6, 2018

   $ 43.43      $ 33.12      $ 10.87      $ 11.10  

The market prices of Enbridge common shares and Listed Shares have fluctuated since the date of the announcement of the Merger Agreement and will continue to fluctuate prior to, and in the case of Enbridge common shares, after, completion of the Merger. No assurance can be given concerning the market prices of Enbridge common shares or Listed Shares before completion of the Merger or of Enbridge common shares after completion of the Merger. The Exchange Ratio is fixed in the Merger Agreement, but the market price of Enbridge common shares (and therefore the value of the Merger Consideration) when received by EEQ shareholders after the Merger is completed could be greater than, less than or the same as shown in the table above. Accordingly, these comparisons may not provide meaningful information to EEQ shareholders in determining whether to vote to approve the Merger Agreement and the Merger. EEQ shareholders are encouraged to obtain current market quotations for Enbridge common shares and Listed Shares and to review carefully the other information contained in this proxy statement/prospectus or incorporated by reference herein. For more information, see the section titled “Where You Can Find More Information” beginning on page 161.

 

29


Table of Contents

The table below sets forth the dividends declared per Enbridge common share and the dividends declared per Listed Share for the periods indicated.

 

     Enbridge      EEQ(1)  
     (C$)      (US$)  

Nine Months Ended September 30, 2018

     2.013        1.05  

Year Ended December 31,

     

2017

     2.413        1.633  

Fourth Quarter

     0.610        0.350  

Third Quarter

     0.610        0.350  

Second Quarter

     0.610        0.350  

First Quarter

     0.583        0.583  

2016

     2.120        2.332  

Fourth Quarter

     0.530        0.583  

Third Quarter

     0.530        0.583  

Second Quarter

     0.530        0.583  

First Quarter

     0.530        0.583  

2015

     1.860        2.306  

Fourth Quarter

     0.465        0.583  

Third Quarter

     0.465        0.583  

Second Quarter

     0.465        0.570  

First Quarter

     0.465        0.570  

2014

     1.400        2.197  

Fourth Quarter

     0.350        0.555  

Third Quarter

     0.350        0.555  

Second Quarter

     0.350        0.5435  

First Quarter

     0.350        0.5435  

2013

     1.260        2.174  

Fourth Quarter

     0.3150        0.5435  

Third Quarter

     0.3150        0.5435  

Second Quarter

     0.3150        0.5435  

First Quarter

     0.3150        0.5435  

 

(1)

Under the terms of the EEQ LLC Agreement, except in connection with EEQ’s liquidation, EEQ does not pay distributions on the Listed Shares in cash, but instead makes distributions on the Listed Shares in additional shares or fractions of shares. At the same time that EEP makes a distribution on its common units and i-units, EEQ distributes on each of the Listed Shares that fraction of a share determined by dividing the amount of the cash distribution to be made by EEP on each common unit by the average market price of a Listed Share determined for the 10-day trading period ending on the trading day immediately prior to the ex-dividend date for the Listed Shares.

 

30


Table of Contents

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This registration statement on Form S-4, of which this proxy statement/prospectus forms a part, and the documents to which Enbridge and EEQ refer you in this registration statement, of which this proxy statement/prospectus forms a part, as well as oral statements made or to be made by Enbridge and EEQ, contain both historical and forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act, and forward-looking information within the meaning of Canadian securities laws (collectively, “forward-looking statements”). Forward-looking statements are typically identified by words such as “anticipate”, “expect”, “project”, “estimate”, “forecast”, “plan”, “intend”, “target”, “believe”, “likely” and similar words suggesting future outcomes or statements regarding an outlook. Forward-looking information or statements included in, or incorporated by reference into, this proxy statement/prospectus include, but are not limited to, statements with respect to the following: the Merger; the Midcoast Transaction; each of the Other Merger Transactions; expected earnings before interest, income taxes and depreciation and amortization (“EBITDA”); expected earnings/(loss); expected earnings/(loss) per share; expected future cash flows; expected performance of the Liquids Pipelines, Gas Transmission and Midstream, Gas Distribution, Green Power and Transmission, and Energy Services businesses; financial strength and flexibility; expectations on sources of liquidity and sufficiency of financial resources; expected costs related to announced projects and projects under construction; expected in-service dates for announced projects and projects under construction (including potentially competitive projects); expected capital expenditures; expected equity funding requirements for Enbridge’s commercially secured growth capital; expected future growth and expansion opportunities; expectations about Enbridge’s joint venture partners’ ability to complete and finance projects under construction; expected closing of acquisitions and dispositions, including the Merger and the Other Merger Transactions; estimated future dividends; expected future actions of regulators; expected costs related to leak remediation and potential insurance recoveries; expectations regarding commodity prices; supply forecasts; expectations regarding the impact of the stock-for-stock merger transaction on February 27, 2017 between Enbridge and Spectra Energy, including Enbridge’s combined scale, financial flexibility, growth capital, future business prospects and performance; impact of the Canadian L3R Program on existing integrity programs; the sponsored vehicle strategy; dividend payout policy; dividend growth and dividend payout expectation; expectations on impact of hedging program; and expectations resulting from the successful execution of Enbridge’s 2018-2020 Strategic Plan.

Although the management of Enbridge and EEQ believe that these forward-looking statements are reasonable based on the information available on the date such statements are made and processes used to prepare the information, such statements are not guarantees of future performance and may not prove to be accurate, and readers are cautioned against placing undue reliance on forward-looking statements. By their nature, these statements involve a variety of assumptions, known and unknown risks and uncertainties and other factors, which may cause actual results, future trends, levels of activity and achievements to differ materially from those matters expressed or implied by such statements. When considering forward-looking statements, readers and investors should keep in mind the risk factors and other cautionary statements described in the section titled “Risk Factors” beginning on page 34. Among the assumptions, risks and uncertainties that could cause actual results to differ from those described in forward-looking statements are the following:

 

   

the ability to complete the Merger, including as a result of the failure to satisfy a condition to completion of the Merger as specified in the Merger Agreement;

 

   

negative effects from the pendency of the Merger;

 

   

any delays or issues in negotiating the relevant documentation in relation to, and any failure to complete, any or all of the Other Merger Transactions;

 

   

the timing to consummate the Merger;

 

   

the focus of management time and attention on the Merger or the Other Merger Transactions and other disruptions arising from the Merger or the Other Merger Transactions;

 

   

the risk that the Merger may not be accretive, and may be dilutive, to Enbridge’s earnings per share, which may negatively affect the market price of Enbridge common shares;

 

31


Table of Contents
   

the possibility that Enbridge and EEQ will incur significant transaction and other costs in connection with the Merger, which may be in excess of those anticipated by Enbridge or EEQ;

 

   

the risk that any announcements relating to the Merger could have adverse effects on the market price of Enbridge common shares or Listed Shares;

 

   

the failure to obtain, delays in obtaining or adverse conditions contained in, any required regulatory or other approvals;

 

   

that EEQ and Enbridge may be required to modify the terms and conditions of the Merger Agreement to achieve regulatory or shareholder approval, or that the anticipated benefits of the Merger are not realized as a result of such things as the strength or weakness of the economy and competitive factors in the areas where EEQ and Enbridge do business;

 

   

debt and equity market conditions, including the ability to access capital markets on favorable terms or at all, and the cost of debt and equity capital;

 

   

potential changes in the Enbridge share price which may negatively impact the value of consideration offered to EEQ shareholders;

 

   

the expected supply of and demand for crude oil, natural gas, natural gas liquids (“NGL”) and renewable energy;

 

   

prices of crude oil, natural gas, NGL and renewable energy;

 

   

competitive changes in Enbridge’s industry (including competition from the same and alternative energy sources);

 

   

exchange rates, including the impact of the movement of the Canadian dollar relative to other currencies, particularly the U.S. dollar;

 

   

inflation; interest rates; availability and price of labor and construction materials; operational reliability; customer and regulatory approvals;

 

   

maintenance of support and regulatory approvals for Enbridge’s projects;

 

   

anticipated in-service dates for Enbridge’s projects and those of its competitors;

 

   

weather and natural disasters;

 

   

the timing and closing of the Other Merger Transactions and Enbridge’s announced dispositions;

 

   

the realization of anticipated benefits and synergies of the Merger, the merger transaction completed in February 2017 with Spectra Energy or the Other Merger Transactions;

 

   

the effects of existing and future governmental legislation;

 

   

the effects of future litigation;

 

   

acquisitions and the timing thereof and the success of integration plans and business plans;

 

   

impact of the dividend policy on Enbridge’s future cash flows;

 

   

credit ratings;

 

   

capital project funding;

 

   

expected EBITDA;

 

   

expected earnings/(loss);

 

   

expected earnings/(loss) per share; and

 

   

expected future cash flows and estimated future dividends.

 

32


Table of Contents

Assumptions regarding the expected supply of and demand for crude oil, natural gas, NGL and renewable energy, and the prices of these commodities, are material to and underlie all forward-looking statements, as they may impact current and future levels of demand for services of Enbridge or EEP. Similarly, exchange rates, inflation and interest rates impact the economies and business environments in which we operate and may impact levels of demand for services of Enbridge or EEP and cost of inputs, and are therefore inherent in all forward-looking statements. Due to the interdependencies and correlation of these macroeconomic factors, the impact of any one assumption on a forward-looking statement cannot be determined with certainty, particularly with respect to the impact of the Merger and the Other Merger Transactions on us, expected EBITDA, earnings/(loss), earnings/(loss) per share, or estimated future dividends. The most relevant assumptions associated with forward-looking statements on announced projects and projects under construction, including estimated completion dates and expected capital expenditures, include the following: the availability and price of labor and construction materials; the effects of inflation and foreign exchange rates on labor and material costs; the effects of interest rates on borrowing costs; the impact of weather and customer, government and regulatory approvals on construction and in-service schedules and cost recovery regimes.

Forward-looking statements of Enbridge and EEQ are subject to risks and uncertainties pertaining to the realization of anticipated benefits and synergies of the Merger, the merger transaction completed in February 2017 with Spectra Energy Corp and the Other Merger Transactions, operating performance, regulatory parameters, dispositions, dividend policy, project approval and support, renewals of rights-of-way, weather, economic and competitive conditions, public opinion, changes in tax laws and tax rates, changes in trade agreements, exchange rates, interest rates, commodity prices, political decisions and supply of and demand for commodities, including but not limited to those risks and uncertainties discussed in this proxy statement/prospectus and in EEQ’s other filings with United States securities regulators and Enbridge’s other filings with Canadian and United States securities regulators. The impact of any one risk, uncertainty or factor on a particular forward-looking statement is not determinable with certainty as these are interdependent and the future courses of action of Enbridge and EEP depend on management’s assessment of all information available at the relevant time. Except to the extent required by applicable law, Enbridge and EEQ each assume no obligation to publicly update or revise any forward-looking statements made in this proxy statement/prospectus or otherwise, whether as a result of new information, future events or otherwise. All subsequent forward-looking statements, whether written or oral, attributable to Enbridge or EEQ or persons acting on behalf of Enbridge and EEQ, are expressly qualified in their entirety by these cautionary statements.

The aforementioned factors are difficult to predict and in many cases may be beyond Enbridge’s and EEQ’s control. Consequently, these forward-looking statements may not prove to be accurate. There is no assurance that the actions, events or results of the forward-looking statements will occur, or, if any of them do, when they will occur or what effect they will have on results of operations, financial condition, cash flows or dividends of Enbridge or EEQ. In view of these uncertainties, Enbridge and EEQ caution that investors should not place undue reliance on any forward-looking statements. All of the forward-looking statements Enbridge and EEQ make in this document are qualified by the information contained or incorporated by reference herein, including, but not limited to, the information contained under this heading and the information detailed (a) in Enbridge’s Annual Report on Form 10-K filed with the SEC for the fiscal year ended December 31, 2017 and Enbridge’s Quarterly Reports on Form 10-Q filed with the SEC for the quarterly periods ended March 31, 2018, June 30, 2018 and September 30, 2018, which are available at http://www.sec.gov, and (b) in EEQ’s Annual Report on Form 10-K filed with the SEC for the fiscal year ended December 31, 2017 and EEQ’s Quarterly Reports on Form 10-Q filed with the SEC for the quarterly periods ended March 31, 2018, June 30, 2018 and September 30, 2018, which are available at http://www.sec.gov. See the section titled “Where You Can Find More Information” beginning on page 161. Further, any forward-looking statement speaks only as of the date on which it is made, and, except as required by applicable law, Enbridge and EEQ undertake no obligation to update or revise any forward-looking statement made in this proxy statement/prospectus to reflect new information, events or circumstances after the date on which it is made or to reflect the occurrence of anticipated or unanticipated events or circumstances. All subsequent forward-looking statements, whether written or oral, attributable to Enbridge or EEQ or persons acting on their behalf, are expressly qualified in their entirety by these cautionary statements.

 

33


Table of Contents

RISK FACTORS

In addition to the other information contained in or incorporated by reference herein, including the matters addressed in the section titled “Cautionary Statement Regarding Forward-Looking Statements” beginning on page 34, you should consider carefully the following risk factors, as well as the other information set forth in and incorporated by reference into this proxy statement/prospectus, before making a decision on the Merger. As an Enbridge shareholder following completion of the Merger, you will be subject to all risks inherent in the business of Enbridge in addition to the risks related to EEQ. The market value of your Enbridge common shares will reflect the performance of the business relative to, among other things, that of the competitors of Enbridge and EEQ and general economic, market and industry conditions. The value of your investment may increase or may decline and could result in a loss. You should also consider the other information in this proxy statement/prospectus and the other documents incorporated by reference herein, particularly the risk factors contained in Enbridge’s and EEQ’s Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q. See the section titled “Where You Can Find More Information” beginning on page 161.

Risks Related to the Merger

The number of Enbridge common shares that holders of Listed Shares will be entitled to receive in the Merger is based upon a fixed Exchange Ratio and will not be adjusted in the event of any change in either the price of Enbridge common shares or the price of the Listed Shares.

The Exchange Ratio of 0.335 of an Enbridge common share per Listed Share is fixed, meaning that it does not change and is not dependent upon the relative values of Enbridge common shares and the Listed Shares. There will be no adjustment to the Exchange Ratio for changes in the market price of Enbridge common shares or the Listed Shares prior to the completion of the Merger. If the Merger is completed, there will be a time lapse between the date of this proxy statement/prospectus and the date on which holders of the Listed Shares who are entitled to receive the Merger Consideration actually receive such Merger Consideration. The market value of Enbridge common shares may fluctuate during and after this period as a result of a variety of factors, including general market and economic conditions, changes in Enbridge’s businesses, operations and prospects and regulatory considerations. Such factors are difficult to predict and in many cases may be beyond the control of Enbridge and EEQ. Consequently, at the time EEQ shareholders must decide whether to approve the Merger Agreement, they will not know the actual market value of the Merger Consideration they will receive when the Merger is completed. The actual value of the Merger Consideration received by the holders of the Listed Shares at the completion of the Merger will depend on the market value of the Enbridge common shares at that time. This market value may differ, possibly materially, from the market value of Enbridge common shares at the time the Merger Agreement was entered into or at any other time. For additional information about the EEQ per share merger consideration, see the section titled “The Merger Agreement—Merger Consideration” beginning on page 58.

The Merger Agreement may be terminated in accordance with its terms and there is no assurance when or if the Merger will be completed.

The completion of the Merger is subject to the satisfaction or waiver of a number of conditions as set forth in the Merger Agreement, including, among others, the requisite approval of the EEQ shareholders, the accuracy of representations and warranties under the Merger Agreement (subject to the materiality standards set forth in the Merger Agreement) and EEQ’s and Enbridge’s performance of their respective obligations under the Merger Agreement in all material respects. These conditions to the closing of the Merger may not be fulfilled in a timely manner or at all, and, accordingly, the Merger may be delayed or may not be completed.

There can be no assurance as to when these conditions will be satisfied or waived, if at all, or that other events will not intervene to delay or result in the failure to complete the Merger.

In addition, if the Merger is not completed by March 18, 2019, either Enbridge or EEQ may choose not to proceed with the Merger, and the parties can mutually decide to terminate the Merger Agreement at any time. In

 

34


Table of Contents

addition, Enbridge and EEQ may elect to terminate the Merger Agreement in certain other circumstances. Please read the section titled “The Merger Agreement—Termination” beginning on page 119.

If the EEP merger is completed and there are delays in completing the Merger, or the Merger is not completed at all, the sole asset of EEQ would be interests in an entity that is no longer publicly traded.

EEQ’s only assets are i-units in EEP and, as a result, EEQ’s financial condition and results of operations are dependent upon the performance of EEP. On September 18, 2018, Enbridge announced that it had entered into a definitive agreement to acquire all of the outstanding equity securities that Enbridge does not already own of EEP. The closing of the EEP merger is not conditioned upon the consummation of the Merger and there is a risk that, if the EEP merger is completed but the Merger is not completed, the sole asset of EEQ would be interests in an entity that is no longer publicly traded.

The opinion rendered to the Special Committee by Goldman Sachs & Co. LLC (“Goldman Sachs”) on September 17, 2018 was necessarily based on economic, monetary, market and other conditions as in effect on, and financial forecasts and other information made available to Goldman Sachs as of, the date of the opinion. As a result, the opinion does not reflect changes in events or circumstances after the date of such opinion. The Special Committee has not requested, and does not expect to request, an updated opinion from Goldman Sachs reflecting changes in circumstances that may have occurred since the signing of the Merger Agreement.

The opinion rendered to the Special Committee by Goldman Sachs on September 17, 2018 was provided for the information and assistance of the Special Committee in connection with its consideration of the Merger. The opinion was necessarily based on economic, monetary, market and other conditions as in effect on, and financial forecasts and other information made available to Goldman Sachs as of, the date of the opinion, which may have changed, or may change, after the date of the opinion. The Special Committee has not requested an updated opinion as of the date of this proxy statement/prospectus from Goldman Sachs and does not expect to request an updated opinion prior to completion of the Merger. Changes in the operations and prospects of Enbridge and EEQ, general market and economic conditions and other factors that may be beyond the control of Enbridge and EEQ, and on which the opinion was based, may have altered the value of Enbridge or EEQ or the prices of Enbridge common shares or the Listed Shares since the date of such opinion, or may alter such values and prices by the time the Merger is completed. The opinion does not speak as of any date other than the date of the opinion. For a description of the opinion that Goldman Sachs rendered to the Special Committee, please read the section titled “The Merger—Opinion of Goldman Sachs & Co. LLC, Financial Advisor to the Special Committee” beginning on page 83.

Failure to complete, or significant delays in completing, the Merger could negatively affect the trading prices of Enbridge common shares or the Listed Shares or the future business and financial results of Enbridge and EEQ.

The completion of the Merger is subject to certain customary closing conditions, including (i) the registration statement having become effective under the Securities Act, (ii) the receipt of requisite approvals of the Merger Agreement by the shareholders of EEQ, (iii) the expiration or termination of the waiting period applicable to the consummation of the Merger under the HSR Act, (iv) the Enbridge common shares issuable in connection with the Merger having been approved for listing on the NYSE and the TSX, subject to official notice of issuance, and (v) the absence of any governmental order prohibiting the consummation of the Merger or the other transactions contemplated by the Merger Agreement. The obligation of each party to consummate the Merger is also conditioned upon the accuracy of the representations and warranties of the other party as of the date of the Merger Agreement and as of the closing (subject to customary materiality qualifiers).

There is no certainty that the various closing conditions will be satisfied and that the necessary approvals will be obtained. If these or other conditions are not satisfied or if there is a delay in the satisfaction of such

 

35


Table of Contents

conditions, then Enbridge and EEQ may not be able to complete the Merger timely or at all, and such failure or delay may have other adverse consequences. If the Merger is not completed or is delayed, Enbridge and EEQ will be subject to a number of risks, including:

 

   

Enbridge and EEQ may experience negative reactions from the financial markets, including negative impacts on the market price of Enbridge common shares and the Listed Shares, particularly to the extent that their current market price reflects a market assumption that the Merger will be completed;

 

   

Enbridge and EEQ will not realize the expected benefits of the combined company; and

 

   

some costs relating to the Merger, such as investment banking, legal and accounting fees, and financial printing and other related charges, must be paid even if the Merger is not completed.

Enbridge also expects to acquire all of the outstanding equity securities of each of EEP, SEP and ENF in the Other Merger Transactions, and Enbridge’s efforts to complete those transactions may result in delays in completing the Merger with EEQ or make it more difficult or time consuming than expected.

Enbridge announced that it had separately entered into definitive agreements to acquire, in separate combination transactions, all of the outstanding equity securities that Enbridge does not already own of SEP (announced on August 24, 2018) and EEP and ENF (each announced on September 18, 2018). EEP will hold a special meeting of its unitholders to obtain their approval of the applicable merger agreement. Completion of the Merger is contingent upon the completion of the EEP merger, while none of the EEP merger, the SEP merger or the ENF plan of arrangement are conditioned on the completion of any of such other transactions. SEP will solicit consents in order to obtain the requisite approval of the SEP unitholders. The consents of Enbridge and its subsidiaries (other than SEP) to the SEP merger are sufficient to approve the SEP merger and the related merger agreement. The requisite approval of the ENF plan of arrangement by the ENF shareholders was obtained at a special meeting of ENF shareholders held on November 6, 2018. Following the special meeting of ENF shareholders, ENF also received the final approval of the Court of Queen’s Bench of Alberta with respect to the ENF plan of arrangement. Enbridge cannot predict whether the Other Merger Transactions will be approved by the requisite votes of security holders of the respective sponsored vehicles, whether all of the other conditions precedent to such transactions will be satisfied or, if so, the timing of the completion of such transactions. Enbridge’s efforts to complete those transactions may result in delays in completing the Merger with EEQ or make it more difficult or time consuming than expected.

The assumptions and estimates underlying the financial projections are inherently subject to significant business, economic and competitive uncertainties and contingencies, all of which are difficult to predict and many of which are beyond the control of Enbridge and EEQ. As a result, the financial projections for Enbridge and EEQ may not be realized.

In performing its financial analyses and rendering its opinion regarding the fairness from a financial point of view to the holders (other than Enbridge and its affiliates) of the outstanding Listed Shares of the Exchange Ratio pursuant to the Merger Agreement, Goldman Sachs, the financial advisor to the Special Committee, reviewed and relied on, among other things, certain financial analyses and forecasts for EEP, certain financial analyses and forecasts for Enbridge stand alone, and certain financial analyses and forecasts for Enbridge pro forma for the Merger and the EEP merger, as adjusted by the Special Committee, in each case, as prepared by the management of Enbridge and approved for Goldman Sachs’ use by the Special Committee. These financial projections speak only as of the date made and will not be updated. These financial projections were not provided with a view to public disclosure, are subject to significant economic, competitive, industry and other uncertainties, and may not be achieved in full, within projected time frames or at all. The financial projections on which the Special Committee’s financial advisor based its opinion may not be realized.

In performing its financial analyses and rendering its opinion regarding the fairness, from a financial point of view, of the Exchange Ratio to EEQ and the Unaffiliated EEQ Shareholders, Goldman Sachs, the financial advisor to the Special Committee, reviewed and relied on, among other things, financial forecasts for Enbridge

 

36


Table of Contents

and EEQ prepared by management. These financial projections speak only as of the date made and will not be updated. These financial projections were not provided with a view to public disclosure, are subject to significant economic, competitive, industry and other uncertainties, and may not be achieved in full, within projected time frames or at all. The financial projections on which the Special Committee’s financial advisor based its opinion may not be realized.

The unaudited pro forma condensed consolidated financial information and unaudited forecasted financial information included in this proxy statement/prospectus is presented for illustrative purposes only and does not represent the actual financial position or results of operations of the combined company following the completion of the Merger. Future results of Enbridge and EEQ may differ, possibly materially, from the unaudited pro forma condensed consolidated financial information and unaudited forecasted financial information presented in this proxy statement/prospectus.

The unaudited pro forma condensed consolidated financial statements and unaudited forecasted financial information contained in this proxy statement/prospectus are presented for illustrative purposes only, contain a variety of adjustments, assumptions and preliminary estimates and do not represent the actual financial position or results of operations of Enbridge or EEQ prior to the Merger or following the Merger, the Midcoast Transaction and/or the Other Merger Transactions for several reasons. See the Unaudited Pro Forma Condensed Consolidated Financial Statements section beginning on page F-1. In addition, the Merger and post-Merger integration process, as well as the Other Merger Transactions, may give rise to unexpected liabilities and costs. Unexpected delays in completing the Merger or in completing the Other Merger Transactions may significantly increase the related costs and expenses incurred by Enbridge. The actual financial positions and results of operations of Enbridge and EEQ prior to the Merger and following the Merger, the Midcoast Transaction and the Other Merger Transactions may be different, possibly materially, from the unaudited pro forma condensed consolidated financial statements or forecasted financial information included in this proxy statement/prospectus. In addition, the assumptions used in preparing the unaudited pro forma condensed consolidated financial statements and forecasted financial information included in this proxy statement/prospectus may not prove to be accurate and may be affected by other factors. Any significant changes in the market price of Enbridge common shares may cause a significant change in the purchase price used for Enbridge’s accounting purposes and the unaudited pro forma financial statements contained in this proxy statement/prospectus.

Enbridge and EEQ and their directors and officers may have interests that differ from your interests, and these interests may have influenced their decision to propose and to approve the Merger Agreement and the transactions contemplated thereby, including the Merger.

The nature of the respective businesses of Enbridge and EEQ and their respective affiliates may give rise to conflicts of interest between Enbridge, EEQ and the General Partner. The interests of Enbridge, EEQ and the General Partner, and their directors and officers, as applicable, may differ from your interests as a result of the relationships among them. A conflict could be perceived to exist, for example, in connection with the number of Enbridge common shares offered as the Merger Consideration, particularly where two of the ten directors on the EEQ Board are executive officers of Enbridge.

EEQ does not have any employees. EEQ has entered into agreements with the General Partner and several of its affiliates to provide EEQ with the necessary services and support personnel, who act on EEQ’s behalf as EEQ’s agents. All directors of the General Partner are elected annually and may be removed by Enbridge (U.S.) Inc., as the sole shareholder of the General Partner, an indirect and wholly owned subsidiary of Enbridge. All directors of EEQ were elected and may be removed by the General Partner, as the sole holder of the Voting Shares.

In considering the recommendation of the EEQ Board to approve the Merger Proposal, you should consider that the directors and executive officers of Enbridge, the General Partner and EEQ may have other interests that

 

37


Table of Contents

differ from, or are in addition to, the interests of EEQ shareholders generally. These interests include the following:

 

   

six of the ten directors of EEQ also hold positions at Enbridge or its subsidiaries (other than EEQ or the General Partner);

 

   

seven directors, including three non-management directors, of EEQ own Enbridge common shares. Those directors, individually and in the aggregate, own shares representing less than 1.0% of the Enbridge common shares outstanding as of November 5, 2018;

 

   

all of the executive officers of EEQ hold positions at Enbridge or its subsidiaries (other than EEQ or the General Partner);

 

   

11 individuals who serve as executive officers of EEQ own Enbridge common shares, which, individually and in the aggregate, represent less than 1.0% of the Enbridge common shares outstanding as of November 5, 2018;

 

   

the three directors on the Special Committee also serve on the EEP Special Committee;

 

   

seven of the ten directors of the General Partner and EEQ, including two directors on the Special Committee, are defendants in the Derivative Action; and

 

   

all of the directors and executive officers of EEQ have the right to indemnification under the EEQ LLC Agreement and the Merger Agreement. In addition, all of the directors and officers of Enbridge have the right to indemnification under the organizational documents of Enbridge and indemnification agreements with Enbridge.

In addition, certain executive officers and directors of Enbridge are also executive officers and directors of EEQ and the General Partner. J. Herbert England serves as a member of the boards of directors of all three companies. The compensation received by the executive officers of Enbridge is paid to them in their capacities as executive officers of Enbridge, EEQ and the General Partner, as applicable. EEQ and the General Partner have the same directors and, with the exception of William Yardley, who is an executive officer of the General Partner only, have the same executive officers.

The following director and executive officers of Enbridge hold positions at EEQ and the General Partner:

 

Executive Officer/Director

  

EEQ / General Partner

  

Enbridge

J. Herbert England

  

Director

  

Director

D. Guy Jarvis

  

Director and Executive Vice President—Liquids Pipelines

  

Executive Vice President & President, Liquids Pipelines

John K. Whelen

  

Director

  

Executive Vice President & Chief Financial Officer

The members of the Special Committee and the EEQ Board were aware of and considered these interests, among other matters, when they approved the Merger Agreement and when they recommended that EEQ shareholders approve the Merger. These interests are described in more detail in the section titled “The Merger—Interests of Directors and Executive Officers of EEQ in the Merger” beginning on page 96.

Enbridge and EEQ will be subject to certain operating restrictions until the completion of the Merger.

The Merger Agreement generally restricts EEQ, without Enbridge’s consent, or Enbridge, without EEQ’s consent, from taking specified actions until the Merger occurs or the Merger Agreement terminates. These restrictions may prevent EEQ or Enbridge from taking actions that each respectively might otherwise consider beneficial. Please read the section titled “The Merger Agreement—Interim Operations” beginning on page 108.

 

38


Table of Contents

Risks Related to the Enbridge Common Shares

The market price of Enbridge common shares will continue to fluctuate after the Merger.

Upon completion of the Merger, Unaffiliated EEQ Shareholders will become holders of Enbridge common shares. The market price of Enbridge common shares may fluctuate significantly following completion of the Merger and Unaffiliated EEQ Shareholders could lose some or all of the value of their investment in Enbridge common shares. In addition, the stock market has experienced significant price and volume fluctuations in recent times which, if they continue to occur, could have a material adverse effect on the market for, or liquidity of, the Enbridge common shares, regardless of Enbridge’s actual operating performance.

The market price of Enbridge common shares may be affected by factors different from those that historically have affected Listed Shares.

Upon completion of the Merger, Unaffiliated EEQ Shareholders will become holders of Enbridge common shares. The businesses of Enbridge differ from those of EEQ in certain respects, and, accordingly, the financial position or results of operations and/or cash flows of Enbridge after the Merger, as well as the market price of Enbridge common shares, may be affected by factors different from those currently affecting the financial position or results of operations and/or cash flows of EEQ, and, in turn, the market price of the Listed Shares. For a discussion of the businesses of Enbridge and EEQ and of some important factors to consider in connection with those businesses, see the section titled “Information about the Companies” beginning on page 44, and the documents incorporated by reference in the section titled “Where You Can Find More Information” beginning on page 161, including, in particular, in the sections titled “Risk Factors” in each of Enbridge’s Annual Report on Form 10-K for the year ended December 31, 2017 and EEQ’s Annual Report on Form 10-K for the year ended December 31, 2017, in each case, as modified by subsequent reports filed by Enbridge and EEQ.

Holders of Enbridge common shares, which will be received by eligible holders of the Listed Shares as a result of the Merger, will have rights different from the current holders of Listed Shares.

Upon completion of the Merger, Unaffiliated EEQ Shareholders will no longer be shareholders of EEQ, and Unaffiliated EEQ Shareholders will become Enbridge shareholders. There are certain differences between the current rights of Unaffiliated EEQ Shareholders and the rights to which such shareholders will be entitled as Enbridge shareholders. See the section titled “Comparison of Rights of Enbridge Shareholders and EEQ Shareholders” beginning on page 129 for a discussion of the different rights associated with Enbridge common shares.

Enbridge may not pay any cash dividends to Enbridge shareholders, and Enbridge’s ability to declare and pay cash dividends to Enbridge shareholders, if any, in the future will depend on various factors, many of which are beyond Enbridge’s control.

Unlike EEQ, Enbridge is not required to declare dividends of its available cash to its equityholders. The Enbridge Board may not declare dividends in the future. Should the Enbridge Board declare dividends on the Enbridge common shares in the future, the dividend yield of the Enbridge common shares may only be a fraction of the historical or projected dividend yield of the Listed Shares. Any payment of future dividends will be at the sole discretion of the Enbridge Board and will depend upon many factors, including the financial condition, earnings and capital requirements of its operating subsidiaries, covenants associated with certain debt obligations, legal requirements, regulatory constraints and other factors deemed relevant by the Enbridge Board. For more information regarding Enbridge’s financial condition, earnings and capital requirements, level of indebtedness or legal, regulatory or contractual restrictions, please read Enbridge’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017, incorporated by reference herein.

 

39


Table of Contents

Enbridge declares its dividend in Canadian dollars. However, Enbridge delivers payment to U.S. holders of Enbridge common shares in U.S. dollars. Fluctuations in the Canadian dollar/U.S. dollar exchange rate may impact the value of dividend payments received by U.S. holders of Enbridge common shares.

Enbridge declares its dividend in Canadian dollars. However, Enbridge delivers payment to U.S. holders of Enbridge common shares in U.S. dollars. The U.S. dollar value of any cash payment for declared dividends to a U.S. holder of Enbridge common shares will be converted into U.S. dollars using the indicative rate of exchange for Canadian interbank transactions established by the Bank of Canada on the declared record date. Fluctuations in the Canadian dollar/U.S. dollar exchange rate may impact the value of any dividend payments received by U.S. holders of Enbridge common shares.

Enbridge is organized under the laws of Canada and a substantial portion of its assets are, and many of its directors and officers reside, outside of the United States. As a result, it may not be possible for shareholders to enforce civil liability provisions of the securities laws of the United States in Canada.

Enbridge is organized under the laws of Canada. A substantial portion of Enbridge’s assets are located outside the United States, and many of Enbridge’s directors and officers and some of the experts named in this proxy statement/prospectus (including in documents that are incorporated by reference into this proxy statement/prospectus) are residents of jurisdictions outside of the United States. As a result, it may be difficult for investors to effect service within the United States upon Enbridge and those directors, officers and experts, or to realize in the United States upon judgments of courts of the United States predicated upon civil liability of Enbridge and such directors, officers or experts under the U.S. federal securities laws. There is uncertainty as to the enforceability in Canada by a court in original actions, or in actions to enforce judgments of United States courts, of the civil liabilities predicated upon the U.S. federal securities laws.

There may be future dilution of the Enbridge common shares, including as a result of any Enbridge common shares issued in connection with the Other Merger Transactions, which could adversely affect the market price of Enbridge common shares.

If the Merger is successfully completed, Enbridge expects that it will issue to the Unaffiliated EEQ Shareholders approximately 29,174,068 Enbridge common shares at the Effective Time in connection with the proposed Merger, based on the number of Enbridge common shares and the estimated number of Listed Shares that are outstanding as of November 5, 2018 (not including any Enbridge common shares that would be expected to be issued upon the successful completion of the Other Merger Transactions, including the EEP merger). If the Other Merger Transactions are all also successfully completed in accordance with their respective transaction agreements, based on the number of outstanding shares or units, as the case may be, of SEP, EEP, EEQ and ENF, as of November 5, 2018, and the exchange ratio in each applicable transaction agreement, Enbridge expects that it will issue approximately 296,284,573 Enbridge common shares in aggregate upon the completion of the proposed Merger and those Other Merger Transactions. The actual number of Enbridge common shares issued in the Merger and the EEP merger will be determined by multiplying the Exchange Ratio by the number of issued and outstanding Listed Shares held by Unaffiliated EEP Unitholders and the exchange ratio in the EEP merger by the number of issued and outstanding Class A common units held by the public as of the closing date of the Merger. The actual number of Enbridge common shares issued in each of the SEP merger and the ENF plan of arrangement will be determined by multiplying the applicable exchange ratio by the number of publicly held shares or units of the acquired entity as of the closing date of each such transaction.

In addition, the Merger Agreement does not restrict Enbridge’s ability to issue additional Enbridge common shares prior to (with consent of each conflicts committee and special committee pursuant to the respective merger agreements and arrangement agreement applicable to the proposed Merger and the Other Merger Transactions) or following the Effective Time or thereafter. In the future (assuming such consents have been secured), Enbridge may issue additional Enbridge common shares to raise cash for its projects, operations, acquisitions or other purposes. Enbridge may also (assuming such consents have been secured) acquire interests in other

 

40


Table of Contents

companies by using a combination of cash and Enbridge common shares or just Enbridge common shares. Enbridge has issued securities convertible into, or exchangeable for, or that represent the right to receive, Enbridge common shares and may (assuming such consents have been secured) do so again in the future. Any of these events may dilute the ownership interests of current Enbridge common shares, reduce Enbridge’s earnings per share and have an adverse effect on the price of Enbridge common shares. The issuance of these new shares and the sale of additional shares that may become eligible for sale in the public market from time to time could have the effect of depressing the market value for Enbridge common shares. The increase in the number of Enbridge common shares may lead to sales of such Enbridge common shares or the perception that such sales may occur, either of which may adversely affect the market for, and the market value of, Enbridge common shares.

Sales of a substantial number of Enbridge common shares in the public market could adversely affect the market price of Enbridge common shares.

Sales of a substantial number of Enbridge common shares in the public market, or the perception that these sales may occur, could reduce the market price of Enbridge common shares.

Tax Risks Related to the Merger and the Ownership of Enbridge Common Shares Received in the Merger

In addition to reading the following risk factors, EEQ shareholders are urged to read “Material U.S. Federal Income Tax Consequences of the Merger” beginning on page 123 and “Material Canadian Federal Income Tax Consequences of the Merger” beginning on page 121 for a more complete discussion of the expected U.S. and Canadian federal income tax consequences of the Merger and owning and disposing of Enbridge common shares received in the Merger.

There is some risk that the IRS could challenge the conclusions set forth in the opinions and that such a challenge would be sustained by a court. If the conclusions in the tax opinions were to be challenged by the IRS and such challenge were to be sustained, U.S. holders of EEQ shares would recognize gain (and may not be allowed to recognize loss) based on the amount such a holder realizes in the Merger. None of the parties to the Merger intends to request a ruling from the IRS regarding the U.S. federal income tax consequences of the Merger. Consequently there is no guarantee that the IRS will treat the Merger in the manner described above. If the IRS successfully challenges the treatment of the Merger, adverse U.S. federal income tax consequences may result.

Assuming the Merger qualifies for the Intended Tax Treatment, the United States federal income tax consequences to U.S. holders of EEQ shares generally are as follows:

 

   

A U.S. holder of EEQ shares receiving Enbridge common shares in exchange for EEQ shares pursuant to the Merger should not recognize any gain or loss, except for any gain or loss that may result from the receipt by such holder of cash in lieu of a fractional Enbridge common share.

 

   

A U.S. holder of EEQ shares who receives cash in lieu of a fractional Enbridge share pursuant to the Merger generally will be treated as having received such fractional share in the Merger and then as having received cash in redemption of such fractional share. Gain or loss generally will be recognized based on the difference between the amount of cash received in lieu of the fractional share and the portion of the U.S. holder’s aggregate tax basis in the EEQ share surrendered which is allocable to the fractional share.

It is a condition to the completion of the Merger that EEQ receives an opinion from Vinson & Elkins L.L.P., dated as of the closing date, to the effect that (i) the Merger should qualify as a “reorganization” within the meaning of Section 368(a) of the Code, and (ii) the Merger should not result in gain being recognized by U.S. holders under Section 367(a) of the Code upon the exchange of EEQ share for Enbridge common shares in the

 

41


Table of Contents

merger (other than by a U.S. holder who is a “five-percent transferee shareholder” within the meaning of the rules under Treasury Regulations Section 1.367(a)-3(c) and who does not file the agreement with the IRS as described in Treasury Regulations Section 1.367(a)-3(c)(l)(iii)(B)). We believe that the conclusions in this opinion are accurate. However, they are not certain and are not binding on the IRS or any court. Although none of Enbridge, EEQ or Merger Sub intends to request a ruling from the IRS regarding the U.S. federal income tax consequences of the merger, there is some risk that the IRS could challenge the conclusions set forth in the opinion and that such a challenge would be sustained by a court. If the conclusions in the tax opinion were to be challenged by the IRS and such challenge were to be sustained, U.S. holders of EEQ shares would recognize gain (and may not be allowed to recognize loss) based on the amount such a holder realizes in the Merger. Because none of the parties to the Merger intends to request a ruling from the IRS regarding the U.S. federal income tax consequences of the Merger, there is no guarantee that the IRS will treat the Merger in the manner described above. If the IRS successfully challenges the treatment of the Merger, adverse U.S. federal income tax consequences may result.

EEQ shareholders should read the section entitled “Material U.S. Federal Income Tax Consequences of the Merger” beginning on page 123 and consult their own tax advisors regarding the United States federal income tax consequences of the Merger to them in their particular circumstances, as well as tax consequences arising under the laws of any state, local or non-U.S. taxing jurisdiction.

Dividends paid with respect to Enbridge common shares generally will be subject to withholding tax.

A distribution of cash by Enbridge to a shareholder who is a U.S. holder will generally be included in such U.S. holder’s income as ordinary dividend income to the extent of Enbridge’s current or accumulated “earnings and profits”, as determined under U.S. federal income tax principles. A portion of the cash distributed to Enbridge shareholders by Enbridge after the Merger may exceed Enbridge’s current and accumulated earnings and profits. Cash distributions in excess of Enbridge’s current and accumulated earnings and profits will be treated as a non-taxable return of capital, reducing a U.S. holder’s adjusted tax basis in such shareholder’s Enbridge common shares and, to the extent the cash distribution exceeds such shareholder’s adjusted tax basis, as gain from the sale or exchange of such Enbridge common shares. However, Enbridge does not expect to calculate earnings and profits in accordance with U.S. federal income tax principles. Accordingly, each Enbridge shareholder should expect to generally treat distributions made by Enbridge as dividends.

Dividends paid or credited or deemed to be paid or credited on Enbridge common shares to a Non-Canadian Resident Holder generally will be subject to Canadian withholding tax at a rate of 25% of the gross amount of the dividend, unless the rate is reduced under the provisions of an applicable income tax convention between Canada and the Non-Canadian Resident Holder’s jurisdiction of residence. For example, the rate of withholding tax under the Treaty applicable to a Non-Canadian Resident Holder who is a resident of the United States for purposes of the Treaty, is the beneficial owner of the dividend and is entitled to all of the benefits under the Treaty, generally will be 15%.

Please read “Material U.S. Federal Income Tax Consequences of the Merger” and “Material Canadian Federal Income Tax Consequences of the Merger” beginning on pages 123 and 121, respectively, for a more complete discussion of certain U.S. and Canadian federal income tax consequences of owning and disposing of Enbridge common shares.

Future changes to U.S., Canadian and foreign tax laws could adversely affect the combined company.

The U.S. Congress, the Canadian House of Commons, the Organization for Economic Co-operation and Development, and other government agencies in jurisdictions where Enbridge and its affiliates do business have been focused on issues related to the taxation of multinational corporations. Specific attention has been paid to “base erosion and profit shifting”, where payments are made between affiliates from a jurisdiction with high tax rates to a jurisdiction with lower tax rates. As a result, the tax laws in the United States, Canada and other countries in which Enbridge and its affiliates do business could change on a prospective or retroactive basis, and any such change could adversely affect the combined company.

 

42


Table of Contents

Further, there can be no assurance that applicable Canadian income tax laws, regulations or tax treaties will not be changed or interpreted in a manner that is, or that applicable taxing authorities will not take administrative positions that are, adverse to Enbridge and its shareholders. Such taxation authorities may also disagree with how Enbridge calculates or has in the past calculated its income for tax purposes. Any such event could adversely affect Enbridge, its share price or the dividends or other payments to be paid to shareholders of Enbridge.

Risks Related to Enbridge’s Business

You should read and consider risk factors specific to Enbridge’s businesses that will also affect the combined company after the completion of the Merger. These risks are described in Part I, Item 1A of Enbridge’s Annual Report on Form 10-K for the year ended December 31, 2017, and in other documents that are incorporated by reference herein. See the section titled “Where You Can Find More Information” beginning on page 161 for the location of information incorporated by reference in this proxy statement/prospectus.

Risks Related to EEQ’s Business

You should read and consider risk factors specific to EEQ’s businesses that will also affect the combined company after the completion of the Merger. These risks are described in Part I, Item 1A of EEQ’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017, and in other documents that are incorporated by reference herein. See the section titled “Where You Can Find More Information” beginning on page 161 for the location of information incorporated by reference in this proxy statement/prospectus.

 

43


Table of Contents

INFORMATION ABOUT THE COMPANIES

Enbridge Inc.

200, 425 – 1st Street S.W.

Calgary, Alberta T2P 3L8, Canada

Phone: 1-403-231-3900

Enbridge is a North American energy infrastructure company with strategic business platforms that include an extensive network of crude oil, liquids and natural gas pipelines, regulated natural gas distribution utilities and renewable power generation assets. Enbridge delivers an average of 2.9 million barrels of crude oil each day through its Mainline and Express Pipeline, and accounts for approximately 62% of United States-bound Canadian crude oil exports. Enbridge also moves approximately 22% of all natural gas consumed in the United States, serving key supply basins and demand markets. Its regulated utilities serve approximately 3.7 million retail customers in Ontario, Quebec and New Brunswick. Enbridge also has interests in more than 1,700 megawatts (MW) of net renewable power generation capacity in North America and Europe. Enbridge has ranked on the Global 100 Most Sustainable Corporations index for the past nine years. Enbridge was incorporated on April 13, 1970 under the Companies Ordinance of the Northwest Territories and was continued under the Canada Corporations Act on December 15, 1987. Enbridge indirectly holds all of the outstanding equity interests of Merger Sub, an indirect wholly owned subsidiary formed in Delaware for the sole purpose of completing the Merger.

Enbridge is a public company and the Enbridge common shares trade on both the TSX and the NYSE under the ticker symbol “ENB”. Enbridge’s principal executive offices are located at 200, 425 – 1st Street S.W., Calgary, Alberta T2P 3L8, Canada, and its telephone number is 1-403-231-3900.

Additional information about Enbridge can be found on its website at https://www.enbridge.com. The information contained in, or that can be accessed through, Enbridge’s website is not intended to be incorporated into this proxy statement/prospectus. For additional information about Enbridge, see the section titled “Where You Can Find More Information” beginning on page 161.

Enbridge Energy Management, L.L.C.

5400 Westheimer Court

Houston, Texas 77056

Phone: (713) 627-5400

EEQ is a publicly-traded Delaware limited liability company that is a limited partner of EEP, through its ownership of i-units, a special class of the EEP’s limited partner interests. EEQ’s only investment is its limited partner interest in EEP. EEQ is structured as an alternative to direct investment in master limited partnerships for investors without the complications associated with partnership tax reporting.

As of November 5, 2018, EEQ owned approximately 21.9% of the outstanding units of EEP. At November 5, 2018, the General Partner owned 100% of EEQ’s 7.4 Voting Shares, as well as approximately 11.7% of the Listed Shares, which represent limited liability company interests in EEQ and are publicly traded on the NYSE. The remaining approximately 88.3% of the Listed Shares are held by the public.

EEQ’s performance depends entirely on the operations and management of EEP. Under a delegation of control agreement among EEQ, EEP and the General Partner, EEQ manages EEP’s business and affairs. The General Partner is an indirect, wholly owned subsidiary of Enbridge.

Under the EEP Partnership Agreement, except for the available cash that EEP is required to retain in respect of the i-units, EEP distributes all of its available cash to the General Partner and limited partners on a quarterly basis. EEQ does not, however, receive distributions of cash in respect of the i-units EEQ owns and does not otherwise have any cash flow attributable to EEQ’s ownership of the i-units.

 

44


Table of Contents

EEQ’s executive offices are located at 5400 Westheimer Court, Houston, Texas 77056, and its telephone number is (713) 627-5400.

Additional information about EEQ can be found on its website at https://www.enbridgemanagement.com/. The information contained in, or that can be accessed through, EEQ’s website is not intended to be incorporated into this proxy statement/prospectus. For additional information about EEQ, see the section titled “Where You Can Find More Information” beginning on page 161.

Merger Sub

5400 Westheimer Court

Houston, Texas 77056

Phone: (713) 627-5400

Merger Sub, a Delaware corporation and an indirect wholly owned subsidiary of Enbridge, was formed solely for the purpose of facilitating the Merger. Merger Sub has not carried on any activities or operations to date, except for those activities incidental to its formation and undertaken in connection with the transactions contemplated by the Merger Agreement. By operation of the Merger, Merger Sub will be merged with and into EEQ. As a result, EEQ will survive the Merger as a wholly owned subsidiary of Enbridge. Upon completion of the Merger, Merger Sub will cease to exist as a separate entity.

Merger Sub’s principal executive offices are located at 5400 Westheimer Court, Houston, Texas 77056, and its telephone number is (713) 627-5400.

Other Merger Transactions

On August 24, 2018, Enbridge and SEP announced that they entered into the SEP merger agreement on the same day under which Enbridge will acquire all of the outstanding public units of SEP, subject to the approval of the SEP unitholders. Under the terms of the SEP merger agreement, SEP public unitholders will receive 1.111 Enbridge common shares for each outstanding public unit of SEP.

On September 18, 2018, Enbridge and EEP announced that they entered into the EEP merger agreement on September 17, 2018 under which Enbridge will acquire all of the outstanding Class A common units of EEP, subject to the approval of the EEP unitholders. Under the terms of the EEP merger agreement, EEP unitholders (other than Enbridge and its subsidiaries) will receive 0.335 of an Enbridge common share for each Class A common unit of EEP, which is at parity with the exchange ratio in the Merger. The Merger is conditional upon the consummation of the EEP Merger.

Also on September 18, 2018, Enbridge and ENF announced that they entered into the arrangement agreement on September 17, 2018 under which Enbridge will acquire all of the issued and outstanding public common shares of ENF, subject to customary closing conditions. Under the terms of the arrangement agreement, each common share of ENF will be exchanged for 0.7350 of an Enbridge common share and cash of C$0.45 per common share of ENF, subject to adjustment for certain dividends declared on the Enbridge common shares and the common shares of ENF. The requisite approval of the ENF plan of arrangement by the ENF shareholders was obtained at a special meeting of ENF shareholders on November 6, 2018. Following the special meeting of ENF shareholders, ENF also received the final approval of the Court of Queen’s Bench of Alberta with respect to the ENF plan of arrangement.

For more information on the Other Merger Transactions, see the section titled “Where You Can Find More Information” beginning on page 161.

 

45


Table of Contents

The Special Meeting

EEQ is providing this proxy statement/prospectus to the EEQ shareholders for the solicitation of proxies to be voted at the special meeting that EEQ has called for the purposes described below. This proxy statement/prospectus is first being mailed to EEQ shareholders on or about [                ] and provides EEQ shareholders with the information they need to know about the Merger and the proposals to be able to vote or instruct their vote to be cast at the special meeting.

Date, Time and Place

The special meeting will be held on December 17, 2018 at 10:00 a.m., local time, at Hilton Houston Post Oak by the Galleria, 2001 Post Oak Boulevard, Houston, Texas 77056.

Purpose

At the special meeting, you will be asked to vote solely on the following proposals:

 

   

Proposal 1: To consider and vote on the EEQ Merger Proposal;

 

   

Proposal 2: To consider and vote on the Waiver Proposal;

 

   

Proposal 3: To consider and vote on the EEQ LLC Agreement Amendment Proposal;

 

   

Proposal 4: To consider and vote on the EEQ Adjournment Proposal;

 

   

Proposal 5: To consider and vote on the EEP Merger Proposal in order to determine how the EEP i-units will be voted at the special meeting in which the EEP unitholders will vote on the EEP merger agreement; and

 

   

Proposal 6: To consider and vote on the EEQ Adjournment Proposal in order to determine how the EEP i-units will be voted at the EEP special meeting on the proposal to approve the EEP merger agreement.

Special Committee and the EEQ Board Recommendation

The Special Committee recommends that you vote:

 

   

FOR” the EEQ Merger Proposal;

 

   

FOR” the Waiver Proposal; and

 

   

FOR” the EEQ LLC Agreement Amendment Proposal.

The EEQ Board recommends that you vote:

 

   

FOR” any EEQ Adjournment Proposal;

 

   

FOR” the EEP Merger Proposal; and

 

   

FOR” any EEP Adjournment Proposal.

The Special Committee and the EEQ Board considered the benefits of the Merger Agreement, the Merger, the Waiver, the EEQ LLC Agreement Amendment and the related transactions as well as the associated risks and, acting in good faith, unanimously (1) determined that the Merger Agreement, the transactions contemplated thereby, including the Merger, and the EEQ LLC Agreement Amendment, are fair and reasonable to EEQ, including the Unaffiliated EEQ Shareholders, and (2) approved the Merger Agreement, the transactions contemplated thereby, including the Merger, and the EEQ LLC Agreement

 

46


Table of Contents

Amendment on the terms and subject to the conditions set forth in the Merger Agreement. The Special Committee recommended that the EEQ Board approve the Merger Agreement and the transactions contemplated thereby, including the Merger. The EEQ Board directed that the Merger Agreement, the Waiver and the EEQ LLC Agreement Amendment be submitted to the shareholders of EEQ for their approval. Each of the Special Committee and the EEQ Board recommends that the shareholders of EEQ approve the EEQ Merger Proposal, the Waiver Proposal and the EEQ LLC Agreement Amendment Proposal. See the sections titled The Merger—Recommendation of the Special Committee” beginning on page 78, “The Merger—Recommendation of the EEQ Board” beginning on page 78 and “The Merger—Reasons for the Recommendation of the Special Committee” beginning on page 78.

In considering the recommendation of the Special Committee and the EEQ Board with respect to the Merger Agreement and the transactions contemplated thereby, the Waiver and the EEQ LLC Agreement Amendment, you should be aware that some of EEQ’s directors and executive officers may have interests that are different from, or in addition to, the interests of EEQ shareholders more generally. See the section titled “The Merger—Relationship of the Parties to the Merger Agreement” beginning on page 96.

See the complete EEP proxy statement/prospectus attached as Annex D to this proxy statement/prospectus for further detail regarding the EEP merger agreement and the related proposals.

Record Date; Outstanding EEQ Shares; Shares Entitled to Vote

The Record Date for the special meeting is November 5, 2018. Only holders of outstanding EEQ shares as of the close of business on the Record Date will be entitled to receive notice of, and to vote at, the special meeting or any adjournment or postponement thereof. The General Partner and its affiliates are not entitled to vote Listed Shares owned by them on the EEQ Merger Proposal, the Waiver Proposal or the EEQ LLC Agreement Amendment Proposal and such Listed Shares are not considered outstanding for purposes of those Proposals.

As of November 5, 2018, there were 98,611,085.310591 Listed Shares issued and outstanding, of which 11,524,315.661566 were owned by Enbridge and its affiliates, and 7.434953 Voting Shares, all of which were owned by Enbridge and its affiliates. Each holder of Listed Shares is entitled to one vote for each share owned as of the Record Date on the matters for which such holder of Listed Shares is entitled to vote.

A complete list of EEQ shareholders entitled to vote at the special meeting will be available for inspection at the principal place of business of EEQ during regular business hours for a period of no less than ten days before the special meeting and at the place of the special meeting during the meeting.

Quorum

A quorum is the number of shares that must be present, in person or by proxy, in order for business to be transacted at a meeting of the EEQ shareholders. A quorum of EEQ shareholders is required to approve the Proposals at the special meeting, but not to approve any adjournment of the meeting. The presence, in person or by proxy, of EEQ shareholders representing a majority of the Listed Shares outstanding on the Record Date, other than Listed Shares owned by the General Partner and its affiliates, will constitute a quorum for the special meeting.

Required Vote

The approval of EEQ Merger Proposal, including the approval of the Merger Agreement, the Waiver Proposal and the EEQ LLC Agreement Amendment Proposal require the affirmative vote of the holders of a majority of the outstanding Listed Shares (other than the Excluded Shares) entitled to vote on such matters at a meeting of the holders of Listed Shares. Pursuant to the terms of the EEQ LLC Agreement, the special meeting may be adjourned from time to time by the affirmative vote of a majority of the outstanding EEQ shares represented either in person or by proxy at the special meeting, whether or not a quorum exists.

 

47


Table of Contents

The EEQ shareholders cannot themselves approve the EEP merger agreement. The vote of the EEQ shareholders to approve the EEP Merger Proposal, including the EEP merger agreement, will determine only how the EEP i-units will be voted at the EEP special meeting. Approval of the EEP merger agreement requires the affirmative vote or consent of (1) the holders of at least 6623% of the outstanding EEP units (other than the EEP Class F units), and (2) the holders of a majority of the outstanding EEP Class A common units (other than EEP Class A common units held by Enbridge and its affiliates) and the outstanding EEP i-units (other than EEP i-units voted at the direction of Enbridge and its affiliates), voting together as a single class, in each case entitled to vote on such matter at the EEP special meeting or any adjournment or postponement thereof. If submitted to a vote of EEP unitholders, approval of an adjournment of the EEP special meeting from time to time to solicit additional proxies, if there are not sufficient votes to approve the EEP merger agreement at the time of the EEP special meeting, requires (1) if a quorum does not exist, the affirmative vote of the holders of a majority of the outstanding EEP units represented either in person or by proxy at the special meeting or (2) if a quorum does exist, the affirmative vote of 6623% of the outstanding EEP units represented either in person or by proxy at the special meeting.

Share Ownership of and Voting by Enbridge and EEQ’s Directors and Executive Officers

As of November 5, 2018, Enbridge and its subsidiaries held in the aggregate approximately 11.5 million Listed Shares, representing approximately 11.7% of the outstanding Listed Shares, and approximately 7.4 Voting Shares, representing all of the outstanding Voting Shares. The directors and executive officers, and their affiliates, of EEQ held and were entitled to vote, in the aggregate, Listed Shares representing less than 1.0% of the outstanding Listed Shares as of November 5, 2018.

Enbridge and its subsidiaries are generally not entitled to vote on the Merger Agreement, but Enbridge has agreed in the Merger Agreement that, subject to limited exceptions, it and its subsidiaries would vote their EEQ shares FOR the EEQ Merger Proposal, FOR the Waiver Proposal and FOR the EEQ LLC Agreement Amendment Proposal (in each case, to the extent that they are entitled to vote). In addition, we believe that Enbridge and its subsidiaries will vote FOR any applicable Adjournment Proposal and FOR the EEP Merger Proposal. We believe EEQ’s directors and executive officers intend to vote all of their EEQ shares FOR the EEQ Merger Proposal, FOR the Waiver Proposal and FOR the EEQ LLC Agreement Amendment Proposal. We believe EEQ’s directors and executive officers intend to vote all of their EEQ shares FOR any applicable Adjournment Proposal and FOR the EEP Merger Proposal.

Voting of Shares by Holders of Record

If you are entitled to vote at the special meeting and hold your EEQ shares in your own name, you can submit a proxy or vote in person by completing a ballot at the special meeting. However, we encourage you to submit a proxy before the special meeting even if you plan to attend the special meeting in order to ensure that your shares are voted. A proxy is a legal designation of another person to vote your EEQ shares on your behalf in the manner you instruct. If you hold EEQ shares in your own name, you may submit a proxy for your EEQ shares by:

 

   

calling the toll-free number specified on the enclosed proxy card and following the instructions when prompted;

 

   

accessing the Internet website specified on the enclosed proxy card and following the instructions provided to you; or

 

   

filling out, signing and dating the enclosed proxy card and mailing it in the prepaid envelope included with these proxy materials.

When you submit a proxy by telephone or through the Internet, your proxy is recorded immediately. We encourage you to submit your proxy using these methods whenever possible. If you submit a proxy by telephone or the Internet website, please do not return your proxy card by mail.

 

48


Table of Contents

All Listed Shares represented by each properly executed and valid proxy received before the special meeting will be voted in accordance with the instructions given on the proxy. If an EEQ shareholder executes a proxy card without giving instructions, the EEQ shares represented by that proxy card will be voted FOR approval of the proposal to approve the EEQ Merger Proposal, FOR the approval of the Waiver Proposal, FOR the approval of the EEQ LLC Agreement Amendment Proposal, FOR the EEP Merger Proposal and FOR approval of any Adjournment Proposal.

Your vote is important. Accordingly, please submit your proxy by telephone, through the Internet or by mail, whether or not you plan to attend the meeting in person. Proxies must be received by 11:59 p.m., Eastern Time, on [                ], [                ].

Voting of Shares Held in Street Name

If your EEQ shares are held in an account at a bank, broker, nominee, trust company or other fiduciary, you must instruct the bank, broker, nominee, trust company or other fiduciary on how to vote your EEQ shares by following the instructions that the bank, broker, nominee, trust company or other fiduciary provides to you with these proxy materials. Most banks, brokers, nominees, trust companies and other fiduciaries offer the ability for shareholders to submit voting instructions by mail by completing a voting instruction card, by telephone and via the Internet.

If you hold your EEQ shares in a brokerage account and you do not provide voting instructions to your broker, your EEQ shares will not be voted on any proposal, as under the current rules of the NYSE, brokers do not have discretionary authority to vote on the proposal to approve the Merger Agreement or any adjournment proposal. Since there are no items on the agenda which your broker has discretionary authority to vote upon, there will be no broker non-votes present at the special meeting.

If you hold EEQ shares through a bank, broker, nominee, trust company or other fiduciary and wish to vote your EEQ shares in person at the special meeting, you must obtain a legal proxy from your bank, broker, nominee, trust company or other fiduciary and present it to the inspector with your ballot when you vote at the special meeting.

Revocability of Proxies; Changing Your Vote

You may revoke your proxy and/or change your vote at any time before your proxy is voted at the special meeting. If you are an EEQ shareholder of record, you can do this by:

 

   

sending a written notice stating that you revoke your proxy bearing a date later than the date of the proxy to EEQ at 5400 Westheimer Court, Houston, Texas 77056, Attn: Corporate Secretary;

 

   

submitting a valid, later-dated proxy by mail, telephone or Internet; or

 

   

attending the special meeting and voting by ballot in person (your attendance at the special meeting will not, by itself, revoke any proxy that you have previously given).

If you choose to revoke your proxy by written notice or submit a later-dated proxy, you must do so by 11:59 p.m., Eastern Time, on the day before the special meeting.

If you hold your EEQ shares through a bank, broker, nominee, trust company or other fiduciary, you must follow the directions you receive from your bank, broker, nominee, trust company or other fiduciary, in order to revoke or change your vote.

Solicitation of Proxies

EEQ will bear all costs and expenses in connection with the solicitation of proxies from its shareholders, except that Enbridge has agreed to pay all expenses of printing and mailing this proxy statement/prospectus and

 

49


Table of Contents

all filing fees payable to the SEC in connection with this proxy statement/prospectus. In addition to the solicitation of proxies by mail, EEQ will request that banks, brokers and other record holders send proxies and proxy material to the beneficial owners of EEQ shares and secure their voting instructions, if necessary. EEQ will reimburse the banks, brokers and other record holders for their reasonable expenses in taking those actions. EEQ has also made arrangements with D.F. King & Co., Inc. to assist in soliciting proxies and in communicating with EEQ shareholders and estimates that it will pay them a fee of approximately US$15,000, plus fees on a per call basis and reasonable out-of-pocket fees and expenses for these services.

EEQ shareholders should not send share certificates with their proxies. A letter of transmittal and instructions for the surrender of the EEQ share certificates will be mailed to EEQ shareholders shortly after the completion of the Merger.

Householding

The SEC has adopted a rule concerning the delivery of annual reports and proxy statements. It permits EEQ, with your permission, to send a single notice of meeting and, to the extent requested, a single set of this proxy statement/prospectus to any household at which two or more shareholders reside if EEQ believes they are members of the same family. This rule is called “householding”, and its purpose is to help reduce printing and mailing costs of proxy materials.

A number of brokerage firms have instituted householding. If you and members of your household have multiple accounts holding EEQ shares, you may have received a householding notification from your broker. Please contact your broker directly if you have questions, require additional copies of this proxy statement/prospectus or wish to revoke your decision to household. These options are available to you at any time.

Adjournments

Adjournments may be made from time to time for the purpose of, among other things, soliciting additional proxies. The special meeting may be adjourned from time to time by the affirmative vote of the holders of a majority of the outstanding EEQ shares represented either in person or by proxy at the special meeting, whether or not a quorum exists. When a meeting of EEQ shareholders is adjourned to another time or place, notice need not be given of the adjourned meeting and a new record date need not be fixed if the time and place are announced at the meeting at which the adjournment is taken, unless such adjournment will be for more than 45 days. At the adjourned meeting, EEQ may transact any business that might have been transacted at the original meeting. If the adjournment is for more than 45 days or if a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting will be given. Proxies submitted by EEQ shareholders for use at the special meeting will be used at any adjournment or postponement of the special meeting. References to the special meeting in this proxy statement/prospectus are to such special meeting as adjourned or postponed.

Attending the Special Meeting

All holders of outstanding EEQ shares as of the close of business on the record date, or their duly appointed proxies, may attend the special meeting. Seating, however, is limited. Admission to the special meeting will be on a first-come, first-served basis. Registration will begin at 9:00 a.m., local time, and seating will begin at 9:30 a.m., local time. Cameras, recording devices and other electronic devices will not be permitted at the special meeting.

Shareholders will be asked to present valid picture identification, such as a driver’s license or passport. Please note that if you hold your EEQ shares in street name, you will also need to bring a copy of the voting instruction card that you receive from your bank, broker, nominee, trust company or other fiduciary in connection with the special meeting or a brokerage statement reflecting your EEQ share ownership as of the close of business on the record date and check in at the registration desk at the special meeting.

 

50


Table of Contents

Assistance

If you need assistance in completing your proxy card, have questions regarding the special meeting, or would like additional copies, without charge, of this proxy statement/prospectus, please contact D.F. King & Co., Inc. toll-free at (800) 207-3159 (banks and brokers call collect at (212) 269-5550) or by email at Enbridge@dfking.com.

 

51


Table of Contents

PROPOSAL 1: THE EEQ MERGER PROPOSAL

EEQ shareholders are being asked to approve the Merger Agreement. Approval of the EEQ Merger Proposal is a condition to the closing of the Merger. If the EEQ Merger Proposal is not approved, the Merger will not occur. For a detailed discussion of the Merger and the Merger Agreement, see the sections titled “The Merger” beginning on page 58 and “The Merger Agreement” beginning on page 100.

Required Vote

The approval of the EEQ Merger Proposal, including the approval of the Merger Agreement, requires the affirmative vote of the holders of a majority of the outstanding Listed Shares (other than the Excluded Shares) entitled to vote on such matter at a meeting of the holders of Listed Shares.

Vote Recommendation

The Special Committee and the EEQ Board recommend that EEQ shareholders vote “FOR” the approval of the EEQ Merger Proposal.

 

52


Table of Contents

PROPOSAL 2: THE WAIVER PROPOSAL

EEQ shareholders are being asked to approve the waiver of Section 9.01(a)(v) of the EEQ LLC Agreement. Under Section 9.01(a)(v) of the EEQ LLC Agreement, EEQ is not, except in certain circumstances, permitted to effect a merger or similar transaction involving EEQ. As a result, approval of the Waiver Proposal is a condition to the closing of the Merger. If the Waiver Proposal is not approved, the Merger will not occur. For a detailed discussion of the terms and conditions of the Merger, see the section titled “The Merger Agreement—Conditions to the Completion of the Merger” beginning on page 117.

Required Vote

The approval of the Waiver Proposal requires the affirmative vote of the holders of a majority of the outstanding Listed Shares (other than the Excluded Shares) entitled to vote on such matter at a meeting of the holders of Listed Shares.

Vote Recommendation

The Special Committee and the EEQ Board recommends that EEQ shareholders vote “FOR” the approval of the Waiver Proposal.

 

53


Table of Contents

PROPOSAL 3: THE EEQ LLC AGREEMENT AMENDMENT PROPOSAL

EEQ shareholders are being asked to approve the EEQ LLC Agreement Amendment Proposal. The EEQ LLC Agreement Amendment contemplates the enfranchisement of the Listed Shares, with each Listed Share entitled to one vote per share, by providing that the holders of the Listed Shares would be entitled to vote with the holders of the Voting Shares as a single class on certain matters, including the election or removal of directors and any further amendments of the EEQ LLC Agreement.

The amendment of the EEQ LLC Agreement, as provided for by the EEQ LLC Agreement Amendment, is a condition to the closing of the Merger. Therefore, if the EEQ LLC Agreement is not amended, the Merger will not occur. For a detailed discussion of the terms and conditions of the Merger, see the section titled “The Merger Agreement—Conditions to the Completion of the Merger” beginning on page 117.

Required Vote

The approval of the EEQ LLC Agreement Amendment Proposal requires the affirmative vote of the holders of a majority of the outstanding Listed Shares (other than the Excluded Shares) entitled to vote on such matter at a meeting of the holders of Listed Shares.

Vote Recommendation

The Special Committee and the EEQ Board recommend that EEQ shareholders vote “FOR” the approval of the EEQ LLC Agreement Amendment Proposal.

 

54


Table of Contents

PROPOSAL 4: THE EEQ ADJOURNMENT PROPOSAL

EEQ shareholders are being asked to approve the adjournment of the special meeting from time to time, if necessary or appropriate, to solicit additional proxies in favor of the above proposals, if there are insufficient votes at the time of such adjournment to approve such proposals. If, at the special meeting, the number of Listed Shares present or represented and voting in favor of the EEQ Merger Proposal, the Waiver Proposal or the EEQ LLC Agreement Amendment Proposal is insufficient to approve the corresponding proposal, EEQ may move to adjourn the special meeting from time to time in order to enable the EEQ Board to solicit additional proxies for approval of such proposals.

Required Vote

Pursuant to the terms of the EEQ LLC Agreement, the special meeting may be adjourned from time to time by the affirmative vote of a majority of the outstanding EEQ shares represented either in person or by proxy at the special meeting, whether or not a quorum exists.

Vote Recommendation

The EEQ Board recommends that EEQ shareholders vote “FOR” the approval of the EEQ Adjournment Proposal.

 

55


Table of Contents

PROPOSAL 5: THE EEP MERGER PROPOSAL

EEQ shareholders are being asked to approve the EEP merger agreement. EEQ will vote its i-units in EEP on the EEP Merger Proposal in the same manner that the EEQ shareholders vote their EEQ shares on this proposal.

Because the Merger is contingent upon the EEP merger, a vote against or to abstain from voting on the proposal to approve the EEP merger agreement is indirectly a vote against the Merger Agreement. Please see the complete EEP proxy statement/prospectus attached as Annex D to this proxy statement/prospectus for further detail regarding the EEP merger agreement and this proposal.

Required Vote

Approval of the EEP merger agreement requires the affirmative vote by (1) the holders of at least 6623% of the outstanding EEP units (other than the EEP Class F units), and (2) the holders of a majority of the outstanding EEP Class A common units (other than any EEP Class A common units held by Enbridge and its affiliates) and the outstanding EEP i-units (other than EEP i-units voted at the direction of Enbridge and its affiliates), voting together as a single class, in each case entitled to vote on such matter at the EEP special meeting or any adjournment or postponement thereof.

Vote Recommendation

The EEQ Board recommends that EEQ shareholders vote “FOR” the approval of the EEP Merger Proposal.

 

56


Table of Contents

PROPOSAL 6: THE EEP ADJOURNMENT PROPOSAL

EEQ shareholders are being asked to approve a proposal that will give the EEQ Board the authority to adjourn the EEP special meeting from time to time, if necessary to solicit additional proxies if there are not sufficient votes to approve the EEP merger agreement at the time of the EEP special meeting. EEQ will vote its i-units in EEP on EEP’s adjournment proposal in the same manner that the EEQ shareholders vote their EEQ shares on this proposal. Please see the complete EEP proxy statement/prospectus attached as Annex D to this proxy statement/prospectus for further detail regarding this proposal.

Required Vote

If submitted to a vote of EEP unitholders, approval of an adjournment of the EEP special meeting from time to time to solicit additional proxies, if there are not sufficient votes to approve the EEP merger agreement at the time of the EEP special meeting, requires (1) if a quorum does not exist, the affirmative vote of the holders of a majority of the outstanding EEP units represented either in person or by proxy at the special meeting or (2) if a quorum does exist, the affirmative vote of 6623% of the outstanding EEP units represented either in person or by proxy at the special meeting.

Vote Recommendation

The EEQ Board recommends that EEQ shareholders vote “FOR” the approval of the EEP Adjournment Proposal.

 

57


Table of Contents

THE MERGER

This discussion of the Merger is qualified in its entirety by reference to the Merger Agreement, which is attached to this proxy statement/prospectus as Annex A and incorporated by reference herein in its entirety. You should read the entire Merger Agreement carefully as it is the legal document that governs the Merger.

Transaction Structure

The Merger Agreement provides that, upon the terms and conditions in the Merger Agreement, and in accordance with the EEQ LLC Agreement, the Delaware Limited Liability Company Act (“DLLCA”), at the Effective Time of the Merger, Merger Sub will be merged with and into EEQ, with EEQ being the surviving entity of the Merger and a wholly owned subsidiary of Enbridge.

Merger Consideration

At the Effective Time, by virtue of the Merger and without any action on the part of the parties or any holder of EEQ securities, each Listed Share issued and outstanding immediately prior to the Effective Time (other than the Excluded Shares) will be converted into the right to receive Enbridge common shares in exchange for such holder’s Listed Shares at the Exchange Ratio.

If the Exchange Ratio would result in an EEQ shareholder being entitled to receive, after aggregating all fractional shares to which such holder would otherwise be entitled to receive in connection with the Merger and rounding to three decimal places, a fraction of an Enbridge common share, such holder will receive a cash payment (without interest, rounded down to the nearest cent) in lieu of such fractional Enbridge common share in an amount equal to the product obtained by multiplying (1) the amount of the fractional share interest in an Enbridge common share to which such holder would be entitled and (2) an amount equal to the average of the volume-weighted average price per share of Enbridge common shares on the NYSE (as reported by Bloomberg L.P., or, if not reported therein, in another authoritative source mutually selected by Enbridge and EEQ) on the trading day immediately prior to the Effective Time for ten trading days ending on the fifth full business day immediately prior to the Closing Date.

Background of the Merger

The Enbridge Board and senior management of Enbridge, with the assistance of Enbridge’s financial and legal advisors, from time to time review and consider various potential strategic opportunities and alternatives in light of industry, regulatory and economic trends and developments. As part of such review, Enbridge has evaluated potential transactions, including various transactions with respect to its sponsored vehicles, to advance its strategic objective of streamlining Enbridge’s business to create value for Enbridge’s and its sponsored vehicles’ security holders.

On September 6, 2016, Enbridge and Spectra Energy announced that they had entered into a definitive merger agreement under which Enbridge and Spectra Energy would combine in a stock-for-stock merger transaction. In connection therewith, Enbridge began to conduct an internal review with the objective of improving EEP’s financial position and future outlook.

On January 27, 2017, in connection with their quarterly business updates, Enbridge and EEP announced that the strategic review of EEP was ongoing, and EEP was considering (a) the sustainability of EEP’s current level of distributions to unitholders, (b) further cost efficiency measures, (c) the potential extension of existing supportive actions by Enbridge with respect to EEP, (d) the sale of a portion or all of its remaining interests in the natural gas gathering and processing assets, including to Enbridge, and (e) potential further restructuring of the general partner incentive distribution rights.

On February 27, 2017, Enbridge and Spectra Energy completed their previously announced combination.

 

58


Table of Contents

On April 28, 2017, EEP announced that its strategic review had concluded, and it had taken several actions to strengthen EEP’s financial position and outlook, including modifying EEP’s capital structure, including its incentive distribution mechanism, and reducing quarterly distributions from US$0.583 per unit to US$0.350 per unit.

Following the conclusion of the strategic review of EEP, Enbridge continued throughout 2017 to evaluate and consider various potential strategic opportunities and alternatives, including with respect to EEP and its other sponsored vehicles.

On November 2, 2017, Enbridge filed with the SEC Amendment No. 4 to the Schedule 13D, filed by Enbridge and certain of its affiliates with the SEC on December 4, 2008 with respect to its investment in EEP (the “EEP Schedule 13D”). Enbridge disclosed in Amendment No. 4 to the EEP Schedule 13D that, as part of its ongoing evaluation of its investment in EEP, and alternatives to that investment, including a potential consolidation, acquisition or sale of assets or EEP units, or changes to EEP’s capital structure, Enbridge may, from time to time, formulate plans or proposals with respect to such matters and hold discussions with or make formal proposals to the EEQ Board, in its capacity as the board of directors of the delegate of the General Partner, other holders of EEP units or other third parties regarding such matters. Also on November 2, 2017, Enbridge filed with the SEC Amendment No. 2 to the Schedule 13D, filed by Enbridge and certain of its affiliates with the SEC on October 28, 2002 with respect to its investment in EEQ (the “EEQ Schedule 13D”). Enbridge disclosed in Amendment No. 2 to the EEQ Schedule 13D that, as part of its ongoing evaluation of its investment in EEQ, and alternatives to that investment, including a potential consolidation, acquisition or sale of assets or Listed Shares, or changes to EEQ’s capital structure, Enbridge may, from time to time, formulate plans or proposals with respect to such matters and hold discussions with or make formal proposals to the EEQ Board, in its capacity as the board of directors of EEQ, other holders of Listed Shares or other third parties regarding such matters.

On November 29, 2017, Enbridge announced the finalization of its strategic plan and financial outlook for 2018 through 2020, including Enbridge’s key objectives of growing organically, minimizing risk and streamlining Enbridge’s business.

On December 22, 2017, the United States implemented U.S. tax reform. The Tax Cuts and Jobs Act (“TCJA”) was signed into law and became enacted for tax purposes. Substantially all of the provisions of the TCJA are effective for taxation years beginning after December 31, 2017. The most significant change included in the TCJA was a reduction in the corporate federal income tax rate from 35% to 21%. This tax rate change caused EEP to reduce the income tax allowance component of the tolls in its Federal Energy Regulatory Commission (the “FERC”) regulated cost-of-service based Facility Surcharge Mechanism projects.

On February 15, 2018, EEP announced in connection with its quarterly business update that the total annual impact to EEP of U.S. tax reform was expected to be a US$55 million per year reduction to distributable cash flow, net of noncontrolling interests.

On March 15, 2018, the FERC revised a long-standing policy, announcing in a revised policy statement that it would no longer permit entities organized as master limited partnerships (“MLPs”) to recover an income tax allowance for interstate pipeline assets with cost-of-service rates. The FERC also, among other things, issued a notice seeking comment on how the FERC should address changes related to accumulated deferred income taxes (“ADIT”) (collectively, with the revised policy statement, the “March FERC Announcement”). The trading price of Enbridge’s, EEP’s and EEQ’s publicly-traded securities reacted negatively to the March FERC Announcement, including (a) Enbridge common shares closing 4.9% lower the day of the March FERC Announcement and 4.8% lower three weeks after the day of the March FERC Announcement, (b) the EEP Class A common units closing 17.3% lower the day of the March FERC Announcement and 23.7% lower three weeks after the day of the March FERC Announcement and (c) the Listed Shares closing 15.6% lower the day of the March FERC Announcement and 23.2% lower three weeks after the day of the March FERC Announcement,

 

59


Table of Contents

in each case, compared to their respective closing prices on the NYSE on the trading day immediately preceding the date of the March FERC Announcement.

On March 16, 2018, Enbridge announced that it was continuing to assess options to mitigate the effects of the March FERC Announcement on Enbridge’s sponsored vehicles, including through the acquisition of all of Enbridge’s sponsored vehicles by Enbridge, but that Enbridge did not expect a material impact to its previously disclosed 2018-2020 consolidated financial guidance as a result of the March FERC Announcement.

Also on March 16, 2018, EEP announced that, based on its preliminary assessment of the March FERC Announcement, the financial impact to EEP for 2018 was expected to be an approximate US$100 million reduction in revenues and US$60 million reduction to distributable cash flow, net of noncontrolling interests.

On April 24, 2018, the Enbridge Board held a telephonic meeting to discuss the financial effects of the March FERC Announcement on Enbridge, its sponsored vehicles, and the MLP market more broadly, as well as options with respect to minimizing those effects. Enbridge management highlighted the negative impact of the March FERC Announcement and the decline in the effectiveness of the MLP business model and recommended acceleration of Enbridge’s review of a potential corporate simplification.

Throughout April and May 2018, Enbridge management also developed updated projections for its sponsored vehicles, including extended five-year projections through 2022, in light of the March FERC Announcement and in connection with Enbridge’s review of a potential corporate simplification.

On May 9, 2018, in connection with its quarterly business update, EEP announced that the financial impact to EEP for 2018 from the combination of U.S. tax reform and the March FERC Announcement was expected to be a US$125 million reduction to distributable cash flow, net of noncontrolling interests, and exclusive of a payback of ADIT, and that EEP was continuing to evaluate options to mitigate the negative impact of the March FERC Announcement as previously announced.

On May 10, 2018, Enbridge released its quarterly report for the quarter ended March 31, 2018, which stated, among other things, that the March FERC Announcement was adversely affecting MLPs generally, including EEP, due to both the direct consequences of the changes in FERC policy and the possible negative impact on the longer-term availability of capital on attractive terms to EEP.

On May 16, 2018, the Enbridge Board held a telephonic meeting, which was also attended by representatives of Merrill Lynch, Pierce, Fenner & Smith Incorporated (“BofAML”) and Scotia Capital Inc., financial advisors to Enbridge, and Sullivan & Cromwell LLP (“S&C”) and McCarthy Tétrault LLP, legal advisors to Enbridge, to discuss Enbridge management’s conclusions and recommendations following completion of their review of a potential corporate simplification. Enbridge management noted that the unit and share prices of Enbridge’s sponsored vehicles, including EEP, weakened significantly following the March FERC Announcement, making them an ineffective source of capital for Enbridge, relative to alternative equity sources. Enbridge management also discussed potential alternatives to a buy-in of all of Enbridge’s sponsored vehicles, including maintaining Enbridge’s existing corporate structure or converting the sponsored vehicles into C-corporations for tax purposes but maintaining them as public vehicles. Following a discussion by the Enbridge Board of the potential risks and benefits of a buy-in of Enbridge’s sponsored vehicles and the viability of various alternatives, the Enbridge Board authorized Enbridge management to make an offer to each of its sponsored vehicles to acquire the outstanding public equity securities of the sponsored vehicles through separate combination transactions.

On May 17, 2018, representatives of Enbridge delivered a proposal (the “EEP Initial Proposal”) to the EEQ Board, in its capacity as the board of directors of the delegate of the General Partner, to acquire all of the outstanding EEP Class A common units not already owned by Enbridge and its affiliates through a merger between EEP and Winter Acquisition Sub II, LLC, at an exchange ratio of 0.3083 Enbridge common shares for

 

60


Table of Contents

each issued and outstanding publicly held EEP Class A common unit. On the same day, representatives of Enbridge delivered a separate proposal (the “EEQ Initial Proposal”) to the EEQ Board, in its capacity as the board of directors of EEQ, to acquire all of the outstanding Listed Shares not already owned by Enbridge and its affiliates through a merger between EEQ and Merger Sub, at an exchange ratio of 0.2887 Enbridge common shares for each issued and outstanding publicly held Listed Share. Also on the same day, representatives of Enbridge delivered proposals to each of SEP and ENF to acquire the outstanding publicly-traded equity securities of those sponsored vehicles, at exchange ratios of (a) 1.0123 Enbridge common shares for each issued and outstanding publicly held common unit of SEP, and (b) 0.7029 Enbridge common shares for each issued and outstanding publicly held common share of ENF.

On May 17, 2018, immediately following the delivery of the EEP Initial Proposal, EEQ Initial Proposal and the proposals with respect to SEP and ENF, Enbridge publicly announced that it had made such proposals and that Enbridge believed that both the direct consequences of the March FERC Announcement, as well as the adverse market effects following such announcement, weakened EEP and EEQ’s credit profile and made them ineffective and unreliable standalone financing vehicles to support Enbridge’s growth. Enbridge further announced that it believed that, on a standalone basis, EEP would face the cessation of distribution growth and potential reductions in cash distribution to unitholders as early as 2019. On the same day, Enbridge also amended its Schedule 13Ds with respect to its investments in SEP, EEP and EEQ.

On May 17, 2018, the EEQ Board held a telephonic meeting to discuss the offer received from Enbridge. Following that discussion, the EEQ Board, in its capacity as the board of directors of the delegate of the General Partner, formally constituted a special committee of the EEQ Board (the “EEP Special Committee” and together with the Special Committee, the “EEP/EEQ Special Committees”) and appointed Messrs. Connelly (Chair), Waldheim and Westbrook to serve on the EEP Special Committee. The EEQ Board, in its capacity as the board of directors of the delegate of the General Partner, authorized the EEP Special Committee to (a) review, evaluate, consider and negotiate the proposed acquisition by Enbridge, through a wholly owned subsidiary, of all of the EEP Class A common units that are not already owned by Enbridge and its affiliates (including the amount and form of consideration to be paid in connection therewith), (b) consider alternatives to such proposed transaction, if any, (c) approve or disapprove, as the case may be, such proposed transaction and the agreements related thereto, (d) make such recommendations to the EEQ Board as it deems appropriate, including whether or not the EEQ Board should approve such proposed transaction and the agreements related thereto, (e) make all determinations and take all actions with respect to such proposed transaction and the agreements related thereto as may be authorized and contemplated thereby, and (f) do all things that may, in the judgment of the Special Committee, be deemed necessary, appropriate or advisable to assist the EEQ Board in carrying out its responsibilities with respect to such proposed transaction.

Also on May 17, 2018, the EEQ Board, in its capacity as the board of directors of EEQ, also formally constituted the Special Committee and appointed Messrs. Connelly (Chair), Waldheim and Westbrook to the Special Committee. The EEQ Board, in its capacity as the board of directors of EEQ, authorized the Special Committee to (a) review, evaluate, consider and negotiate the proposed acquisition by Enbridge, through a wholly owned subsidiary, of all of the Listed Shares that are not already owned by Enbridge and its affiliates (including the amount and form of consideration to be paid in connection therewith), (b) consider alternatives to such proposed transaction, if any, (c) approve or disapprove, as the case may be, such proposed transaction and the agreements related thereto, (d) make such recommendations to the EEQ Board as it deems appropriate, including whether or not the EEQ Board should approve such proposed transaction, (e) make all determinations and take all actions with respect to such proposed transaction and the agreements related thereto as may be authorized and contemplated thereby, and (f) do all things that may, in the judgment of the Special Committee, be deemed necessary, appropriate or advisable to assist the EEQ Board in carrying out its responsibilities with respect to such proposed transaction. In establishing the EEP/EEQ Special Committees, the EEQ Board considered, among other things, that Mr. Connelly’s son was employed by Midcoast Operating, L.P. (“Midcoast”), which at the time was a subsidiary of Enbridge. Enbridge had previously announced on May 9, 2018, that it had entered into a definitive agreement to sell Midcoast and its subsidiaries, and such

 

61


Table of Contents

transaction was completed on August 1, 2018. The EEQ Board also took into consideration that Messrs. Connelly and Westbrook had previously served on the special committee of the EEQ Board that (in EEQ’s capacity as the delegate of the General Partner) reviewed and recommended the 2015 Transaction (the “2015 Special Committee”) and are named as defendants in the Derivative Action.

Throughout the process of considering the EEP Initial Proposal and the EEQ Initial Proposal, EEP and EEQ received communications from their respective unitholders and shareholders, which communications were provided to the EEP/EEQ Special Committees and their legal and respective financial advisors and considered by the EEP/EEQ Special Committees as part of the review process.

On May 17, 2018, Mr. Connelly contacted representatives of Bracewell regarding the potential engagement of Bracewell as legal advisor to the EEP/EEQ Special Committees. In connection with engaging Bracewell, the EEP/EEQ Special Committees considered, among other things, that Bracewell served as legal counsel to the 2015 Special Committee. An engagement letter dated May 17, 2018, detailing the terms of Bracewell’s engagement as legal advisor to the EEP Special Committee, was subsequently executed and an engagement letter dated May 17, 2018, detailing the terms of Bracewell’s engagement as legal advisor to the Special Committee, was subsequently executed.

Between May 17, 2018 and May 31, 2018, the EEP/EEQ Special Committees and Bracewell held discussions concerning whether the EEP Special Committee and the Special Committee should retain a single financial advisor for both committees or separate financial advisors for each committee. The EEP/EEQ Special Committees determined to retain separate financial advisors for each committee. On May 17, 2018, Mr. Connelly and representatives of Evercore Group L.L.C. (“Evercore”) discussed the potential engagement of Evercore as financial advisor to the EEP Special Committee. On May 17, 2018, Mr. Waldheim and representatives of Goldman Sachs discussed the potential engagement of Goldman Sachs as financial advisor to the Special Committee. Mr. Connelly also contacted representatives of a second investment bank regarding the potential engagement of such investment bank as financial advisor to the Special Committee.

On May 18, 2018, EEP and EEQ each issued a press release announcing the receipt of the EEP Initial Proposal and EEQ Initial Proposal, respectively, from Enbridge, and that the EEQ Board had established the EEP/EEQ Special Committees to review and consider such proposals.

On May 31, 2018, the EEP Special Committee held a meeting in person at the offices of Bracewell in Houston, Texas, with representatives of Bracewell and Evercore. Representatives of Bracewell provided an overview of the proposed Merger and the legal framework that governs the EEP Special Committee’s review, and representatives of Evercore provided an overview of the proposed Merger structure, process and timing. On June 4, 2018, Evercore delivered a disclosure letter regarding its relationships with Enbridge and its affiliates to the Special Committee and Bracewell. An engagement letter dated June 4, 2018, detailing the terms of Evercore’s engagement, was subsequently executed.

Also on May 31, 2018, the Special Committee held a meeting in person at the offices of Bracewell in Houston, Texas, with representatives of Bracewell. At such meeting, the Special Committee conducted interviews with two investment banks regarding their potential service as financial advisor to the Special Committee. Following such interviews, the Special Committee determined to retain Goldman Sachs as financial advisor to the Special Committee. On June 5, 2018, Goldman Sachs delivered an executed disclosure letter regarding certain of its relationships with Enbridge, EEP, ENF and SEP to the Special Committee and Bracewell. An engagement letter dated June 18, 2018, detailing the terms of Goldman Sachs’ engagement, was subsequently executed.

On June 3, 2018, the directors of the EEQ Board, in its capacity as the board of directors of the delegate of the General Partner, determined that (a) each member of the EEP Special Committee would receive a special retainer fee of US$40,000, plus US$1,500 for each related meeting of the EEP Special Committee (or

 

62


Table of Contents

subcommittee thereof) and an additional US$1,500 for any required travel to Houston, Texas for an in-person meeting, and (b) the Chair of the EEP Special Committee would receive an additional retainer fee of US$40,000. In the event that the EEP Merger is consummated, each member of the EEP Special Committee would receive an additional hourly fee of US$500 for any time spent in connection with any litigation arising out of their service on the EEP Special Committee. Also on June 3, 2018, the directors of the EEQ Board, in its capacity as the board of directors of EEQ, determined that (a) each member of the Special Committee would receive a special retainer fee of US$40,000, plus US$1,500 for each related meeting of the Special Committee (or subcommittee thereof) and an additional US$1,500 for any required travel to Houston, Texas for an in-person meeting, and (b) the Chair of the Special Committee would receive an additional retainer fee of US$40,000. In the event that the Merger is consummated, each member of the Special Committee would receive an additional hourly fee of US$500 for any time spent in connection with any litigation arising out of their service on the Special Committee.

On June 4, 2018, representatives of Bracewell held discussions with representatives of Friedlander & Gorris, P.A. (“Friedlander & Gorris”), counsel to the plaintiffs in the Derivative Action, concerning a possible meeting with the EEP/EEQ Special Committees and plaintiff’s counsel in the Derivative Action.

On June 5, 2018, members of Enbridge management, along with representatives of BofAML, S&C and Enbridge’s tax advisors, conducted an in-person presentation to the EEP/EEQ Special Committees at a joint meeting thereof, held at the offices of Enbridge in Houston, Texas. Representatives of Bracewell, Evercore and Goldman Sachs also were present during the meeting. During the meeting, representatives of Enbridge management explained to the EEP/EEQ Special Committees and their respective advisors the background to and strategic rationale for the proposed EEP merger, including, among other things, the decreasing fund flows and equity capital available to MLPs, industry trending toward simplification transactions and streamlined structures and the increasing focus on “self-funding” business models, the proposed Merger and the Other Merger Transactions, and Enbridge management’s five-year projections for Enbridge on a standalone basis and pro forma, taking into account the proposed EEP merger, the proposed Merger and the Other Merger Transactions, and standalone projections for EEP.

Also on June 5, 2018, after completion of the presentation from Enbridge management, the members of the EEP/EEQ Special Committees held a joint meeting with their respective advisors, including representatives of Bracewell, Evercore and Goldman Sachs, to discuss their initial impressions of the EEP Initial Proposal and the EEQ Initial Proposal and the process for evaluating the transactions. Also at the meeting, representatives of Bracewell advised the EEP/EEQ Special Committees that Friedlander & Gorris had requested a meeting with the EEP/EEQ Special Committees concerning the Derivative Action. Also at the meeting, each of the EEP Special Committee and the Special Committee determined to engage MNAT as special Delaware counsel to assist with its review of the EEP Initial Proposal and the EEQ Initial Proposal, respectively. In connection with engaging MNAT, the EEP/EEQ Special Committees considered, among other things, that MNAT is serving as legal counsel to certain defendants in the Derivative Action, including Messrs. Connelly and Westbrook. An engagement letter dated June 25, 2018, detailing the terms of MNAT’s engagement as legal advisor to the EEP Special Committee, was subsequently executed, and an engagement letter dated June 25, 2018, detailing the terms of MNAT’s engagement as legal advisor to the Special Committee, was subsequently executed.

On June 12, 2018, the EEP/EEQ Special Committees held a joint telephonic meeting with representatives of Bracewell and MNAT. During the meeting, the EEP/EEQ Special Committees discussed and considered the current structure of the two committees and their respective advisors. They considered, in particular, whether the two committees should be comprised of different individuals and whether the two committees should have separate and non-overlapping legal and financial advisors. Representatives of Bracewell and MNAT provided an overview of the provisions in the EEP Partnership Agreement and the EEQ LLC Agreement relating to the EEP/EEQ Special Committees’ respective roles in reviewing the transactions, and the many considerations relating to the structure of the two committees including, among other considerations, that (a) the proposed EEP merger and the proposed Merger would be negotiated simultaneously but that EEP and EEQ were each negotiating with Enbridge and not with one another, (b) the proposed Merger was conditioned upon the consummation of the

 

63


Table of Contents

proposed EEP merger, (c) the standards governing the approval of related-party transactions are substantially the same for both EEP and EEQ, and that each of the EEP Partnership Agreement and the EEQ LLC Agreement provide that the fair and reasonable nature of a transaction shall be considered in the context of all similar or related transactions and (d) Messrs. Connelly, Waldheim and Westbrook owned EEP Class A common units and did not own Listed Shares. Also during the meeting, the EEP/EEQ Special Committees, together with their legal advisors, discussed certain challenges and considerations in evaluating the proposed EEP merger and the proposed Merger, respectively, including, among other things, the taxable nature of the proposed EEP merger to EEP unitholders, combined with the fact that the merger consideration consisted of Enbridge common shares, and the fact that the U.S. federal tax consequences of the proposed EEP merger would vary among EEP unitholders depending upon, among other things, the EEP unitholders’ individual tax characteristics and how long they had owned the EEP Class A common units. During the meeting and in light of the factors discussed with Bracewell and MNAT, Messrs. Connelly, Waldheim and Westbrook determined that each of the EEP Special Committee and the Special Committee would continue to be comprised of the same persons and be represented by a single set of legal advisors and separate financial advisors, as was currently the arrangement.

On June 13, 2018, representatives of Bracewell and MNAT held discussions with representatives of Friedlander & Gorris concerning a possible meeting with the EEP/EEQ Special Committees and plaintiff’s counsel in the Derivative Action.

On June 13, 2018, Enbridge opened an electronic data room to provide materials responsive to due diligence requests made by the EEP/EEQ Special Committees and their legal and respective financial advisors. From June 13, 2018, until the execution of the EEP merger agreement and the Merger Agreement, the EEP/EEQ Special Committees and their respective advisors conducted due diligence on Enbridge, EEP and EEQ, including through the review of materials made available in the data room and conference calls between representatives of the EEP/EEQ Special Committees and their respective advisors and representatives of Enbridge.

During the week of June 18, 2018, representatives of the EEP/EEQ Special Committees provided Enbridge initial due diligence requests with respect to certain legal and financial information of Enbridge.

On June 27, 2018, the EEP Special Committee held a telephonic meeting with representatives of Bracewell and Evercore. During the meeting, representatives of Evercore presented a preliminary analysis to the EEP Special Committee of the financial terms of the proposed EEP merger based on the financial projections received from EEP and Enbridge management (the “Management Projections”). Also during the meeting, representatives of Bracewell provided the EEP Special Committee with an overview of communications received from EEP unitholders and EEQ shareholders and a summary of the March FERC Announcement.

On June 28, 2018, the Minnesota Public Utilities Commission approved the issuance of a Certificate of Need and pipeline route for construction of Enbridge’s United States Line 3 Replacement Program in Minnesota (the “Line 3 Approval”). The Enbridge common shares closed 4.5% percent higher the day of the Line 3 Approval and 10.8% percent higher one week after the day of the Line 3 Approval, the EEP Class A common units closed 3.7% higher the day of the Line 3 Approval and 8.6% higher one week after the day of the Line 3 Approval, and the Listed Shares closed 2.5% higher the day of the Line 3 Approval and 8.9% higher one week after the day of the Line 3 Approval, in each case, compared to their respective closing prices on the NYSE on the trading day immediately preceding the date of the Line 3 Approval.

On June 28, 2018, the Special Committee held a telephonic meeting with representatives of Bracewell, MNAT and Goldman Sachs. During the meeting, representatives of Goldman Sachs discussed with the Special Committee Goldman Sachs’ preliminary, illustrative financial analysis of the proposed Merger. At the end of the meeting, after discussing Goldman Sachs’ presentation, the Special Committee engaged its advisors in a discussion of negotiating strategy including, among other things, whether to value the Listed Shares and the EEP Class A common units at parity for purposes of negotiation and whether to submit a joint responsive proposal to Enbridge for both the proposed Merger and the proposed EEP merger instead of separate responsive proposals,

 

64


Table of Contents

and the committee agreed to defer consideration of any potential counterproposal until after Goldman Sachs had received certain additional financial and other information from EEP and Enbridge and until after such time as the Special Committee had the opportunity to further consider the Derivative Action. Also during the meeting, representatives of Bracewell provided an overview of legal considerations relating to the proposed Merger, including, among other things, issues relating to the March FERC Announcement and a summary of purchase rights held by Enbridge and certain of its affiliates under the EEQ LLC Agreement and its legal advisors’ views on whether any of those purchase rights were implicated by the proposed Merger or the proposed EEP merger.

On July 6, 2018, representatives of S&C provided representatives of Bracewell with (a) an initial draft of the EEP merger agreement and (b) an initial draft of the Merger Agreement. The key economic terms of the initial draft merger agreements were consistent with the EEP Initial Proposal and the EEQ Initial Proposal, respectively.

On July 10, 2018, the Special Committee held a telephonic meeting with representatives of Bracewell, MNAT and Goldman Sachs. During the meeting, representatives of Goldman Sachs discussed with the Special Committee Goldman Sachs’ preliminary, illustrative financial analysis of the proposed Merger.

On July 11, 2018, the EEP Special Committee held a telephonic meeting with representatives of Bracewell, MNAT and Evercore. During the meeting, representatives of Evercore presented the EEP Special Committee with a preliminary analysis of the financial terms of the proposed EEP merger. The EEP Special Committee also discussed the fact that representatives of BofAML had advised Evercore prior to the meeting that Enbridge was unwilling to convert EEP into a C-corporation for tax purposes. Following the presentation, the EEP Special Committee and its advisors engaged in a discussion regarding Evercore’s presentation and the EEP Special Committee’s strategy for developing a potential responsive proposal to Enbridge including, among other things, whether to value the EEP Class A common units and the Listed Shares at parity for purposes of negotiation and whether to submit a joint responsive proposal for each of the proposed Merger and the proposed EEP merger, and the committee determined to prepare a joint responsive proposal to Enbridge in respect of both the proposed EEP merger and the proposed Merger and agreed to defer consideration of any potential counter proposal until after its advisors could complete additional diligence and until after such time as the EEP Special Committee had the opportunity to further consider the Derivative Action. The EEP Special Committee further determined to convene a joint meeting of the EEP/EEQ Special Committees and their respective advisors once the additional diligence had been completed. Also during the meeting, representatives of Bracewell provided an analysis of the potential U.S. federal tax impact of the proposed EEP merger utilizing information obtained from Enbridge management. Following discussion, the EEP Special Committee directed Evercore to request additional financial information with respect to tax matters from Enbridge management.

On July 13, 2018, the EEP/EEQ Special Committees held a joint meeting in person at the offices of Bracewell in Houston, Texas, with representatives of Bracewell, Evercore and Goldman Sachs. The purpose of the meeting was to evaluate information relating to the Derivative Action. The EEP Special Committee, the Special Committee, Bracewell, Evercore and Goldman Sachs were joined by representatives of the following organizations at different times and in separate meetings: (a) Brager, Eagel & Squire P.C. and Friedlander & Gorris, counsel to the plaintiffs in the Derivative Action, and (b) Paul Hastings LLP and MNAT (telephonically), counsel to certain defendants in the Derivative Action, including Messrs. Connelly and Westbrook. The EEP/EEQ Special Committees had requested the representatives’ views on the Derivative Action in order to review, evaluate and consider the Derivative Action and to determine the value in connection with its review of the proposed EEP merger and the proposed Merger, respectively. During the meeting with representatives of Brager, Eagel & Squire P.C. and Friedlander & Gorris, the representatives shared and discussed their views on the Derivative Action and estimated that damages in the Derivative Action were US$743.8 million plus interest of approximately US$186.0 million. Representatives of Brager, Eagel & Squire P.C. and Friedlander & Gorris also advised the EEP/EEQ Special Committees that they would be open to engaging in a mediation process with Enbridge with the objective of settling the Derivative Action. During the meeting with representatives of Paul Hastings LLP and MNAT, the representatives of Paul Hastings LLP shared and discussed their views on the Derivative Action.

 

65


Table of Contents

On July 13, 2018, the Derivative Action Plaintiff filed the Fourth Amended Complaint with respect to the Derivative Action with the Delaware Chancery Court, bringing derivative claims on behalf of EEP against the General Partner and EEQ, and bringing direct claims on behalf of the unitholders of EEP against the General Partner and Enbridge (the “Direct Claims”), among others, and alleging total damages in “an amount exceeding US$500 million” based in part upon the impact on such EEP unitholders of the special tax allocation which had been approved as part of the 2015 Transaction. The Derivative Action Plaintiff also contended that such special tax allocation unfairly reallocated tax obligations to public unitholders of EEP on more than US$880 million in EEP income.

On July 13, 2018 and July 16, 2018, representatives of Bracewell held telephonic meetings with representatives of S&C, in its capacity as counsel to Enbridge in the Derivative Action, to discuss certain matters related to the Derivative Action. During the meeting on July 16, 2018, representatives of S&C advised representatives of Bracewell that Enbridge was not prepared at that time to participate in the mediation process proposed by Brager, Eagel & Squire P.C. and Friedlander & Gorris.

On July 16, 2018, the Special Committee held a telephonic meeting with representatives of Bracewell, MNAT and Goldman Sachs. During the meeting, representatives of Goldman Sachs discussed with the Special Committee Goldman Sachs’ preliminary, illustrative financial analysis of the proposed Merger. Representatives of Bracewell then presented a summary of considerations that had been raised during prior meetings of each of the EEP Special Committee and the Special Committee regarding whether any responsive proposal to Enbridge in respect of each of the proposed transactions should value the Listed Shares and the EEP Class A common units at parity for purposes of negotiation and outlining certain related considerations, including that the EEP Class A common units and the Listed Shares each have historically traded at a premium and a discount relative to the other security at a given time.

On July 18, 2018, the EEP Special Committee held a telephonic meeting with representatives of Bracewell, MNAT and Evercore. During the meeting, representatives of Evercore presented the EEP Special Committee with a preliminary analysis of the financial terms of the proposed EEP merger. Representatives of Bracewell further discussed considerations relating to EEP’s contractual obligations with respect to its tariffs that establish the rates, terms and conditions under which each system provides service to its customers.

On July 18, 2018, after markets closed, the FERC issued a further order (the “July FERC Announcement”) that (a) dismissed all requests for rehearing of the March FERC Announcement and explained that the March FERC Announcement did not establish a binding rule, but was instead an expression of general policy that the FERC intended to follow in the future, and (b) provided guidance that if an MLP or other tax pass-through pipeline eliminates its income tax allowance from its cost of service pursuant to the March FERC Announcement, then ADIT will similarly be removed from its cost of service and MLP pipelines may also eliminate previously-accumulated sums in ADIT instead of flowing ADIT balances back to ratepayers. Enbridge common shares closed 3.0% higher the day after the July FERC Announcement, the EEP Class A common units closed 7.0% higher the day after the July FERC Announcement, and the Listed Shares closed 4.5% higher the day after the July FERC Announcement, in each case, compared to their respective closing prices on the NYSE on the date of the July FERC Announcement.

On July 20, 2018, the EEP/EEQ Special Committees each engaged Morris James as special Delaware counsel to assist with their review of the Derivative Action. In deciding to retain Morris James the EEP/EEQ Special Committees took into consideration, among other things, that (a) Morris James did not represent the 2015 Special Committee and was not involved in the Derivative Action, (b) Bracewell represented the 2015 Special Committee and (c) MNAT represents Messrs. Connelly and Westbrook in the Derivative Action. An engagement letter dated July 20, 2018, detailing the terms of Morris James’ engagements as legal advisor to each of the EEP Special Committee and the Special Committee was subsequently executed.

On July 21, 2018, representatives of Bracewell held a telephonic meeting with representatives of S&C, in its capacity as counsel to Enbridge in the Derivative Action, to discuss certain matters related to the Derivative Action.

 

66


Table of Contents

On July 23, 2018, the EEP/EEQ Special Committees held a joint telephonic meeting with representatives of Bracewell and Morris James. At that meeting, the EEP/EEQ Special Committees discussed the process for reviewing and evaluating the Derivative Action as part of the EEP Special Committee’s review of the EEP Initial Proposal and the Special Committee’s review of the EEQ Initial Proposal. Following discussion at the meeting, each of the EEP Special Committee and the Special Committee adopted resolutions forming a sub-committee (the “Derivative Action Subcommittee”) of each committee and in each case comprised solely of Mr. Waldheim, who is not party to the Derivative Action, in order to review, evaluate and consider the Derivative Action and to determine the value, if any, of the Derivative Claims and materiality thereof and to make such recommendations to the EEP/EEQ Special Committees, in its capacity as a subcommittee of each such committee, as it deems appropriate. Mr. Waldheim did not evaluate the value of the Direct Claims in the Derivative Action. In considering whether to form the Derivative Action Subcommittee, the EEP/EEQ Special Committees took into consideration, among other things, that (a) Mr. Waldheim did not serve on the 2015 Special Committee and was not a defendant in the Derivative Action and (b) Messrs. Connelly and Westbrook are named as defendants in the Derivative Action.

On July 25, 2018, representatives of Bracewell met with representatives of Friedlander & Gorris in person at the offices of Bracewell in Houston, Texas, to discuss certain matters related to the Derivative Action. Representatives of Morris James joined the meeting by telephone.

On July 25, 2018, representatives of BofAML provided representatives of Evercore and Goldman Sachs with updated management projections, taking into account the July FERC Announcement, for EEP on a standalone basis, and on July 27, 2018, representatives of BofAML provided representatives of Evercore and Goldman Sachs with updated management projections, taking into account the July FERC Announcement, for Enbridge on a standalone basis and pro forma, taking into account various scenarios with respect to the buy-ins of EEP, EEQ, SEP and ENF (the “Revised Management Projections”).

Also on July 25, 2018 and August 1, 2018, at the direction of the EEP Special Committee, Evercore provided certain illustrative financial analysis of the 2015 Transaction, as of the date of the 2015 Transaction, to the Derivative Action Subcommittee for use in its analysis of the Derivative Claims.

On July 26, 2018, the EEP/EEQ Special Committees held a meeting in person at the offices of Bracewell in Houston, Texas, with representatives of Bracewell, Evercore and Goldman Sachs. Representatives of MNAT joined by telephone. At that meeting, representatives of Evercore and Goldman Sachs reviewed with the EEP/EEQ Special Committees a draft letter to Enbridge prepared by Evercore and Goldman Sachs at the request of the EEP Special Committee and the Special Committee, respectively, as a potential response by each of the EEP Special Committee and the Special Committee to the EEP Initial Proposal and the EEQ Initial Proposal, respectively. The Evercore and Goldman Sachs representatives explained to the EEP Special Committee and the Special Committee, respectively, that the FERC’s guidance regarding ADIT had prompted EEP and Enbridge management to prepare and deliver to the financial advisors the Revised Management Projections, and then the representatives provided the EEP/EEQ Special Committees a high-level overview of the key changes in the Revised Management Projections relative to the Management Projections. The Evercore and Goldman Sachs representatives and the EEP Special Committee and the Special Committee, respectively, then discussed various arguments to support negotiating for a higher exchange ratio in each of the proposed EEP merger and the proposed Merger. The Special Committee and the representatives of Goldman Sachs then discussed arguments to support negotiating for an exchange ratio in the proposed Merger equal to the exchange ratio in the proposed EEP merger. Also at the meeting, representatives of Bracewell explained that representatives of Friedlander & Gorris had met with representatives of Bracewell and Morris James on July 25, 2018, and that representatives of Bracewell had also met with representatives of S&C, in its capacity as counsel to Enbridge in the Derivative Action, on July 21, 2018, in each case to discuss certain matters related to the Derivative Action. Representatives of Bracewell then discussed potential additional conditions that the EEP/EEQ Special Committees could request in connection with the proposed transactions, including (a) that the EEP Special Committee could request the approval of the EEP merger agreement by the holders of a majority of the outstanding EEP Class A common

 

67


Table of Contents

units (other than EEP Class A common units held by Enbridge and its affiliates) and the outstanding i-units of EEP (other than i-units of EEP voted at the direction of Enbridge and its affiliates), entitled to vote on such matter at the EEP special meeting or any adjournment or postponement thereof, voting together as a single class (the “Majority of the Minority Vote”) and (b) that the Special Committee could request the proposed EEP merger be conditioned upon the consummation of the proposed Merger. Representatives of Bracewell further explained to the EEP/EEQ Special Committees that, if the proposed EEP merger is not conditioned upon the consummation of the proposed Merger, there would be a risk that if the proposed EEP merger is consummated but the proposed Merger is not consummated, the sole asset of EEQ would be interests in an entity that is no longer publicly traded.

On July 30, 2018, representatives of Friedlander & Gorris sent representatives of Bracewell a memorandum concerning the Derivative Action, who then distributed such memorandum to the Derivative Action Subcommittee and Morris James. The memorandum provided an update regarding some aspects of the Derivative Action Plaintiff’s litigation path and settlement path respecting the Derivative Action and the Derivative Action Plaintiff’s view of the merit and value of the Derivative Claims.

On July 31, 2018 and August 1, 2018, the Enbridge Board held its regular quarterly meeting, where members of Enbridge management provided an update to the Enbridge Board on the status and timeline of the negotiations with the EEP/EEQ Special Committees and the special committees of Enbridge’s other sponsored vehicles and on the July FERC Announcement.

On July 31, 2018, the Derivative Action Subcommittee held a telephonic meeting with representatives of Bracewell and Morris James. At the meeting, the Derivative Action Subcommittee received additional information relating to its ongoing consideration of the value, if any, of the Derivative Claims. Representatives of Bracewell and Morris James presented the legal advisors’ analysis relating to the standards applicable to the Derivative Action Subcommittee’s review and discussed the approach to the financial analysis of the Derivative Action. Representatives of Bracewell and Morris James also discussed with the Derivative Action Subcommittee the memorandum received from Friedlander & Gorris.

On August 2, 2018, in connection with its quarterly business update, EEP announced that, although assessing the near- and long-term implications of the July FERC Announcement would be challenging pending greater clarification from FERC, EEP estimated that the July FERC Announcement would result in a US$30 million positive impact to its distributable cash flow for 2018, assuming that the July FERC Announcement is retroactive to March 2018. EEP noted that this benefit to distributable cash flow partially offset the previously estimated US$120 million negative impact to EEP for 2018 of U.S. tax reform and the March FERC Announcement.

On August 2, 2018, the EEP Special Committee held a telephonic meeting with representatives of Bracewell, MNAT and Evercore. During the meeting, representatives of Evercore presented the EEP Special Committee with a preliminary analysis of the financial terms of the proposed EEP merger based on the Revised Management Projections. Also during the meeting, representatives of Bracewell and MNAT discussed with the EEP Special Committee whether to negotiate for the Majority of the Minority Vote, and the EEP Special Committee directed representatives of Bracewell to include such requirement in its revised draft of the EEP merger agreement. Representatives of Bracewell also provided the EEP Special Committee with an update on the status of the Derivative Action Subcommittee’s review process.

On August 2, 2018, the Special Committee held a telephonic meeting with representatives of Bracewell, MNAT and Goldman Sachs. During the meeting, representatives of Goldman Sachs discussed with the Special Committee Goldman Sachs’ preliminary, illustrative financial analysis of the proposed Merger. Also during the meeting, representatives of Bracewell and MNAT discussed with the Special Committee whether to negotiate for the proposed EEP merger to be conditioned upon the consummation of the proposed Merger, and the Special Committee directed representatives of Bracewell to include such a requirement in its revised draft of the Merger

 

68


Table of Contents

Agreement. Representatives of Bracewell also provided the Special Committee with an update on the status of the Derivative Action Subcommittee’s review process.

During the afternoon on August 2, 2018, the Derivative Action Subcommittee held a telephonic meeting with representatives of Bracewell, Morris James and Evercore. At the meeting, representatives of Bracewell and Morris James provided a summary of the analysis of the Derivative Action to date.

On August 3, 2018, representatives of Bracewell and Morris James held a telephonic meeting with a representative of S&C, in its capacity as counsel to Enbridge in the Derivative Action, to discuss certain matters related to the Derivative Action.

On August 3, 2018, in connection with its quarterly business update, Enbridge announced that there were many uncertainties with respect to implementation of the July FERC Announcement, including the potential for different outcomes as a result of rate case or customer challenges, and that while there would be varying impacts to each of Enbridge’s sponsored vehicles, on a consolidated basis, Enbridge did not expect a material impact to its results of operations or cash flows over the 2018 to 2020 horizon.

On August 9, 2018, the Derivative Action Subcommittee held a telephonic meeting with representatives of Bracewell and Morris James. Representatives of Bracewell and Morris James presented to the Derivative Action Subcommittee a detailed summary of the review and analysis of the Derivative Action and representatives of Morris James presented a proposed methodology to value the Derivative Claims. Throughout the process of reviewing and analyzing the Derivative Action, representatives of Bracewell and Morris James, among other things, analyzed all prior Court of Chancery and Delaware Supreme Court opinions involving the Derivative Action, reviewed the Fourth Amended Complaint, the Motion to Dismiss briefing and the transcript of the hearing on the Motion to Dismiss for the Derivative Action, met with Friedlander & Gorris and considered materials provided by them, met with Paul Hastings and met telphonically with S&C, reviewed transcripts of depositions held in the Derivative Action and reviewed various other documents, including certain deposition exhibits. To arrive at an estimated value of the Derivative Claims, the Derivative Action Subcommittee first identified a range of recoverable damages for each of the three primary categories of alleged damages. The Derivative Action Subcommittee then applied a risk adjustment (stated as a percentage) to the range of recoverable damages for each of the three primary categories of damages which was intended to reflect the Derivative Action Subcommittee’s views regarding the likelihood of the Derivative Action Plaintiff recovering the range of recoverable damages on each of the three categories of alleged damages, assuming the claims would be resolved through trial and subsequent appeal. The Derivative Action Subcommittee then applied estimated prejudgment interest to the risk adjusted amounts to arrive at an estimated value of the claims assuming the claims would be resolved through trial and appeal. To determine an estimated value of the claims assuming the claims would be resolved through a settlement short of a full trial and appeal, the Derivative Action Subcommittee applied an estimated settlement adjustment to reflect the process of compromise that would be anticipated to occur in order to achieve a settlement of the claims short of a full trial and appeal. Finally, the Derivative Action Subcommittee averaged the estimated value of the claims assuming the claims would be resolved through trial and appeal with the estimated value of the claims assuming the claims would be resolved through a settlement short of a full trial and appeal based on the assumption that either outcome was equally likely. Mr. Waldheim, in his capacity of the sole member of the Derivative Action Subcommittee, determined a risk adjusted range of values for the Derivative Claims of US$88.4 million to US$111.2 million (with a midpoint of US$99.8 million) (such midpoint, the “Estimated Derivative Claims Value”). Such value did not include any assessment of the value of any Direct Claims brought in the Derivative Action.

On August 9, 2018, the EEP/EEQ Special Committees held a joint telephonic meeting with representatives of Bracewell and Morris James. Representatives of Bracewell and Morris James presented to the EEP/EEQ Special Committees a detailed summary of the Derivative Action Subcommittee’s review and analysis of the Derivative Action and representatives of Morris James provided a summary of the methodology used by the Derivative Action Subcommittee to value the Derivative Claims. The EEP/EEQ Special Committees accepted the

 

69


Table of Contents

range of values determined by the Derivative Action Subcommittee for the Derivative Claims and directed Bracewell to request that Evercore, on behalf of the EEP Special Committee, and Goldman Sachs, on behalf of the Special Committee, factor the Estimated Derivative Claims Value into their respective analysis of the proposed EEP merger and the proposed Merger prior to the meeting to be held on August 10, 2018.

On August 10, 2018, the EEP/EEQ Special Committees held a joint telephonic meeting with representatives of Bracewell, MNAT, Evercore and Goldman Sachs. During the meeting, representatives of Evercore presented the EEP Special Committee with a preliminary analysis of the financial terms of the proposed EEP merger and representatives of Goldman Sachs presented to the Special Committee Goldman Sachs’ preliminary, illustrative financial analysis of the proposed Merger. The EEP Special Committee and the Special Committee, with their respective advisors, reviewed, discussed and finalized a letter to Enbridge including a responsive proposal for the proposed EEP merger and the proposed Merger that included, among other things, an exchange ratio of 0.4000 Enbridge common shares for each issued and outstanding publicly held EEP Class A common unit and for each issued and outstanding publicly held Listed Share in the respective transactions. Following this discussion, the EEP/EEQ Special Committees determined to propose an exchange ratio of 0.4000 Enbridge common shares for each issued and outstanding publicly held EEP Class A common unit and for each issued and outstanding publicly held Listed Share in the respective transactions and directed Evercore and Goldman Sachs to deliver the letter as a responsive proposal to BofAML.

On August 13, 2018, at the direction of the EEP/EEQ Special Committees, representatives of Evercore and representatives of Goldman Sachs called representatives of BofAML to deliver a counterproposal of 0.4000 Enbridge common shares in exchange for each issued and outstanding publicly held EEP Class A common unit and each issued and outstanding publicly held Listed Share.

Later on August 13, 2018, representatives of Evercore and Goldman Sachs, on behalf of the EEP/EEQ Special Committees, respectively, shared a letter with representatives of BofAML that communicated the EEP/EEQ Special Committees’ responsive proposal, including, among other things, an exchange ratio of 0.4000 Enbridge common shares for each issued and outstanding publicly held EEP Class A common unit and each issued and outstanding publicly held Listed Share (the “August 13 Proposal”). The August 13 Proposal also included (a) the EEP Special Committee’s proposal that the proposed EEP merger be conditioned upon the Majority of the Minority Vote and (b) the Special Committee’s proposal that the proposed EEP merger be conditioned upon the consummation of the proposed Merger. The August 13 Proposal noted that the EEP/EEQ Special Committees believed that the EEP Initial Proposal and the EEQ Initial Proposal undervalued EEP and EEQ, respectively, and, among other things, did not attribute appropriate value to the Derivative Action. The August 13 Proposal explained that the EEP/EEQ Special Committees established the Derivative Action Subcommittee, consisting solely of Mr. Waldheim, with the authority to review, evaluate and consider the Derivative Action, and that the Derivative Action Subcommittee, in consultation with its legal and financial advisors, determined that an estimated value of the Derivative Claims was US$111.2 million, which value the EEP/EEQ Special Committees included in the August 13 Proposal upon the recommendation of the Derivative Action Subcommittee.

On August 14, 2018, the EEP/EEQ Special Committees held a joint telephonic meeting with representatives of Bracewell, MNAT, Evercore and Goldman Sachs. At the meeting, representatives of Evercore and Goldman Sachs informed the EEP Special Committee and the Special Committee, respectively that they had delivered the EEP/EEQ Special Committees’ responsive proposal to BofAML, and that BofAML had thereafter indicated it had provided the responsive proposal to Enbridge.

On August 17, 2018, representatives of BofAML, on behalf of Enbridge, shared a letter with representatives of Evercore and representatives of Goldman Sachs (the “August 17 Letter”). In the August 17 Letter, Enbridge made counteroffers (a) to the EEP Special Committee of 0.3160 Enbridge common shares in exchange for each issued and outstanding publicly held EEP Class A common unit and (b) to the Special Committee of 0.2960 Enbridge common shares in exchange for each issued and outstanding publicly held Listed Share. The August 17

 

70


Table of Contents

Letter noted that, based on the challenges EEP and EEQ continue to face, Enbridge believed that its offers represented an attractive alternative for EEP unitholders and EEQ shareholders, and Enbridge did not believe that the EEP/EEQ Special Committees’ identified value for the Derivative Claims were supported by relevant facts or applicable law, and that Enbridge ascribed no value to the Derivative Claims other than the costs associated with the defense of the Derivative Action. The August 17 Letter also noted that Enbridge’s counteroffer included the following conditions: (a) the EEP merger would not be conditioned on the closing of the Merger and (b) the Merger would not be subject to obtaining the Majority of the Minority Vote.

On August 20, 2018, the EEP/EEQ Special Committees held a joint telephonic meeting with representatives of Bracewell, MNAT, Evercore and Goldman Sachs. The EEP Special Committee and the Special Committee discussed the August 17 Letter with their legal and respective financial advisors.

On August 24, 2018, Enbridge announced that it had entered into a definitive merger agreement with SEP to acquire all of the issued and outstanding SEP common units not currently owned by Enbridge and its affiliates at an exchange ratio of 1.111 Enbridge common shares for each issued and outstanding publicly held common unit of SEP.

On August 26, 2018, the EEP/EEQ Special Committees held a joint telephonic meeting with representatives of Bracewell, MNAT, Evercore and Goldman Sachs. After considering and discussing the August 17 Letter with their legal and respective financial advisors, the EEP/EEQ Special Committees directed Evercore and Goldman Sachs to deliver a responsive proposal to BofAML on behalf of the EEP Special Committee and the Special Committee, respectively, setting forth an exchange ratio of 0.3720 Enbridge common shares for each issued and outstanding publicly held EEP Class A common unit and each issued and outstanding publicly held Listed Share. The EEP Special Committee further proposed that the EEP merger be conditioned upon the Majority of the Minority Vote, and the Special Committee further proposed that the EEP merger be conditioned upon the consummation of the Merger.

On August 27, 2018, at the respective direction of the EEP/EEQ Special Committees, representatives of Evercore and representatives of Goldman Sachs called representatives of BofAML to deliver a counterproposal of 0.3720 Enbridge common shares in exchange for each issued and outstanding publicly held EEP Class A common unit and each issued and outstanding publicly held Listed Share.

Later on August 27, 2018, at the direction of the EEP/EEQ Special Committees, representatives of Goldman Sachs and Evercore shared a letter with representatives of BofAML that communicated the EEP/EEQ Special Committee’s responsive proposal, including, among other things, a proposed exchange ratio of 0.3720 Enbridge common shares for each issued and outstanding publicly held EEP Class A common unit and each issued and outstanding Listed Share (the “August 27 Proposal”). In the August 27 Proposal, the EEP/EEQ Special Committees noted that they did not believe the August 17 Proposal appropriately valued EEP and EEQ, including, among other things, the value of the Derivative Claims, which was reflected in the August 27 Proposal. The Special Committee maintained that the EEQ exchange ratio should be at parity with the EEP exchange ratio because the market has valued EEQ at parity with EEP, and a precedent transaction to the Merger, the acquisition by Kinder Morgan, Inc. of Kinder Morgan Energy Partners, L.P. (“KMP”) and Kinder Morgan Management, LLC (“KMR”), also assigned parity between the KMP units and KMR shares. In the August 27 Proposal, the EEP Special Committee also proposed that the EEP merger be conditioned upon the Majority of the Minority Vote and the Special Committee further proposed that the EEP merger be conditioned upon the consummation of the Merger.

On August 28, 2018, representatives of Goldman Sachs and representatives of Evercore requested from Enbridge management updated pro forma projections for Enbridge, taking into account the final SEP exchange ratio of 1.111 Enbridge common shares for each issued and outstanding publicly held common share of SEP. Later on August 28, 2018, Enbridge management provided such updated projections to the EEP/EEQ Special Committees.

 

71


Table of Contents

On August 29, 2018, Bracewell provided revised drafts of the EEP merger agreement and the Merger Agreement to S&C (the “August 29 Merger Agreement Drafts”). The August 29 Merger Agreement Drafts provided, among other things, (a) for the Majority of the Minority Vote requirement, (b) that the EEP merger is conditioned upon the consummation of the Merger, (c) that Enbridge would reimburse up to US$4 million of EEP’s expenses incurred in connection with the proposed EEP merger if the EEP merger agreement is terminated under certain circumstances and up to US$4 million of EEQ’s expenses incurred in connection with the proposed EEQ Merger if the Merger Agreement is terminated under certain circumstances, and (d) that EEP would pay distributions in respect of the EEP Class A common units for each completed calendar quarter ended prior to the closing date of the EEP merger in an amount not less than US$0.35 per EEP Class A common unit per calendar quarter. Both August 29 Merger Agreement Drafts also provided, among other things, for greater flexibility for EEP and EEQ, respectively, to entertain alternate proposals and respond to intervening events, and that the EEP Special Committee and the Special Committee would remain in place through closing of the EEP merger and the Merger, respectively.

On August 29, 2018, the Delaware Court of Chancery issued a memorandum decision in the Derivative Action (the “August 29 Mesirov Decision”). The August 29 Mesirov Decision, among other things, dismissed all Direct Claims against defendants and all non-contractual claims against defendants affiliated with Enbridge, while denying dismissal of derivative claims for, among other things, breach of contract.

On August 30, 2018, Wanda M. Opheim, Senior Vice President, Finance of Enbridge, called Mr. Connelly to advise him that Enbridge would be sending a response to the August 27 Proposal and to request that Mr. Connelly attend a breakfast meeting in Houston, Texas with Ms. Opheim and Vern D. Yu, Executive Vice President & Chief Development Officer of Enbridge, to discuss the status of negotiations with respect to the proposed EEP merger and the proposed Merger.

On August 30, 2018, representatives of BofAML, on behalf of Enbridge, shared a letter with representatives of Evercore and representatives of Goldman Sachs (the “August 30 Letter”). In the August 30 Letter, Enbridge made counteroffers (a) to the EEP Special Committee of 0.3200 Enbridge common shares in exchange for each issued and outstanding publicly held EEP Class A common unit and (b) to the Special Committee of 0.2997 Enbridge common shares in exchange for each issued and outstanding publicly held Listed Share. The August 30 Letter noted that, while Enbridge was still evaluating the August 29 Merger Agreement Drafts, Enbridge continued to believe (a) the closing of the EEP merger should not be conditioned on the closing of the Merger, (b) the EEP merger should not be subject to obtaining the Majority of the Minority Vote, (c) the EEP Class A common units and the Listed Shares should not be valued at parity given the different market valuations of the EEP Class A common units and the Listed Shares, which reflect the different terms and other attributes applicable to those securities, and (d) the value of the Derivative Claims was, at best, the costs associated with the defense of such Derivative Action, particularly given Enbridge’s assessment of the August 29 Mesirov Decision.

On August 31, 2018, Messrs. Waldheim and Westbrook held a telephonic meeting with representatives of Bracewell to discuss the August 29 Mesirov Decision.

Later on August 31, 2018, the EEP/EEQ Special Committees held a joint telephonic meeting with representatives of Bracewell, MNAT, Evercore and Goldman Sachs. After considering and discussing the August 30 Letter with their legal and respective financial advisors, the EEP/EEQ Special Committees directed Evercore and Goldman Sachs to deliver a responsive proposal to BofAML setting forth an exchange ratio of 0.3650 Enbridge common shares for each issued and outstanding publicly held EEP Class A common unit and each issued and outstanding publicly held Listed Share. The EEP Special Committee further proposed that the EEP merger be conditioned upon the Majority of the Minority Vote and the Special Committee further proposed that the EEP merger be conditioned upon the consummation of the Merger. The EEP/EEQ Special Committees and their legal and respective financial advisors also discussed Enbridge’s request for a breakfast meeting with Mr. Connelly and determined that the meeting would not be appropriate at that time given how far apart the parties were on price. Mr. Connelly subsequently sent an email to Ms. Opheim declining the meeting.

 

72


Table of Contents

Also on August 31, 2018, the Special Committee held a telephonic meeting with representatives of Bracewell, MNAT and Goldman Sachs. The Special Committee discussed the proposal that the Listed Shares and the EEP Class A common units be valued at parity for purposes of negotiation.

On September 1, 2018, at the direction of the EEP/EEQ Special Committees, representatives of Evercore and representatives of Goldman Sachs shared a letter with representatives of BofAML that communicated the EEP/EEQ Special Committees’ responsive proposal, including, among other things, a counteroffer of 0.3650 Enbridge common shares in exchange for each issued and outstanding publicly held EEP Class A common unit and each issued and outstanding publicly held Listed Share (the “September 1 Proposal”). The September 1 Proposal reiterated the EEP/EEQ Special Committees’ requests that (a) the closing of the EEP merger be conditioned on the consummation of the Merger and (b) the EEP merger be conditioned on obtaining the Majority of the Minority Vote. The September 1 Proposal also noted that the Derivative Action Subcommittee had reviewed the August 29 Mesirov Decision and did not agree with Enbridge’s characterization of such decision, and that the August 29 Mesirov Decision did not change the Derivative Action Subcommittee’s prior determination of an estimated value of the Derivative Claims, which was reflected in the exchange ratio counterproposals presented in the September 1 Proposal.

On September 2, 2018, at the direction of the Special Committee, representatives of Goldman Sachs held a telephonic meeting with representatives of BofAML to further discuss the Special Committee’s proposal that the exchange ratio for the proposed Merger be treated at parity with the exchange ratio for the proposed EEP merger.

Between September 2, 2018 and September 3, 2018, Enbridge management and its advisors discussed internally the Special Committee’s proposal that the exchange ratio for the proposed Merger be treated at parity with the exchange ratio for the proposed EEP merger. Enbridge management considered, among other things, that (a) a precedent transaction to the Merger, the acquisition by Kinder Morgan, Inc. of KMP and KMR, also assigned parity between the KMP units and KMR shares, (b) the Listed Shares were created to be economically equivalent securities to the EEP Class A common units and therefore should have similar or near similar intrinsic valuations and (c) while Listed Shares have recently traded at a discount to EEP Class A common units, since the initial public offering of EEQ, there have been periods where Listed Shares have traded at parity with and at a premium to EEP Class A common units.

On September 3, 2018, representatives of BofAML, on behalf of Enbridge, shared a letter with representatives of Evercore and representatives of Goldman Sachs (the “September 3 Letter”). In the September 3 Letter, Enbridge made counteroffers to the EEP/EEQ Special Committees of 0.3200 Enbridge common shares in exchange for each issued and outstanding publicly held EEP Class A common unit and each issued and outstanding publicly held Listed Share. This counteroffer represented an increase in the exchange ratio in the proposed Merger to be treated at parity with the exchange ratio in the proposed EEP merger, but did not represent a change in the exchange ratio for EEP. Enbridge also conceded that the EEP merger would be conditioned on obtaining the Majority of the Minority Vote. However, Enbridge maintained its position that (a) the closing of the EEP merger should not be conditioned on the closing of the Merger, and (b) the value of the Derivative Claims was, at best, the costs associated with defending such Derivative Action.

On September 4, 2018, the EEP/EEQ Special Committees held a joint telephonic meeting with representatives of Bracewell. The EEP/EEQ Special Committees discussed their initial views on the September 3 Letter and possible responses thereto.

On September 5, 2018, the EEP/EEQ Special Committees held a joint telephonic meeting with representatives of Bracewell, MNAT, Evercore and Goldman Sachs. At the meeting, the EEP/EEQ Special Committees discussed the September 3 Letter with their legal and respective financial advisors. After considering and discussing the September 3 Letter, the EEP/EEQ Special Committees directed Evercore and Goldman Sachs to deliver a responsive proposal to BofAML setting forth an exchange ratio of 0.3500 Enbridge common shares for each issued and outstanding publicly held EEP Class A common unit and each issued and outstanding publicly held Listed Share.

 

73


Table of Contents

Following the meeting on September 5, 2018, at the direction of the EEP/EEQ Special Committees, representatives of Evercore and representatives of Goldman Sachs called representatives of BofAML to deliver a counterproposal of 0.3500 Enbridge common shares in exchange for each issued and outstanding publicly held EEP Class A common unit and each issued and outstanding publicly held Listed Share.

On September 8, 2018, representatives of BofAML, on behalf of Enbridge, called representatives of Evercore to convey Enbridge’s position that it was not willing at that time to increase its offer of 0.3200 Enbridge common shares in exchange for each issued and outstanding publicly held EEP Class A common unit and each issued and outstanding publicly held Listed Share, as Enbridge believed such exchanges ratios were appropriate for EEP and EEQ, and that Enbridge viewed its willingness to agree to parity between the EEP exchange ratio and the Exchange Ratio as a significant movement. Representatives of BofAML further communicated to representatives of Evercore that, notwithstanding Enbridge’s resolve in the exchange ratios it proposed, Enbridge was continuing to consider the EEP/EEQ Special Committees’ position.

On September 10, 2018, the EEP/EEQ Special Committees held a joint telephonic meeting with representatives of Bracewell, MNAT, Evercore and Goldman Sachs. At the meeting, the EEP/EEQ Special Committees discussed Enbridge’s September 8, 2018 response with their legal and respective financial advisors. The EEP/EEQ Special Committees engaged in a discussion of how Enbridge’s proposal compared to the various metrics on which it had evaluated the transactions and the current market price of the EEP Class A common units and the Listed Shares, and determined to reassert the offer made by the EEP/EEQ Special Committees on September 5, 2018. The EEP/EEQ Special Committees also considered whether it was appropriate to send a letter to the EEQ Board informing it that negotiations with Enbridge had reached an impasse and requesting that a discussion of the proposed transaction and alternatives thereto be included as an agenda item at the EEQ Board’s next meeting.

Following the meeting on September 10, 2018, at the direction of the EEP/EEQ Special Committees, representatives of Evercore and representatives of Goldman Sachs called representatives of BofAML to convey that the EEP/EEQ Special Committees believed an exchange ratio of 0.3200 Enbridge common shares in exchange for each issued and outstanding publicly held EEP Class A common unit and each issued and outstanding publicly held Listed Share undervalued EEP and EEQ, and the EEP/EEQ Special Committees were unwilling to enter into an agreement with Enbridge at such exchange ratios. The representatives of Evercore and representatives of Goldman Sachs reasserted the offer made by the EEP/EEQ Special Committees on September 5, 2018, and indicated to representatives of BofAML that the EEP/EEQ Special Committees were drafting a letter to be sent to the EEQ Board. Following the conversation, representatives of BofAML contacted representatives of Evercore to discuss the EEP/EEQ Special Committees’ proposed timing with respect to sharing such letter with the EEQ Board.

Between September 8, 2018 and September 11, 2018, Enbridge management held a number of internal discussions as well as discussions with Enbridge’s legal and financial advisors with respect to the exchange ratio. Enbridge management decided to increase its proposed exchange ratios for EEP and EEQ based on, among other things, the fact that the July FERC Announcement strengthened EEP’s outlook as compared to when the EEP Initial Proposal was delivered and Enbridge management’s belief that completing the buy-ins would be compelling for EEP unitholders and EEQ and Enbridge shareholders.

On September 11, 2018, representatives of BofAML, on behalf of Enbridge, called representatives of Evercore and representatives of Goldman Sachs to deliver an increased offer of 0.3275 Enbridge common shares in exchange for each issued and outstanding publicly held EEP Class A common unit and each issued and outstanding publicly held Listed Share.

On September 13, 2018, the EEP/EEQ Special Committees held a joint telephonic meeting with representatives of Bracewell, MNAT, Evercore and Goldman Sachs. At the meeting, the EEP/EEQ Special Committees discussed Enbridge’s September 11, 2018 proposal with their legal and respective financial advisors.

 

74


Table of Contents

After considering and discussing Enbridge’s proposal, the EEP/EEQ Special Committees directed Evercore and Goldman Sachs to deliver a responsive proposal to BofAML setting forth an exchange ratio of 0.3425 Enbridge common shares for each issued and outstanding publicly held EEP Class A common unit and each issued and outstanding publicly held Listed Share.

Also on September 13, 2018, the EEP Special Committee held a telephonic meeting with representatives of Bracewell, MNAT and Evercore. Representatives of Evercore discussed with the EEP Special Committee the exchange ratio in the proposed Merger, which the Special Committee had successfully negotiated with Enbridge to be treated at parity with the exchange ratio in the proposed EEP merger, in order to confirm with the EEP Special Committee whether the EEP Special Committee wished to negotiate for a higher exchange ratio independent of the exchange ratio in the proposed Merger. The EEP Special Committee members considered the points raised by Evercore and determined not to take any action at the meeting.

Following the meetings on September 13, 2018, at the direction of the EEP/EEQ Special Committees, representatives of Evercore and representatives of Goldman Sachs called representatives of BofAML to deliver a counterproposal of 0.3425 Enbridge common shares in exchange for each issued and outstanding publicly held EEP Class A common unit and each issued and outstanding publicly held Listed Share.

During the afternoon of September 13, 2018, representatives of BofAML, on behalf of Enbridge, called representatives of Evercore and representatives of Goldman Sachs to deliver a counterproposal of 0.3325 Enbridge common shares in exchange for each issued and outstanding publicly held EEP Class A common unit and each issued and outstanding publicly held Listed Share.

During the afternoon of September 13, 2018, the EEP/EEQ Special Committees held a joint telephonic meeting with representatives of Bracewell, Evercore and Goldman Sachs. At the meeting, the EEP/EEQ Special Committees discussed Enbridge’s September 13, 2018 proposal with their legal and respective financial advisors. After considering and discussing Enbridge’s proposal, the EEP/EEQ Special Committees directed Evercore and Goldman Sachs to deliver a responsive proposal to BofAML setting forth an exchange ratio of 0.3375 Enbridge common shares for each issued and outstanding publicly held EEP Class A common unit and each issued and outstanding publicly held Listed Share.

Following the second joint committee meeting on September 13, 2018, at the direction of the EEP/EEQ Special Committees, representatives of Evercore and representatives of Goldman Sachs followed up with representatives of BofAML later on September 13, 2018 to deliver a counterproposal of 0.3375 Enbridge common shares in exchange for each issued and outstanding publicly held EEP Class A common unit and each issued and outstanding publicly held Listed Share.

During the evening of September 13, 2018, representatives of BofAML, on behalf of Enbridge, called representatives of Evercore and representatives of Goldman Sachs to deliver another counterproposal of 0.335 of an Enbridge common share in exchange for each issued and outstanding publicly held EEP Class A common unit and each issued and outstanding publicly held Listed Share. Representatives of BofAML indicated that this was Enbridge’s “best and final” offer.

On September 14, 2018, the EEP/EEQ Special Committees held a joint telephonic meeting with representatives of Bracewell, MNAT, Evercore and Goldman Sachs. At the meeting, the EEP/EEQ Special Committees discussed Enbridge’s second proposal made on September 13, 2018, with their legal and respective financial advisors. The EEP Special Committee and the Special Committee discussed various matters relating to the proposed EEP merger and the proposed Merger, respectively, including the status of the draft merger agreements. Following additional discussion, it was the consensus of the EEP/EEQ Special Committees that, based upon the totality of the factors and circumstances considered by the EEP/EEQ Special Committees and taking into account the advice of their respective financial advisors, Enbridge’s second September 13, 2018 proposal represented the best terms that the EEP Special Committee would be able to negotiate with Enbridge in

 

75


Table of Contents

respect of the proposed EEP merger and the best terms that the Special Committee would be able to negotiate with Enbridge in respect of the proposed Merger.

On September 14, 2018, at the respective direction of the EEP/EEQ Special Committees, representatives of Evercore and representatives of Goldman Sachs communicated that the EEP Special Committee and the Special Committee, respectively, were prepared to approve the exchange ratio of 0.335 of an Enbridge common share in exchange for each issued and outstanding publicly held EEP Class A common unit and each issued and outstanding publicly held Listed Share in the respective transactions, subject to the negotiation of mutually agreeable definitive documentation and the receipt by each committee of a fairness opinion from its respective financial advisor.

On September 14, 2018, S&C shared with Bracewell revised drafts of the EEP merger agreement and the Merger Agreement. The revised draft EEP merger agreement, among other things, (a) provided for an amendment to the EEP Partnership Agreement to be adopted by the General Partner in accordance with the EEP Partnership Agreement, (b) rejected the EEP Special Committee’s proposal regarding distributions in respect of the EEP Class A common units and (c) rejected the Special Committee’s proposal that the EEP merger be conditioned upon the consummation of the Merger. The revised draft Merger Agreement, among other things, provided for an amendment to the EEQ LLC Agreement.

Between September 14, 2018 and September 17, 2018, Bracewell and S&C exchanged further drafts of the EEP merger agreement and discussed outstanding open issues with respect to the EEP merger agreement, including with respect to EEP’s payment of distributions between signing and closing and whether the EEP merger would be conditioned on the consummation of the Merger.

On September 17, 2018, the Enbridge Board, upon due consideration and discussion, unanimously (of those voting) (a) approved the EEP merger agreement and the Merger Agreement and the transactions contemplated thereby, including the EEP merger and the Merger, on the terms and subject to the conditions set forth in the EEP merger agreement and the Merger Agreement, respectively, and (b) approved the issuance of Enbridge common shares in connection therewith. The Enbridge Board also approved in the same meeting a definitive agreement between Enbridge and ENF and the issuance of Enbridge common shares in connection therewith.

On September 17, 2018, the EEP Special Committee held a telephonic meeting with representatives of Bracewell, MNAT and Evercore. During the meeting, representatives of Bracewell discussed an overview of legal matters, the nature of the Derivative Action and the fact that the EEP Special Committee considered the value of the Derivative Claims in its review and evaluation of the proposed EEP merger and that Evercore had considered the Estimated Derivative Claims Value in its analysis and the status of due diligence matters, and representatives of MNAT discussed the applicable legal standard for the EEP Special Committee’s review. Representatives of Bracewell provided an overview of the terms of the final draft of the EEP merger agreement, explained the final negotiated changes to the EEP merger agreement, answered questions from the EEP Special Committee regarding the agreement and also explained to the EEP Special Committee the terms of an amendment to the EEP Partnership Agreement that had been proposed by Enbridge in connection with and conditioned upon the consummation of the proposed EEP merger. Representatives of Evercore presented its financial analysis of the EEP exchange ratio (Evercore did not and does not express any view or opinion as to any term or aspect of the Merger, the Merger Agreement, or the transactions contemplated thereby). After further discussions and based on prior conclusions of the EEP Special Committee with respect to the risks and merits of the EEP merger transaction, the EEP Special Committee unanimously (a) determined that the EEP merger agreement and the transactions contemplated thereby are fair and reasonable to EEP, including the holders of outstanding EEP units (other than Enbridge and its affiliates), (b) approved the EEP merger agreement and the transactions contemplated thereby, (c) approved the execution, delivery and performance of the EEP merger agreement by EEP, (d) recommended that the EEQ Board approve the EEP merger agreement, the execution, delivery and performance of the EEP merger agreement by EEP and the consummation of the transactions contemplated thereby and (e) recommended that the EEQ Board submit the EEP merger agreement to a vote of

 

76


Table of Contents

the limited partners of EEP and recommend the approval of the EEP merger agreement and the transactions contemplated thereby by the limited partners of EEP.

On September 17, 2018, the Special Committee held a telephonic meeting with representatives of Bracewell, MNAT and Goldman Sachs. During the meeting, representatives of Bracewell discussed an overview of legal matters, the nature of the Derivative Action and the fact that the Special Committee considered the value of the Derivative Claims in its review and evaluation of the proposed Merger and that Goldman Sachs had reflected the Estimated Derivative Claims Value in its analysis and the status of due diligence matters, and representatives of MNAT discussed the applicable legal standard for the Special Committee’s review. Representatives of Bracewell provided an overview of the terms of the final draft of the Merger Agreement, explained the final negotiated changes to the Merger Agreement, answered questions from the Special Committee regarding the agreement and also explained to the Special Committee the terms of the EEQ LLC Agreement Amendment that had been proposed by Enbridge in connection with and conditioned upon the consummation of the proposed Merger. Representatives of Goldman Sachs presented its illustrative financial analysis of the Exchange Ratio. At the request of the Special Committee, Goldman Sachs then delivered its oral opinion, which was subsequently confirmed by delivery of a written opinion dated September 17, 2018, to the effect that, as of such date and based upon and subject to the factors and assumptions set forth therein, the Exchange Ratio pursuant to the Merger Agreement was fair from a financial point of view to the holders (other than Enbridge and its affiliates) of Listed Shares. After further discussions and based on prior conclusions of the Special Committee with respect to the risks and merits of the merger transaction, the Special Committee unanimously (a) determined that the Merger Agreement and the transactions contemplated thereby are fair and reasonable to EEQ, including the Unaffiliated EEQ Shareholders, (b) approved the Merger Agreement and the transactions contemplated thereby and the EEQ LLC Agreement Amendment, (c) approved the execution, delivery and performance of the Merger Agreement by EEQ, (d) recommended that the EEQ Board approve the Merger Agreement, the EEQ LLC Agreement Amendment, the execution, delivery and performance of the Merger Agreement by EEQ and the consummation of the transactions contemplated thereby and (e) recommended that the EEQ Board submit the Merger Agreement and the EEQ LLC Agreement Amendment to a vote of the EEQ shareholders and recommend the approval of the Merger Agreement and the transactions contemplated thereby and the EEQ LLC Agreement Amendment by the EEQ shareholders.

Later that day, based upon the recommendation of the EEP Special Committee, the EEQ Board, in its capacity as the board of directors of the delegate of the General Partner, acting in good faith, unanimously (a) determined that the EEP merger agreement and the transactions contemplated thereby, including the EEP merger, are fair and reasonable to EEP, including the holders of outstanding EEP units (other than Enbridge and its affiliates), (b) approved the EEP merger agreement and the transactions contemplated thereby, including the EEP merger, on the terms and subject to the conditions set forth in the EEP merger agreement, (c) recommended that the GP Board approve the EEP merger agreement and the transactions contemplated thereby, including the EEP merger, and (d) resolved to recommend that the limited partners of EEP approve the EEP merger agreement and the transactions contemplated thereby and directed that the EEP merger agreement be submitted to the limited partners of EEP for their approval. The EEQ Board, in its capacity as the board of directors of EEQ, based upon the recommendation of the Special Committee, also, acting in good faith, unanimously (a) determined that the Merger Agreement, the transactions contemplated thereby, including the Merger, and the EEQ LLC Agreement Amendment are fair and reasonable to EEQ, including the Unaffiliated EEQ Shareholders, (b) approved the Merger Agreement, the transactions contemplated thereby and the EEQ LLC Agreement Amendment, on the terms and subject to the conditions set forth in the Merger Agreement and (c) resolved to recommend that holders of Listed Shares approve the Merger Agreement, the transactions contemplated thereby and the EEQ LLC Agreement Amendment, and waive Section 9.01(a)(v) of the EEQ LLC Agreement, and directed that the Merger Agreement be submitted to the holders of Listed Shares for their approval.

Also on September 17, 2018, based upon the recommendation of the EEQ Board, the GP Board, acting in good faith, unanimously (a) determined that the EEP merger agreement and the transactions contemplated thereby, including the EEP merger, are fair and reasonable to EEP, including the holders of outstanding EEP units (other than Enbridge and its affiliates), (b) approved the EEP merger agreement and the transactions

 

77


Table of Contents

contemplated thereby, including the EEP merger, on the terms and subject to the conditions set forth in the EEP merger agreement and (c) resolved to recommend that the limited partners of EEP approve the EEP merger agreement and the transactions contemplated thereby and directed that the EEP merger agreement be submitted to the limited partners of EEP for their approval.

Thereafter, on September 17, 2018, the EEP merger agreement was executed by the parties thereto and the Merger Agreement was executed by the parties thereto.

On September 18, 2018, prior to market open, Enbridge, EEP and EEQ issued a joint press release announcing the execution of the EEP merger agreement and the Merger Agreement, respectively. Enbridge also simultaneously issued a joint press release with ENF announcing its entry into a definitive agreement with respect to its acquisition of all of the outstanding publicly held shares of ENF.

Recommendation of the Special Committee

The Special Committee considered the benefits of the Merger Agreement, the Merger, the Waiver, the EEQ LLC Agreement Amendment and the related transactions as well as the associated risks and, acting in good faith, unanimously (1) determined that the Merger Agreement, the transactions contemplated thereby, including the Merger, and the EEQ LLC Agreement Amendment, are fair and reasonable to EEQ, including the Unaffiliated EEQ Shareholders, and (2) approved the Merger Agreement, the transactions contemplated thereby, including the Merger, and the EEQ LLC Agreement Amendment on the terms and subject to the conditions set forth in the Merger Agreement. The Special Committee recommended that the EEQ Board approve the Merger Agreement, the transactions contemplated thereby, including the Merger, and the EEQ LLC Agreement Amendment.

Recommendation of the EEQ Board

Based upon the recommendation of the Special Committee, the EEQ Board, acting in good faith, unanimously determined that the Merger Agreement, the transactions contemplated by the Merger Agreement, including the Merger, and the EEQ LLC Agreement Amendment, are fair and reasonable to EEQ and the Unaffiliated EEQ Shareholders, and approved the Merger Agreement, the transactions contemplated thereby, including the Merger, and the EEQ LLC Agreement Amendment, on the terms and subject to the conditions set forth in the Merger Agreement. The EEQ Board directed that the Merger Agreement, the Waiver and the EEQ LLC Agreement Amendment be submitted to the shareholders of EEQ for their approval. The EEQ Board recommends that the shareholders of EEQ approve the Merger Agreement, the transactions contemplated thereby, including the Merger, the Waiver and the EEQ LLC Agreement Amendment.

Reasons for the Recommendation of the Special Committee

In evaluating the Merger Agreement and the transactions contemplated thereby, the Special Committee considered information supplied by management of Enbridge and EEQ, consulted with its legal and financial advisors and considered a number of factors in reaching its determination, approval and recommendation. The Special Committee also consulted with its legal advisors regarding its duties and obligations.

The Special Committee viewed the following factors as being generally positive or favorable in coming to its determination, approval and recommendation with respect to the Merger Agreement and the transactions contemplated thereby, including the Merger:

 

   

The Exchange Ratio of 0.335 of an Enbridge common share for each outstanding Listed Share held by the Unaffiliated EEQ Shareholders represents an implied market value of US$11.48 per Listed Share based on the closing price of Enbridge common shares on September 17, 2018, the last trading day before the public announcement of the Merger, and represents an implied premium of 21.6% to the closing price of Listed Shares on May 16, 2018, the last trading day before Enbridge made its initial proposal, and 22.4% to the 30-trading day volume-weighted average price of Listed Shares for the period ended on May 16, 2018.

 

78


Table of Contents
   

The financial analyses prepared by Goldman Sachs, as financial advisor to the Special Committee, and the oral opinion of Goldman Sachs delivered to the Special Committee on September 17, 2018, which was subsequently confirmed by delivery of a written opinion of Goldman Sachs, dated of even date therewith, to the effect that, as of such date and based upon and subject to the factors and assumptions set forth therein (as more fully described below under “—Opinion of Goldman Sachs & Co. LLC, Financial Advisor to the Special Committee”), the Exchange Ratio pursuant to the Merger Agreement is fair from a financial point of view to the holders (other than Enbridge and its affiliates) of Listed Shares.

 

   

Through negotiation, the Special Committee was able to increase the Exchange Ratio by 16% as compared to the exchange ratio that was first proposed by Enbridge on May 17, 2018.

 

   

The fact that the Merger is conditioned upon the consummation of the proposed EEP Merger, and the fact that the sole assets of EEQ consist of interests in EEP and if the proposed EEP Merger were to be consummated, EEQ would own interests in an entity that is no longer publicly traded.

 

   

The Special Committee’s belief that the Merger is likely to present the best opportunity to maximize value for the EEQ shareholders.

 

   

The Special Committee’s belief, based on statements from Enbridge, that Enbridge was unwilling to consider alternative transactions, including the reorganization of EEP into a c-corporation for tax purposes.

 

   

The Special Committee’s belief that it was unrealistic to expect an unsolicited third-party acquisition proposal to acquire assets or control of EEQ in light of Enbridge’s ownership of all of the voting shares of EEQ and approximately 11.68% of the outstanding Listed Shares, and it was unlikely that the Special Committee could conduct a meaningful process to solicit interest in the acquisition of assets or control of EEQ.

 

   

The Merger (i) should qualify as a “reorganization” within the meaning of Section 368(a) of the Code and should not result in gain recognition to U.S. holders of Listed Shares except for any gain or loss that may result from the receipt by such holder of cash in lieu of a fractional Enbridge common share and (ii) generally should not result in gain recognition to EEQ shareholders that are not “five-percent transferee shareholders” pursuant to Section 367(a) of the Code.

 

   

The Special Committee’s belief that the merger consideration represented the highest consideration that could be obtained from a potential business combination transaction with Enbridge, that the Merger was more favorable to the EEQ shareholders than continuing to hold Listed Shares as a stand-alone entity, and that the merger consideration presents the best available opportunity to maximize value for EEQ shareholders in light of Enbridge’s stated position that it was unwilling to consider alternative transactions, such as converting EEP to a c-corporation for tax purposes.

 

   

The Special Committee’s assessment of the negative impact of recent regulatory changes on the long-term financial projections for EEP, including the impact on EEP’s financial outlook from the implementation of the TCJA, the March FERC Announcement and the July FERC Announcement.

 

   

The Special Committee’s belief, based on information received from Enbridge, that the International Joint Tariff Agreement between Enbridge Pipelines, Inc. and Enbridge Energy, Limited Partnership, effective May 6, 2011, could not be renegotiated to increase EEP’s revenue under such agreement.

 

   

The implications for the Unaffiliated EEQ Shareholders of remaining with the status quo rather than approving the Merger Agreement and the Merger in light of EEP’s expected need for continuing financial support from Enbridge.

 

   

Enbridge’s stated position that EEP would need to issue US$500 million of additional Class A common units during 2018 as reflected in the Revised Management Projection, and the Special Committee’s belief that holders of EEP Class A common units (the “EEP Unitholders”) would experience significant dilution if such issuance occurred.

 

79


Table of Contents
   

Enbridge’s stated position that EEP’s cost of capital is ineffective, EEP is no longer an effective financing vehicle for Enbridge and EEP’s valuation is not supportive of future asset contributions from Enbridge.

 

   

The implications for the Unaffiliated EEQ Shareholders of remaining with the status quo rather than approving the Merger Agreement and the Merger in light of Enbridge’s stated position that it intended to reduce the amount of quarterly cash distribution payments in respect of the Class A common units from US$1.40 per Class A common unit (on an annualized basis) to US$1.00 per Class A common unit (on an annualized basis) as reflected in the Revised Management Projections, and the corresponding impact such changes would have on distributions in respect of the Listed Shares.

 

   

The Special Committee’s belief, based on informal guidance received by management of Enbridge from credit rating agencies and provided to the Special Committee, that EEP could experience a downgrade in its credit rating in the near term based on information contained in the Revised Management Projections without a significant equity investment, which Enbridge intends to be in the form of additional EEP units issued to Enbridge.

 

   

The Special Committee’s belief that EEP would have access to greater financial and other resources and opportunities as a wholly owned subsidiary of Enbridge.

 

   

Upon completion of the Merger, EEQ shareholders will receive Enbridge common shares, which have substantially more liquidity than Listed Shares because of the Enbridge common shares’ significantly larger average daily trading volume, as well as Enbridge having a broader investor base and a larger public float.

 

   

The Merger will provide EEQ shareholders with equity ownership in a combined company that is anticipated to have certain benefits as compared to EEQ on a standalone basis:

 

   

The combined company will have an increased scale relative to EEQ and EEP and is anticipated to have stronger coverage with respect to dividends, which is expected to result in (1) greater market confidence, (2) an enhanced outlook for dividend growth and (3) better positioning for varying and uncertain industry and commodity pricing environments.

 

   

The combined company is anticipated to be capable of pursuing larger and more meaningful growth opportunities and capital projects than could have been pursued by EEQ and EEP alone.

 

   

The combined company will operate under a simplified corporate structure to create a stronger and more efficient company and which will, among other things, eliminate potential conflicts of interest between Enbridge, EEQ and EEP.

 

   

The combined company is anticipated to experience cost savings and other efficiencies, including reduced filing requirements with the Commission and other cost savings as a result of maintaining one public company rather than two.

 

   

The combined company will experience a step-up in tax basis resulting from the proposed EEP Merger and the SEP Merger.

 

   

Enbridge’s standalone credit metrics are stronger than EEQ’s, and the Merger will further strengthen the combined company’s balance sheet by retaining a higher proportion of internally generated cash flow, thereby reducing the amount of debt financing required to fund EEP’s growth capital expenditures.

 

   

The Exchange Ratio provided for pursuant to the Merger Agreement is fixed and therefore the implied value of the consideration payable to the Unaffiliated EEQ Shareholders will increase in the event the market price of Enbridge common shares increases relative to the market price of Listed Shares prior to the closing of the Merger.

 

   

The lack of significant regulatory hurdles to consummation of the Merger and, as a result, the fact that the Merger will likely be able to be consummated during the fourth quarter of 2018.

 

80


Table of Contents
   

The fact that the terms and conditions of the EEP Merger Agreement require EEP to continue to pay its regular quarterly cash distributions at historical levels for any completed quarters with a record date prior to the consummation of the EEP Merger, and that Enbridge and EEP will coordinate the payment of dividends, and the corresponding impact that EEP cash distributions have on distributions in respect of the Listed Shares.

 

   

The fact that the Merger Agreement requires Enbridge to pay US$4 million of costs incurred by EEQ if the Merger is not approved by the EEQ shareholders, subject to certain exceptions.

In addition, the Special Committee considered a number of factors relating to the procedural safeguards involved in the negotiation of the Merger Agreement, including those discussed below, each of which supported its determination with respect to the Merger:

 

   

The fact that EEQ shareholders are free to approve or reject the Merger, and approval of the Merger requires the affirmative vote of the holders of a majority of the outstanding Listed Shares (other than the Excluded Shares) entitled to vote on such matters at a meeting of the holders of Listed Shares.

 

   

The Board determined in the good faith exercise of its reasonable judgment to establish the Special Committee, composed of directors who are not officers of EEQ or officers, directors or employees of any affiliate of EEQ (other than serving as directors of the General Partner, for which EEQ acts as a delegate).

 

   

The Special Committee selected and retained its own legal and financial advisors with knowledge and experience with respect to public merger and acquisition transactions, EEQ’s industry generally and EEQ particularly, as well as substantial experience advising other companies with respect to transactions similar to the Merger.

 

   

The terms and conditions of the Merger Agreement were determined through arm’s length negotiations between the Special Committee and Enbridge and their respective representatives and advisors.

 

   

The Special Committee had no obligation to approve or recommend any transaction.

Prior to approval of the Merger Agreement by the EEQ shareholders, the Merger Agreement affords EEQ flexibility to consider and evaluate superior proposals, and the Special Committee to change its recommendation in response to any such proposals and to certain intervening events, as follows:

 

   

EEQ is permitted, subject to certain limitations, to enter into or participate in discussions or negotiations with, or furnish information to, any person in response to an unsolicited written acquisition proposal for EEQ, if the Special Committee, after consultation with outside legal counsel and financial advisors, determines in good faith (1) that such acquisition proposal constitutes or is reasonably likely to result in, a proposal that, if consummated, would be more favorable to the Unaffiliated EEQ Shareholders than the Merger and is reasonably likely to be consummated on the proposed terms or (2) that such acquisition proposal did not result from a material breach of the Merger Agreement terms regarding a change in the Special Committee’s recommendation.

 

   

EEQ and the Special Committee are permitted, subject to certain limitations, to disclose to the Unaffiliated EEQ Shareholders (1) a position contemplated in connection with certain tender offers or (2) such information that the Special Committee, after consultation with outside legal counsel and financial advisors, determines in good faith that the failure to disclose such information would be materially adverse to the interests of EEQ or the Unaffiliated EEQ Shareholders or would otherwise be reasonably likely to be inconsistent with its duties under applicable law or its obligations under the EEQ LLC Agreement.

 

   

The Special Committee is permitted, subject to certain limitations, to change its recommendation that the EEQ shareholders approve the Merger Agreement (1) if such change in recommendation occurs in response to receipt of a proposal that did not arise from or in connection with a breach of the no

 

81


Table of Contents
 

solicitation provisions in the Merger Agreement and the Special Committee, after consultation with outside legal counsel and financial advisors, determines in good faith that, if consummated, such transaction would be more favorable to the Unaffiliated EEQ Shareholders than the Merger and is reasonably likely to be consummated and (2) in response to an intervening event involving facts not known to the Special Committee at the time it made its recommendation if the Special Committee, after consultation with outside legal counsel and financial advisors, reasonably determines in good faith that failure to change its recommendation would be materially adverse to the interests of EEQ or the Unaffiliated EEQ Shareholders or would otherwise be reasonably likely to be inconsistent with its duties under applicable law or its obligations under the EEQ LLC Agreement.

The Special Committee considered the following additional factors as being potentially negative or unfavorable in making its determination, approval and recommendation with respect to the Merger Agreement and the transactions contemplated thereby, including the Merger:

 

   

The Special Committee’s view that the announcement of and market speculation regarding a possible simplification transaction that might involve Enbridge acquiring EEQ resulted in the recent trading price ratio of Enbridge common shares to Listed Shares being depressed, which, among other things, would negatively impact the premium for Listed Shares implied by the Exchange Ratio.

 

   

The Exchange Ratio is fixed and therefore the implied value of the consideration payable to the Unaffiliated EEQ Shareholders will decrease in the event the market price of Enbridge common shares decreases relative to the market price of Listed Shares prior to the closing of the Merger.

 

   

The Special Committee’s expectation that the EEP Merger will be dilutive to EEP’s distributable cash flow per limited partner unit and distribution per limited partner unit throughout the discrete forecast period.

 

   

The Special Committee was not authorized to and did not conduct an auction process or other solicitation of interest from third parties for the acquisition of EEQ.

 

   

The Merger Agreement’s limitations on the Special Committee’s ability to solicit or knowingly encourage other offers, and the conditions it places on the Special Committee’s ability to negotiate or discuss alternative proposals with third parties, to change the recommendation of the Board that EEQ shareholders vote to approve the Merger Agreement or to terminate the Merger Agreement to accept a superior proposal.

 

   

The Merger Agreement restricts the conduct of EEQ’s business prior to the completion of the Merger, which may delay or prevent EEQ from pursuing business opportunities that may arise pending the completion of the Merger.

 

   

EEQ has incurred and will continue to incur significant transaction costs and expenses in connection with the Merger, whether or not the Merger is completed, and EEQ is not entitled to reimbursement of such costs and expenses unless the Merger Agreement is terminated under certain circumstances.

 

   

There is risk that management’s focus and resources for other strategic opportunities and operational matters could be diverted for an extended period of time while the parties work to complete the Merger and integration process and by any litigation that may occur in connection with the Merger.

 

   

Litigation may be commenced in connection with the Merger, and such litigation may increase costs and result in a diversion of management’s focus.

 

   

There is risk that the potential benefits expected to be realized in the Merger might not be fully realized, or might not be realized within the expected time period.

 

   

The Merger may not be completed in a timely manner, or at all, which could result in significant costs and disruption to EEQ’s normal business or negatively impact the trading price of Listed Shares.

 

   

EEQ shareholders are not entitled to appraisal rights under the Merger Agreement, the EEQ LLC Agreement or Delaware law.

 

82


Table of Contents
   

EEQ shareholders will be foregoing any potential benefits that could be realized by remaining shareholders of a standalone entity.

 

   

The Enbridge common shares may not trade at expected valuations.

 

   

The resulting combined company may not achieve its projected financial results or expected synergies.

 

   

Some of EEQ’s directors and executive officers have interests in the Merger that are different from, or in addition to, those of the Unaffiliated EEQ Shareholders.

 

   

The risks of the type and nature described section titled “Cautionary Statement Regarding Forward-Looking Statements” beginning on page 31 and under the heading “Risk Factors” in the EEQ Annual Report on Form 10-K for the year ended December 31, 2017, and subsequent reports it files under the Exchange Act. See “Where You Can Find More Information” beginning on page 161.

The Special Committee considered all of the foregoing factors as a whole and, on balance, concluded that they supported a determination to approve the Merger Agreement. The foregoing discussion of the information and factors considered by the Special Committee includes the material factors, but is not exhaustive. In view of the wide variety of factors considered by the Special Committee in connection with its evaluation of the Merger and the complexity of these matters, the Special Committee did not consider it practical to, and did not attempt to, quantify, rank or otherwise assign relative weights to the specific factors it considered in reaching its decision. The Special Committee evaluated the factors described above, among others, and reached a consensus that the Merger Agreement is fair and reasonable to EEQ, including the Unaffiliated EEQ Shareholders. In considering the factors described above, and any other factors, individual members of the Special Committee may have viewed factors differently or given weight or merit to different factors. The Special Committee approved the Merger Agreement and recommended it to the Board based on the totality of the information presented to and considered by it.

In considering the approval of the Merger Agreement by the Special Committee, you should be aware that EEQ’s executive officers and directors have interests in the Merger that may be different from, or in addition to, the interests of EEQ shareholders generally. The Special Committee was aware of these interests and considered them when approving the Merger Agreement. See “The Merger—Interests of Directors and Executive Officers of EEQ in the Merger” beginning on page 96.

The explanation of the reasoning of the Special Committee and certain information presented in this section are forward-looking in nature and, therefore, the information should be read in light of the factors discussed in the section entitled “Cautionary Statement Regarding Forward-Looking Statements.”

Opinion of Goldman Sachs & Co. LLC, Financial Advisor to the Special Committee

Goldman Sachs rendered its opinion to the Special Committee that, as of September 17, 2018 and based upon and subject to the factors and assumptions set forth therein, the Exchange Ratio pursuant to the Merger Agreement was fair from a financial point of view to the holders (other than Enbridge and its affiliates) of Listed Shares.

The full text of the written opinion of Goldman Sachs, dated September 17, 2018, which sets forth the assumptions made, procedures followed, matters considered and limitations on the review undertaken in connection with the opinion, is attached as Annex B. Goldman Sachs provided advisory services and its opinion for the information and assistance of the Special Committee in connection with its consideration of the Merger. The Goldman Sachs opinion is not a recommendation as to how any holder of Listed Shares should vote with respect to the Merger or any other matter.

In connection with rendering the opinion described above and performing its related financial analyses, Goldman Sachs reviewed, among other things:

 

   

the Merger Agreement;

 

83


Table of Contents
   

annual reports to shareholders and Annual Reports on Form 10-K of EEQ and Enbridge for the five years ended December 31, 2017;

 

   

certain interim reports to shareholders and Quarterly Reports on Form 10-Q of EEQ and Enbridge;

 

   

certain other communications from EEQ and Enbridge to their respective shareholders;

 

   

certain publicly-available research analyst reports for EEQ and Enbridge;

 

   

certain financial analyses and forecasts for EEP (the “EEP Forecasts”), certain financial analyses and forecasts for Enbridge standalone (the “Enbridge Standalone Forecasts”), and certain financial analyses and forecasts for Enbridge pro forma for the Merger and the EEP merger, as adjusted by the Special Committee (the “Enbridge Pro Forma Forecasts” and, together with the EEP Forecasts and the Enbridge Standalone Forecasts, the “Forecasts”), in each case, as prepared by the management of Enbridge and approved for Goldman Sachs’ use by the Special Committee, including certain cost synergies projected by the management of Enbridge to result from the Merger and the EEP merger, as approved for Goldman Sachs’ use by the Special Committee (the “Estimated Cost Synergies”); and

 

   

the Estimated Derivative Claims Value, as prepared by the Derivative Action Subcommittee and approved for Goldman Sachs’ use by the Special Committee.

Goldman Sachs also held discussions with members of the senior management of Enbridge and members of the Special Committee regarding their assessment of the strategic rationale for, and the potential benefits of, the Merger and the past and current business operations, financial condition and future prospects of EEQ, EEP and Enbridge; reviewed the reported price and trading activity for the Listed Shares, Enbridge common shares and EEP’s Class A common units; compared certain financial and stock market information for EEQ, EEP and Enbridge with similar information for certain other companies the securities of which are publicly traded; reviewed the financial terms of certain recent business combinations in the midstream oil and gas industry; and performed such other studies and analyses, and considered such other factors, as it deemed appropriate.

For purposes of rendering this opinion, Goldman Sachs, with the Special Committee’s consent, relied upon and assumed the accuracy and completeness of all of the financial, legal, regulatory, tax, accounting and other information provided to, discussed with or reviewed by, it, without assuming any responsibility for independent verification thereof. In that regard, Goldman Sachs assumed with the Special Committee’s consent that the Forecasts, including the Estimated Cost Synergies, and the Estimated Derivative Claims Value, were reasonably prepared on a basis reflecting the best currently available estimates and judgments of the Special Committee. Goldman Sachs did not make an independent evaluation or appraisal of the assets and liabilities (including any contingent, derivative or other off-balance-sheet assets and liabilities) of EEQ, EEP or Enbridge or any of their respective subsidiaries and, except for the Estimated Derivative Claims Value, it was not furnished with any such evaluation or appraisal. Goldman Sachs assumed that all governmental, regulatory or other consents and approvals necessary for the consummation of the Merger will be obtained without any adverse effect on EEQ, EEP or Enbridge or on the expected benefits of the Merger in any way meaningful to its analysis. Goldman Sachs has also assumed that the Merger will be consummated on the terms set forth in the Merger Agreement and that the EEP merger will be consummated in accordance with the terms of the EEP merger agreement, in each case, without the waiver or modification of any term or condition the effect of which would be in any way meaningful to its analysis.

Goldman Sachs’ opinion does not address the underlying business decision of EEQ to engage in the Merger or the relative merits of the Merger as compared to any strategic alternatives that may be available to EEQ; nor does it address any legal, regulatory, tax or accounting matters. Goldman Sachs was not requested to solicit, and did not solicit, interest from other parties with respect to an acquisition of, or other business combination with, EEQ or any other alternative transaction. Goldman Sachs’ opinion addresses only the fairness from a financial point of view, as of the date of the opinion, of the Exchange Ratio pursuant to the Merger Agreement to the holders (other than Enbridge and its affiliates) of Listed Shares. Goldman Sachs’ opinion does not express any

 

84


Table of Contents

view on, and does not address, any other term or aspect of the Merger Agreement or the Merger or any term or aspect of any other agreement or instrument contemplated by the Merger Agreement or entered into or amended in connection with the Merger, including the EEP merger, the EEP merger agreement or the transactions contemplated thereby, the fairness of the Merger to, or any consideration received in connection therewith by, the holders of any other class of securities, creditors, or other constituencies of EEQ; nor as to the fairness of the amount or nature of any compensation to be paid or payable to any of the officers, directors or employees of EEQ, or class of such persons, in connection with the Merger, whether relative to the Exchange Ratio pursuant to the Merger Agreement or otherwise. Goldman Sachs’ opinion was necessarily based on economic, monetary, market and other conditions as in effect on, and the information made available to it as of, the date of the opinion and Goldman Sachs assumed no responsibility for updating, revising or reaffirming its opinion based on circumstances, developments or events occurring after the date of its opinion. In addition, Goldman Sachs does not express any opinion as to the prices at which Enbridge common shares will trade at any time or as to the impact of the Merger on the solvency or viability of EEQ, EEP or Enbridge or the ability of EEQ, EEP or Enbridge to pay their respective obligations when they come due. Goldman Sachs’ opinion was approved by a fairness committee of Goldman Sachs.

The following is a summary of the material financial analyses delivered by Goldman Sachs to the Special Committee in connection with rendering the opinion described above. The following summary, however, does not purport to be a complete description of the financial analyses performed by Goldman Sachs, nor does the order of analyses described represent relative importance or weight given to those analyses by Goldman Sachs. Except as otherwise noted, the following quantitative information, to the extent that it is based on market data, is based on market data as it existed on or before September 14, 2018 and is not necessarily indicative of current market conditions. At the instruction of the Special Committee, Goldman Sachs used the EEP Forecasts for purposes of its financial analyses of EEP and EEQ.

Following Goldman Sachs’ presentation to the Special Committee on September 17, 2018 (the “September 17 Presentation”), Goldman Sachs determined that a stock price used in the illustrative precedent premia paid analysis as the closing stock price of EEQ on May 16, 2018 (the “Utilized Stock Price”) was not correct. Goldman Sachs subsequently performed such analysis, as of September 17, 2018, using the correct stock price of EEQ on May 16, 2018 (the “Corrected Stock Price”). Such subsequent analysis performed by Goldman Sachs does not address any circumstances, developments or events occurring after September 17, 2018, which is the date of the written opinion of Goldman Sachs, and Goldman Sachs’ opinion set forth in its written opinion letter was provided only as of such date. Based upon and subject to the foregoing, Goldman Sachs confirmed to the Special Committee on October 2, 2018, that, had Goldman Sachs performed its financial analyses set forth in the September 17 Presentation using the Corrected Stock Price, there would have been no change to the conclusion set forth in the opinion letter of Goldman Sachs.

Illustrative Net Asset Value Analysis—EEQ Standalone. Using the EEP Forecasts, Goldman Sachs performed a discounted cash flow analysis of EEP to calculate indications of the present value of the future unlevered free cash flows that EEP could be expected to generate and the illustrative present value per Listed Share implied by such analysis. Using discount rates ranging from 6.5% to 7.5%, reflecting estimates of EEP’s weighted average cost of capital, Goldman Sachs discounted to present value as of June 30, 2018 (i) estimates of unlevered free cash flow for EEP for July 1, 2018 through December 31, 2022, as calculated by Goldman Sachs using the EEP Forecasts and approved for Goldman Sachs’ use by the Special Committee and (ii) a range of illustrative terminal values for EEP, which were derived by applying an illustrative terminal value to EBITDA multiple range of 9.0x to 12.0x to estimated terminal year EBITDA for EEP, which estimated EBITDA was calculated by Goldman Sachs using the EEP Forecasts and approved for Goldman Sachs’ use by the Special Committee. Goldman Sachs derived such range of discount rates by application of the Capital Asset Pricing Model, which requires certain company-specific inputs, including EEP’s target capital structure weightings, the cost of long-term debt, and a beta for EEP, as well as certain financial metrics for the United States financial markets generally. The illustrative terminal value to EBITDA multiple range for EEP was derived by Goldman Sachs utilizing its professional judgment and experience, taking into account, among other things, one-year

 

85


Table of Contents

forward EBITDA multiples implied by EEP’s and EEQ’s trading prices (and IBES estimates of EEP’s one-year forward EBITDA) over prior periods. Goldman Sachs derived a range of illustrative enterprise values for EEP by adding the range of present values it derived above. Goldman Sachs then subtracted from the range of illustrative enterprise values it derived for EEP (i) the estimated amount of EEP’s net debt as of June 30, 2018, as provided by management of Enbridge and approved for Goldman Sachs’ use by the Special Committee and (ii) an illustrative value of the General Partner’s ownership interest in EEP calculated using the percentage of EEP distributions estimated to be received by the General Partner for the twelve-month period ended June 30, 2019, as reflected in the EEP Forecasts, to derive a range of illustrative equity values for EEP. Goldman Sachs then divided the range of illustrative equity values for EEP by the number of fully diluted limited partner units of EEP (which included the i-units held by EEQ) as of September 14, 2018, as provided by management of Enbridge and approved for Goldman Sachs’ use by the Special Committee, and, at the instruction of the Special Committee, added to the resulting illustrative range of per share equity values for EEP an illustrative per share value for the Estimated Derivative Claims Value of US$0.22 (the “Illustrative Per Share Derivative Claim Valuation”), which Goldman Sachs calculated by dividing the Estimated Derivative Claims Value by the number of fully diluted limited partner units of EEP (which included the i-units held by EEQ) as of September 14, 2018, as provided by management of Enbridge and approved for Goldman Sachs’ use by the Special Committee, to derive an illustrative range of implied values per Listed Share of US$9.63 to US$17.58, which implied an illustrative range of exchange ratios of 0.2841x to 0.5186x based on the closing price per Enbridge common share of US$33.89 as of September 14, 2018.

Illustrative Discounted Cash Flow Analysis—Enbridge Standalone; Implied Exchange Ratio. Using the Enbridge Standalone Forecasts, Goldman Sachs performed an illustrative discounted cash flow analysis of the Enbridge common shares on a standalone basis. Using discount rates ranging from 4.5% to 5.5%, reflecting estimates of Enbridge’s weighted average cost of capital, Goldman Sachs discounted to present value as of June 30, 2018 (i) estimates of unlevered free cash flow for Enbridge for July 1, 2018 through December 31, 2022, as calculated by Goldman Sachs using the Enbridge Standalone Forecasts and approved for Goldman Sachs’ use by the Special Committee and (ii) a range of illustrative terminal values for Enbridge, which were derived by applying an illustrative terminal value to EBITDA multiple range of 11.5x to 13.5x to estimated terminal year EBITDA for Enbridge, which estimated EBITDA was calculated by Goldman Sachs using the Enbridge Standalone Forecasts and approved for Goldman Sachs’ use by the Special Committee. Goldman Sachs derived such discount rates by application of the Capital Asset Pricing Model, which requires certain company-specific inputs, including Enbridge’s target capital structure weightings, the cost of long-term debt, after-tax yield on permanent excess cash, if any, future applicable marginal cash tax rate and a beta for Enbridge, as well as certain financial metrics for the United States and Canadian financial markets generally. The illustrative terminal value to EBITDA multiple ranges for Enbridge were derived by Goldman Sachs utilizing its professional judgment and experience, taking into account, among other things, one-year forward EBITDA multiples implied by Enbridge’s trading prices (and IBES estimates of Enbridge’s one-year forward EBITDA) over prior periods. Goldman Sachs derived a range of illustrative enterprise values for Enbridge by adding the range of present values it derived above. Goldman Sachs then subtracted from the range of illustrative enterprise values it derived for Enbridge (i) the estimated amount of Enbridge’s net debt as of June 30, 2018, as provided by management of Enbridge and approved for Goldman Sachs’ use by the Special Committee, which was reduced, at the direction of the Special Committee, to reflect the anticipated use by Enbridge of net cash proceeds from the Renewable Asset Sale and the Canadian G&P Sale to pay down a portion of its outstanding debt; (ii) the estimated amount of Enbridge’s preferred equity as of June 30, 2018, as provided by management of Enbridge and approved for Goldman Sachs’ use by the Special Committee, and (iii) the market value of the non-controlling interests in Enbridge’s publicly traded sponsored vehicles (other than SEP) as of September 14, 2018, to derive a range of illustrative equity values for Enbridge. Goldman Sachs then divided the range of illustrative equity values of Enbridge by the number of fully diluted outstanding Enbridge common shares, which included an estimate of the Enbridge common shares to be issued by Enbridge in connection with its acquisition of SEP, as provided by management of Enbridge and approved for Goldman Sachs’ use by the Special Committee, to derive a range of illustrative values per Enbridge common share on a standalone basis of US$39.63 to US$55.13.

 

86


Table of Contents

Using the range of illustrative values per Listed Share and the range of illustrative values per Enbridge common share on a standalone basis calculated above, Goldman Sachs calculated an illustrative range of implied exchange ratios per Listed Share of 0.2429x to 0.3188x.

Illustrative Present Value of Future Share Price Analysis—EEQ Standalone. Goldman Sachs performed an illustrative analysis of the implied present values of illustrative future values per Listed Share on a standalone basis, which is designed to provide an indication of the present value of a theoretical future value of a company’s equity as a function of such company’s financial multiples. For this analysis, Goldman Sachs used the EEP Forecasts for each of the years 2018 to 2022. Goldman Sachs first calculated the implied values per EEP unit on a standalone basis as of December 31 for each of the years 2019 to 2021, by applying a range of illustrative one-year forward P/DCF multiples of 6.0x to 10.0x to estimated distributable cash flow per EEP unit for each of the years 2020 to 2022, as provided by management of Enbridge and approved for Goldman Sachs’ use by the Special Committee, which are referred to as the “2020 EEP DCF Estimate”, the “2021 EEP DCF Estimate” and the “2022 EEP DCF Estimate”, respectively. The illustrative multiple estimates were derived by Goldman Sachs utilizing its professional judgment and experience, taking into account, among other things, P/DCF multiples for EEP Class A common units implied by trading prices of EEP Class A common units (and Wall Street research estimates of EEP’s one-year forward distributable cash flows) over prior periods. Goldman Sachs then multiplied the illustrative range of implied values per EEP unit as of December 31 for each of the years 2019 to 2021 by the estimated number of i-units outstanding as of December 31 for each of 2019 to 2021, respectively, as provided by management of Enbridge and approved for Goldman Sachs’ use by the Special Committee, to derive an illustrative range of implied equity values for EEQ as of December 31 for each of 2019 to 2021, respectively. Goldman Sachs then discounted to present value as of June 30, 2018, using an illustrative range of discount rates of 8.5% to 10.5%, reflecting an estimate of EEQ’s cost of equity, the range of illustrative equity values it derived for EEQ as of December 31 for each of 2019 to 2021. Goldman Sachs derived such range of discount rates by application of the Capital Asset Pricing Model, which requires certain company-specific inputs, including a beta for EEP, as well as certain financial metrics for the United States financial markets generally. Goldman Sachs then divided the range of illustrative present equity values it derived for EEQ by the number of fully diluted outstanding Listed Shares as of September 14, 2018, as provided by management of Enbridge and approved for Goldman Sachs’ use by the Special Committee, and, at the instruction of the Special Committee, added to the resulting illustrative range of per share equity values for “EEQ” the Illustrative Per Share Derivative Claim Valuation of US$0.22 to derive a range of illustrative implied values per Listed Share of (i) US$10.07 to US$17.09 based on the 2020 EEP DCF Estimate, (ii) US$10.17 to US$17.59 based on the 2021 EEP DCF Estimate and (iii) US$10.33 to US$17.28 based on the 2022 EEP DCF Estimate. Using the range of illustrative implied values per Listed Share calculated above and the closing price per Enbridge common share of US$33.89 as of September 14, 2018, Goldman Sachs calculated an illustrative range of implied exchange ratios of 0.2971x to 0.5189x.

Illustrative Present Value of Future Share Price Analysis—Enbridge Standalone; Implied Exchange Ratio. Goldman Sachs performed an illustrative analysis of the implied present values per Enbridge common share on a standalone basis, which is designed to provide an indication of the present value of a theoretical future value of a company’s equity as a function of such company’s financial multiples. For this analysis, Goldman Sachs used Enbridge Standalone Forecasts for each of the years 2018 to 2022. Goldman Sachs first calculated the implied values per Enbridge common share as of December 31 for each of the years 2019 to 2021, by applying a range of illustrative one-year forward P/DCF multiples of 10.0x to 13.0x to estimated distributable cash flow per Enbridge common share for each of the years 2020 to 2022, as provided by management of Enbridge and approved for Goldman Sachs’ use by the Special Committee, which are referred to as the “2020 Enbridge Standalone DCF Estimate”, the “2021 Enbridge Standalone DCF Estimate” and the “2022 Enbridge Standalone DCF Estimate”, respectively. These illustrative multiple estimates were derived by Goldman Sachs utilizing its professional judgment and experience, taking into account, among other things, P/DCF multiples for Enbridge common shares implied by trading prices of Enbridge common shares (and Wall Street research estimates of Enbridge’s one-year forward distributable cash flows) over prior periods. Goldman Sachs then discounted to present value as of June 30, 2018, using an illustrative range of discount rates of 5.5% to 7.5%, reflecting an estimate of Enbridge’s

 

87


Table of Contents

cost of equity, (i) the sum of (x) the theoretical future value per Enbridge common share as of December 31, 2019 and (y) the aggregate dividends per Enbridge common share estimated for July 1, 2018 to December 31, 2019 as calculated by Goldman Sachs using the Enbridge Standalone Forecasts and approved for Goldman Sachs’ use by the Special Committee; (ii) the sum of (x) the theoretical future value per Enbridge common share as of December 31, 2020 and (y) the aggregate dividends per Enbridge common share estimated for July 1, 2018 through December 31, 2020 as calculated by Goldman Sachs using the Enbridge Standalone Forecasts and approved for Goldman Sachs’ use by the Special Committee and (iii) the sum of (x) the theoretical future value per Enbridge common share as of December 31, 2021 and (y) the aggregate dividends per Enbridge common share estimated for July 1, 2018 to December 31, 2021 as calculated by Goldman Sachs using the Enbridge Standalone Forecasts and approved for Goldman Sachs’ use by the Special Committee. Goldman Sachs derived such range of discount rates by application of the Capital Asset Pricing Model, which requires certain company-specific inputs, including a beta for Enbridge, as well as certain financial metrics for the United States and Canadian financial markets generally. This analysis resulted in a range of illustrative implied values per Enbridge common share of (i) US$38.63 to US$50.59 based on the 2020 Enbridge Standalone DCF Estimate, (ii) US$39.41 to US$51.81 based on the 2021 Enbridge Standalone DCF Estimate and (iii) US$41.15 to US$54.37 based on the 2022 Enbridge Standalone DCF Estimate. Using the range of illustrative implied present values per Listed Share on a standalone basis calculated above and the range of illustrative implied present values per Enbridge common share on a standalone basis calculated above, Goldman Sachs calculated an illustrative range of implied exchange ratios per Listed Share of 0.2607x to 0.3235x.

Illustrative Present Value of Future Share Price Analysis—Implied Valuation Uplift. Goldman Sachs performed an illustrative analysis of the implied present values per Enbridge common share pro forma for the Merger and the EEP merger and calculated the implied valuation uplift for the Listed Share upon consummation of the Merger and the EEP merger. Goldman Sachs first calculated the implied values per Enbridge common share as of December 31 for each of the years 2019 to 2021 by applying a range of illustrative one-year forward P/DCF multiples of 10.0x to 13.0x to estimated distributable cash flow per Enbridge common share for 2020 (the “2020 Enbridge Pro Forma DCF Estimate”), estimated distributable cash flow per Enbridge common share for 2021 (the “2021 Enbridge Pro Forma DCF Estimate”) and estimated distributable cash flow per Enbridge common share for 2022 (the “2022 Enbridge Pro Forma DCF Estimate”), in each case as calculated by Goldman Sachs using the Enbridge Pro Forma Forecasts and approved for Goldman Sachs’ use by the Special Committee. These illustrative multiple estimates were derived by Goldman Sachs utilizing its professional judgment and experience, taking into account, among other things, P/DCF multiples for Enbridge common shares implied by trading prices of Enbridge common shares (and Wall Street research estimates of Enbridge’s one-year forward distributable cash flows) over prior periods. Goldman Sachs then discounted to present value as of June 30, 2018, using an illustrative range of discount rates of 5.5% to 7.5%, reflecting an estimate of Enbridge’s cost of equity, (i) the sum of (x) the theoretical future value per Enbridge common share as of December 31, 2019 and (y) the aggregate dividends per Enbridge common share estimated for July 1, 2018 to December 31, 2019 as calculated by Goldman Sachs using the Enbridge Pro Forma Forecasts and approved for Goldman Sachs’ use by the Special Committee; (ii) the sum of (x) the theoretical future value per Enbridge common share as of December 31, 2020 and (y) the aggregate dividends per Enbridge common share estimated for July 1, 2018 through December 31, 2020 as calculated by Goldman Sachs using the Enbridge Pro Forma Forecasts and approved for Goldman Sachs’ use by the Special Committee and (iii) the sum of (x) the theoretical future value per Enbridge common share as of December 31, 2021 and (y) the aggregate dividends per Enbridge common share estimated for July 1, 2018 to December 31, 2021 as calculated by Goldman Sachs using the Enbridge Pro Forma Forecasts and approved for Goldman Sachs’ use by the Special Committee to derive a range of illustrative implied present values per Enbridge common share pro forma for the Merger and the EEP merger. Goldman Sachs derived such range of discount rates by application of the Capital Asset Pricing Model, which requires certain company-specific inputs, including a beta for Enbridge, as well as certain financial metrics for the United States and Canadian financial markets generally. Goldman Sachs then calculated a range of illustrative implied values for the pro forma value to be received per Listed Share pursuant to the Merger Agreement by multiplying the implied present values per Enbridge common share pro forma for the Merger and the EEP merger derived from the above analysis by the Exchange Ratio. This analysis resulted in a range of illustrative implied values for the pro forma value to be

 

88


Table of Contents

received per Listed Share pursuant to the Merger Agreement of (i) US$13.13 to US$17.20 based on the 2020 Enbridge Pro Forma DCF Estimate, (ii) US$13.14 to US$17.28 based on the 2021 Enbridge Pro Forma DCF Estimate and (iii) US$13.96 to US$18.46 based on the 2022 Enbridge Pro Forma DCF Estimate.

Illustrative Precedent Premia Paid Analysis. Goldman Sachs reviewed and analyzed, using publicly-available information, the acquisition premia or discount for buy-in transactions involving master limited partnerships announced during the time period from September 2013 through September 14, 2018. For the entire period, using publicly-available information, Goldman Sachs calculated the discount / premia of the price paid in the transactions relative to the target’s last undisturbed closing stock price prior to announcement of the relevant transaction, offer, or strategic review, as applicable. This analysis indicated a range of illustrative discount / premia of (9)% to 26%. Based on its review of the foregoing data and its professional judgment and experience, Goldman Sachs applied a reference range of illustrative discount / premia of (9)% to 26% to the Corrected Stock Price per Listed Share of US$9.44 as of May 16, 2018 and calculated a range of implied equity values per Listed Share of US$8.63 to US$11.88, which implied a range of illustrative exchange ratios of 0.2547x to 0.3505x based on the closing price per Enbridge common share of US$33.89 as of September 14, 2018.1

The preparation of a fairness opinion is a complex process and is not necessarily susceptible to partial analysis or summary description. Selecting portions of the analyses or of the summary set forth above, without considering the analyses as a whole, could create an incomplete view of the processes underlying Goldman Sachs’ opinion. In arriving at its fairness determination, Goldman Sachs considered the results of all of its analyses and did not attribute any particular weight to any factor or analysis considered by it. Rather, Goldman Sachs made its determination as to fairness on the basis of its experience and professional judgment after considering the results of all of its analyses. No company or transaction used in the above analyses as a comparison is directly comparable to EEQ, EEP or Enbridge or the contemplated transactions.

Goldman Sachs prepared these analyses for purposes of Goldman Sachs’ providing its opinion to the Special Committee as to the fairness from a financial point of view of the Exchange Ratio pursuant to the Merger Agreement to the holders (other than Enbridge and its affiliates) of the Listed Shares. These analyses do not purport to be appraisals nor do they necessarily reflect the prices at which businesses or securities actually may be sold. Analyses based upon forecasts of future results are not necessarily indicative of actual future results, which may be significantly more or less favorable than suggested by these analyses. Because these analyses are inherently subject to uncertainty, being based upon numerous factors or events beyond the control of the parties or their respective advisors, none of EEQ, Enbridge, Goldman Sachs or any other person assumes responsibility if future results are materially different from those forecast.

The Exchange Ratio was determined through arm’s length negotiations between the Special Committee and Enbridge and was recommended by the Special Committee and approved by the EEQ Board. Goldman Sachs provided advice to the Special Committee during these negotiations. Goldman Sachs did not, however, recommend any specific exchange ratio to the Special Committee or the EEQ Board or that any specific exchange ratio constituted the only appropriate exchange ratio for the transaction.

As described above Goldman Sachs’ opinion to the Special Committee was one of many factors taken into consideration by the Special Committee in making its determination to recommend that the EEQ Board approve the Merger Agreement. The foregoing summary does not purport to be a complete description of the analyses performed by Goldman Sachs in connection with the fairness opinion and is qualified in its entirety by reference to the written opinion of Goldman Sachs attached as Annex B.

 

1 

In the September 17 Presentation, the range of implied equity values per Listed Share resulting from this analysis using the Utilized Stock Price was US$8.58 to US$11.81, which implied a range of illustrative exchange ratios of 0.2531x to 0.3484x based on the closing price per Enbridge common share of US$33.89 as of September 14, 2018.

 

89


Table of Contents

Goldman Sachs and its affiliates are engaged in advisory, underwriting and financing, principal investing, sales and trading, research, investment management and other financial and non-financial activities and services for various persons and entities. Goldman Sachs and its affiliates and employees, and funds or other entities in which they invest or with which they co-invest, may at any time purchase, sell, hold or vote long or short positions and investments in securities, derivatives, loans, commodities, currencies, credit default swaps and other financial instruments of EEQ, Enbridge, any of their respective affiliates, including EEP, and third parties, or any currency or commodity that may be involved in the transaction contemplated by the Merger Agreement for the accounts of Goldman Sachs and its affiliates and employees and their customers. Goldman Sachs acted as financial advisor to the Special Committee in connection with, and participated in certain of the negotiations leading to, the Merger. During the two year period ended September 17, 2018, the Investment Banking Division of Goldman Sachs has not been engaged by EEQ or its affiliates (except by Enbridge and its affiliates as described below) to provide financial advisory or underwriting services for which Goldman Sachs has recognized compensation. Goldman Sachs has provided certain financial advisory and/or underwriting services to Enbridge and/or its affiliates from time to time for which the Investment Banking Division of Goldman Sachs has received, and may receive, compensation, including having acted as co-manager with respect to a public offering by SEP, an affiliate of Enbridge, of 3.375% senior notes due 2026 and 4.5% senior notes due 2045 (aggregate principal amount US$800 million) in October 2016. During the two year period ended September 17, 2018, Goldman Sachs has recognized compensation for financial advisory and/or underwriting services provided by its Investment Banking Division to Enbridge and/or its affiliates of approximately US$150,000. Goldman Sachs may also in the future provide financial advisory and/or underwriting services to EEQ, Enbridge and their respective affiliates for which the Investment Banking Division of Goldman Sachs may receive compensation.

The Special Committee selected Goldman Sachs as its financial advisor because it is an internationally recognized investment banking firm that has substantial experience in transactions similar to the Merger. Pursuant to a letter agreement dated June 18, 2018, the Special Committee engaged Goldman Sachs to act as its financial advisor in connection with the contemplated transaction. The engagement letter between the Special Committee, EEQ and Goldman Sachs provides for a transaction fee of US$3,000,000, US$200,000 of which became payable upon the execution of such engagement letter, and the remainder of which became payable upon the execution of the Merger Agreement. Goldman Sachs may receive an additional fee of up to US$1,500,000 at the Special Committee’s sole discretion. In addition, EEQ has agreed to reimburse Goldman Sachs for certain of its expenses, including attorneys’ fees and disbursements, and to indemnify Goldman Sachs and related persons against various liabilities, including certain liabilities under the federal securities laws.

Unaudited Financial Projections of Enbridge and EEP

In connection with the proposed Merger, management of Enbridge provided financial projections relating to Enbridge and EEP. Because EEQ is structured as an alternative to direct investment in EEP and its only investment is its limited partner interest in EEP, only projections of EEP are provided below.

The financial projections were prepared for Enbridge and EEP, on a standalone basis and taking into account the final SEP exchange ratio of 1.111 Enbridge common shares for each issued and outstanding common unit of SEP not owned by Enbridge or its subsidiaries (without giving effect to any of the Merger, the EEP merger or the ENF plan of arrangement), and reflected during the periods presented the anticipated impacts of (i) the Midcoast Transaction, (ii) the March FERC Announcement and the July FERC Announcement (together, the “FERC Announcements”), (iii) the sale by Enbridge of certain renewable assets completed on August 1, 2018 (as described in Enbridge’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2018) (the “Renewable Asset Sale”), and (iv) the expected completion of the transactions contemplated by the agreements entered into by Enbridge with Brookfield Infrastructure Partners L.P. and its institutional partners to sell Enbridge’s Canadian natural gas gathering and processing businesses for a cash purchase price of approximately C$4.31 billion (as described in Enbridge’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2018) (the “Canadian G&P Sale”). The financial projections were also prepared for Enbridge, on a pro forma basis and taking into account the final SEP exchange ratio of 1.111 Enbridge common shares for each issued and

 

90


Table of Contents

outstanding common unit of SEP not owned by Enbridge or its subsidiaries, as well as the initial exchange ratios for EEP, EEQ and ENF proposed by Enbridge on May 17, 2018 for the acquisitions of the publicly held securities of those entities of (a) 0.3083 of an Enbridge common share for each issued and outstanding Class A common unit not owned by Enbridge or its subsidiaries, (b) 0.2887 of an Enbridge common share for each issued and outstanding Listed Share of EEQ not owned by Enbridge or its subsidiaries and (c) 0.7029 of an Enbridge common share for each issued and outstanding common share of ENF not owned by Enbridge or its subsidiaries, and reflected during the periods presented the anticipated impacts of (i) the Midcoast Transaction, (ii) the FERC Announcements, (iii) the Renewable Asset Sale, and (iv) the Canadian G&P Sale. These nonpublic financial projections were provided (a) to the Special Committee for Goldman Sachs’ use and consideration in its financial analysis and in preparation of its opinion to the Special Committee, and (b) for use and consideration in financial analysis prepared for the Enbridge Board. A summary of these projections is included below to give Unaffiliated EEQ Shareholders and holders of Enbridge common shares access to certain nonpublic unaudited prospective financial information that was made available to the Special Committee, Goldman Sachs, the EEQ Board and the Enbridge Board in connection with the proposed Merger.

You should be aware that uncertainties are inherent in prospective financial information of any kind. None of Enbridge, EEP or EEQ or any of their affiliates, advisors, officers, directors, or representatives has made or makes any representation or can give any assurance to any EEQ shareholder or Enbridge shareholder, or any other person regarding the ultimate performance of EEQ, EEP or Enbridge compared to the summarized information set forth below or that any such results will be achieved.

The summary financial projections set forth below summarize the financial projections made available to the legal and financial advisors to each of the parties to the Merger Agreement. The inclusion of the following summary financial projections in this proxy statement/prospectus should not be regarded as an indication that EEQ, EEP, Enbridge, or their respective representatives considered or consider the projections to be a reliable or accurate prediction of future performance or events, and the summary financial projections set forth below should not be relied upon as such.

The Enbridge and EEP financial projections were prepared in connection with the evaluation of the proposed Merger and for internal planning purposes only and not with a view toward public disclosure or guidance or toward compliance with generally accepted accounting principles in the U.S. (“GAAP”), the published guidelines of the SEC, or the guidelines established by the American Institute of Certified Public Accountants with respect to prospective financial information, but, in the view of Enbridge’s management, were prepared on a reasonable basis, reflected the best available estimates and judgments at such time, and presented, to the best of Enbridge management’s knowledge and belief, the expected course of action and expected future financial performance of Enbridge, EEP and EEQ. However, because this information is highly subjective, it should not be relied on as necessarily indicative of future results. The Enbridge prospective financial information was prepared by and is the responsibility of Enbridge’s management. None of PricewaterhouseCoopers LLP (“PwC”), PricewaterhouseCoopers LLP, Canada or any other independent registered public accounting firm has audited, reviewed, compiled, examined or performed any procedures with respect to such financial projections, including any prospective financial information contained therein. Accordingly, neither PwC nor any other independent registered public accounting firm expresses an opinion or any other form of assurance with respect thereto. The reports of PwC incorporated by reference into this proxy statement/prospectus with respect to Enbridge and EEQ relate to historical financial information of Enbridge and EEQ. Such reports do not extend to the financial projections included below and should not be read to do so. None of the EEQ Board, the Special Committee, the General Partner, EEQ, EEP, Enbridge, or the Enbridge Board gives any assurance regarding such financial projections. The Enbridge and EEP financial projections summarized below were prepared and provided to the Special Committee prior to the execution of the Merger Agreement on September 17, 2018. Such projections were prepared for Enbridge and EEP on a standalone basis, giving effect to the SEP merger in which the final SEP exchange ratio is 1.111 Enbridge common shares for each issued and outstanding common unit of SEP not owned by Enbridge or its subsidiaries (without giving effect to any of the Merger, the EEQ merger or the ENF plan of arrangement), and for Enbridge on a pro forma basis,

 

91


Table of Contents

giving effect to the SEP merger in which the final SEP exchange ratio is 1.111 Enbridge common shares for each issued and outstanding common unit of SEP not owned by Enbridge or its subsidiaries and giving effect to the initial exchange ratios proposed by Enbridge on May 17, 2018 for the acquisitions of the publicly held securities of EEP, EEQ and ENF of (a) 0.3083 of an Enbridge common share for each issued and outstanding Class A common unit not owned by Enbridge or its subsidiaries, (b) 0.2887 of an Enbridge common share for each issued and outstanding Listed Share of EEQ not owned by Enbridge or its subsidiaries and (c) 0.7029 of an Enbridge common share for each issued and outstanding common share of ENF not owned by Enbridge or its subsidiaries, respectively. The Enbridge and EEP financial projections do not take into account any circumstances or events occurring after the date they were prepared. Enbridge can give no assurance that, had the unaudited prospective financial information been prepared as of the date of this proxy statement/prospectus, similar estimates and assumptions would be used. ENBRIDGE DOES NOT INTEND TO, AND DISCLAIMS ANY OBLIGATION TO, MAKE PUBLICLY AVAILABLE ANY UPDATE OR OTHER REVISION TO THE UNAUDITED PROSPECTIVE FINANCIAL PROJECTIONS TO REFLECT CIRCUMSTANCES EXISTING SINCE THEIR PREPARATION OR TO REFLECT THE OCCURRENCE OF UNANTICIPATED EVENTS, EVEN IN THE EVENT THAT ANY OR ALL OF THE ASSUMPTIONS UNDERLYING THE UNAUDITED PROSPECTIVE FINANCIAL PROJECTIONS ARE NOT REALIZED, OR TO REFLECT CHANGES IN GENERAL ECONOMIC OR INDUSTRY CONDITIONS, EXCEPT AS MAY BE REQUIRED BY APPLICABLE LAW.

The internal financial projections of Enbridge and EEP are, in general, prepared by Enbridge primarily for internal use. Such internal financial projections are inherently subjective in nature, susceptible to interpretation and, accordingly, such financial projections may not be achieved. Such internal financial projections also reflect numerous assumptions made by management of Enbridge, including material assumptions that may not be realized and are subject to significant uncertainties and contingencies, all of which are difficult to predict and many of which are beyond the control of Enbridge. Enbridge’s management, consistent with past presentations to the EEQ Board and public guidance representations, develops its financial projections according to several criteria. Additionally, anticipated impacts from prospective capital expenditures were included within the financial projections. Accordingly, there can be no assurance that the assumptions made in preparing the internal financial projections upon which the financial projections provided to the Special Committee were based will prove accurate. There will be differences between actual and forecasted results, and the differences may be material. The risk that these uncertainties and contingencies could cause the assumptions to fail to be reflective of actual results is further increased due to the length of time in the future over which these assumptions apply. Any inaccuracy of assumptions and projections in early periods could have a compounding effect on the projections shown for the later periods. Thus, any failure of an assumption or projection to be reflective of actual results in an early period could have a greater effect on the projected results failing to be reflective of actual events in later periods.

All of these assumptions involve variables making them difficult to predict, and some are beyond the control of EEQ, EEP and Enbridge. Although Enbridge’s management believes that there was a reasonable basis for its financial projections and underlying assumptions, any assumptions for near-term projected cases remain uncertain, and the risk of inaccuracy increases with the length of the forecasted period. The projections are forward-looking statements and are subject to risks and uncertainties. Please read the sections titled “Cautionary Statement Regarding Forward-Looking Statements” and “Risk Factors” beginning on pages 31 and 34, respectively.

In developing the financial projections provided to the Special Committee, Enbridge’s management made numerous material assumptions with respect to Enbridge and EEP for the period from 2018 to 2022, including:

 

   

capital expenditures and operating cash flows, including the related amounts and timing thereof;

 

   

outstanding debt during applicable periods, and the availability and cost of capital;

 

   

the cash flow from existing assets and business activities;

 

   

the Midcoast Transaction, FERC Announcements, Renewable Assets Sale and Canadian G&P Sale;

 

92


Table of Contents
   

management’s ability to mitigate the impact of the FERC Announcements, on a pre-merger basis, including planned rate case filings;

 

   

the prices and production of, and demand for, crude oil, natural gas, NGLs and other hydrocarbon products, which could impact volumes and margins;

 

   

the in-service dates of the significant competing liquids pipeline systems in Canada and the United States, which reflected a January 1, 2021 in-service date for TransCanada Corporation’s Keystone XL pipeline and an October 1, 2020 in-service date for the TransMountain Pipeline Expansion Project; and

 

   

other general business, market, and financial assumptions.

The summarized projected financial information for Enbridge and EEP set forth below was based on Enbridge’s and EEP’s standalone projected results for 2018 through 2022, adjusted for the material assumptions set out above, including the anticipated impacts of the SEP merger at the final exchange ratio for such transaction, the Midcoast Transaction, FERC Announcements, Renewable Assets Sale and Canadian G&P Sale, as applicable.

 

     Year ending December 31,  
     2018      2019      2020      2021      2022  
     (Millions of Canadian dollars)  

Enbridge Adjusted EBITDA(1)

   $ 12,509      $ 12,858      $ 14,778      $ 14,968      $ 16,578  

Enbridge Adjusted Distributable Cash Flow(2)

   $ 7,305      $ 8,037      $ 8,798      $ 9,079      $ 9,642  

Enbridge Dividend per Enbridge Common Share(3)

   $ 2.68      $ 2.95      $ 3.24      $ 3.41      $ 3.58  

 

The above measures are not measures of financial performance under generally accepted accounting principles in the U.S. (“GAAP”), and should not be considered as alternatives to net income (loss), operating income, cash from operations or any other measure of financial performance or liquidity presented in accordance with GAAP. Enbridge’s computations of these measures may differ from similarly titled measures used by others.

 

(1)

Enbridge Adjusted EBITDA represents EBITDA adjusted for unusual, non-recurring or non-operating factors on both a consolidated and segmented basis.

(2)

Enbridge Adjusted Distributable Cash Flow is defined as cash flow provided by operating activities before the impact of changes in operating assets and liabilities (including changes in environmental liabilities) less distributions to noncontrolling interests and redeemable noncontrolling interests, preference share dividends and maintenance capital expenditures, and further adjusted for unusual, non-recurring or non-operating factors.

(3)

Number of Enbridge common shares reflects the final SEP exchange ratio of 1.111 Enbridge common shares for each issued and outstanding common unit of SEP not owned by Enbridge or its subsidiaries; does not reflect the Merger, the EEP merger or the ENF plan of arrangement.

 

     Year ending December 31,  
     2018      2019      2020      2021      2022  
     (Millions of US dollars, other than per unit amounts)  

EEP Adjusted EBITDA(1)

   $ 1,580      $ 1,673      $ 1,920      $ 1,992      $ 2,021  

EEP Adjusted Distributable Cash Flow(2)

   $ 724      $ 798      $ 962      $ 988      $ 1,015  

EEP Distributions per limited partner unit

   $ 1.40      $ 1.00      $ 1.20      $ 1.30      $ 1.40  

 

The above measures are not measures of financial performance under GAAP, and should not be considered as alternatives to net income (loss), operating income, cash from operations or any other measure of financial performance or liquidity presented in accordance with GAAP. EEP’s computations of these measures may differ from similarly titled measures used by others.

 

(1)

EEP Adjusted EBITDA represents EBITDA adjusted for unusual, non-recurring or non-operating factors.

(2)

EEP Adjusted Distributable Cash Flow is defined as cash flow provided by operating activities before the impact of changes in operating assets and liabilities, less distributions to noncontrolling interests and maintenance capital expenditures, and further adjusted for unusual, non-recurring or non-operating factors.

 

93


Table of Contents

The summarized projected financial information for Enbridge set forth below was based on Enbridge’s pro forma projected results for 2018 through 2022, adjusted for the material assumptions set out above, including the anticipated impacts of the SEP merger at the final exchange ratio for such transaction, the EEP, EEQ and ENF transactions at the initial exchange ratios for such transactions, the Midcoast Transaction, FERC Announcements, Renewable Assets Sale and Canadian G&P Sale.

 

     Year ending December 31,  
     2018      2019      2020      2021      2022  
     (Millions of Canadian dollars)  

Enbridge Adjusted Distributable Cash Flow(1)

   $ 7,305      $ 8,815      $ 9,926      $ 10,023      $ 10,866  

 

The above measures are not measures of financial performance under generally accepted accounting principles in the U.S. (“GAAP”), and should not be considered as alternatives to net income (loss), operating income, cash from operations or any other measure of financial performance or liquidity presented in accordance with GAAP. Enbridge’s computations of these measures may differ from similarly titled measures used by others.

 

(1)

Enbridge Adjusted Distributable Cash Flow is defined as cash flow provided by operating activities before the impact of changes in operating assets and liabilities (including changes in environmental liabilities) less distributions to noncontrolling interests and redeemable noncontrolling interests, preference share dividends and maintenance capital expenditures, and further adjusted for unusual, non-recurring or non-operating factors.

Reasons of the Enbridge Board for the Merger

The Merger is expected to generate several benefits for Enbridge and its shareholders, including Unaffiliated EEQ Shareholders that will become Enbridge shareholders if the Merger is successfully completed:

 

   

Ownership in Core Businesses: The Merger will increase Enbridge’s ownership in its core businesses and further enhance its low-risk profile;

 

   

Simplified Corporate Structure: The Merger will significantly advance Enbridge’s strategy to simplify and streamline its corporate structure, which will further increase the transparency of its strong cash generating assets;

 

   

Cash Retention: The Merger, taken into account with the EEP merger, will result in Enbridge having higher retention of cash generated from the EEP assets, which will support continued strong dividend coverage and self-funded growth;

 

   

Enhanced Credit Profile: The Merger, taken into account with the EEP merger, will improve Enbridge’s credit profile due to the elimination of EEP public distributions, as well as opportunities to minimize structural subordination of Enbridge debt;

 

   

Tax Benefits: The Merger will provide significant benefits to Enbridge’s post-2020 outlook primarily due to tax optimization synergies;

 

   

Regulatory Uncertainty Benefits: The Merger will reduce risks related to uncertainty and potential unfavorable changes associated with regulatory tax policies applied to MLPs and incremental Enbridge support required by EEQ in difficult capital markets; and

 

   

Maintain Financial Profile: The Merger will result in no change to Enbridge’s consolidated EBITDA following the completion of the Merger since the assets held by EEQ are already managed and operated by Enbridge’s U.S. subsidiaries and consolidated for accounting purposes by Enbridge.

Regulatory Approvals

In connection with the Merger, Enbridge intends to make all required filings under the Securities Act and the Exchange Act, as well as any required filings or applications with the NYSE and the TSX.

 

94


Table of Contents

In addition, to complete the Merger, EEQ and Enbridge must make certain filings, submissions and notices to obtain required authorizations, approvals, consents or expiration or termination of waiting periods from U.S. and Canadian governmental and regulatory bodies, including antitrust and other regulatory authorities. EEQ and Enbridge are not currently aware of any material governmental filings, authorizations, approvals or consents that are required prior to the parties’ completion of the Merger other than those described in this section.

Completion of the Merger is not subject to antitrust review in the United States. The Merger is not reportable under the HSR Act, and therefore no filings with respect to the Merger are required with the FTC or the DOJ because at the Effective Time, Enbridge will already hold more than 50% of the outstanding EEP units and the acquisition of additional EEP units (which are the only interests held by EEQ) is not subject to the HSR Act’s filing requirements.

Litigation and Regulatory Reviews/Investigations Related to the Merger

Judy Mesirov v. Enbridge Energy Co., Inc. et al.

On July 20, 2015, plaintiff Peter Brinckerhoff, individually and as trustee of the Peter R. Brinckerhoff Trust, filed a Verified Class Action and Derivative Complaint in the Court of Chancery of the State of Delaware against the General Partner, Enbridge, EEQ, Enbridge Pipelines (Alberta Clipper) L.L.C., Enbridge Energy, Limited Partnership, EEP and the following individuals: Jeffrey A. Connelly, Rebecca B. Roberts, Dan A. Westbrook, J. Richard Bird, J. Herbert England, C. Gregory Harper, D. Guy Jarvis, Mark A. Maki and John K. Whelen. The Complaint asserted both class action claims on behalf of holders of EEP’s Class A common units, as well as derivative claims brought on behalf of EEP (the “Derivative Claims”). The Derivative Action Plaintiff’s claims arose out of the January 2, 2015 repurchase (the “2015 Transaction”) by EEP of the General Partner’s 66.67% interest in the pipeline that runs from the Canadian international border near Neche, North Dakota to Superior, Wisconsin on EEP’s Lakehead System (the “Alberta Clipper Pipeline”). First, the Derivative Action Plaintiff alleged that the 2015 Transaction improperly amended the Sixth Amended and Restated Agreement of Limited Partnership of EEP (the “Sixth Amended and Restated EEP LPA”) without the consent of the holders of Outstanding EEP units, other than Enbridge and its affiliates (the “Unaffiliated EEP Unitholders”), so as to allocate to the Unaffiliated EEP Unitholders gross income that should have been allocated to the General Partner (the “Special Tax Allocation”). Second, the Derivative Action Plaintiff alleged that EEP paid an unfair price for the General Partner’s 66.67% interest in the Alberta Clipper Pipeline such that the 2015 Transaction breached the Sixth Amended and Restated EEP LPA because it was not fair and reasonable to EEP. The Complaint asserted claims for breach of fiduciary duty, breach of the covenant of good faith and fair dealing, breach of residual fiduciary duties, tortious interference, aiding and abetting, and rescission and reformation.

On April 29, 2016, the Court of Chancery granted Enbridge’s and the Director Defendants’ motion to dismiss and dismissed the case in its entirety. On May 26, 2016, the Derivative Action Plaintiff appealed that dismissal to the Delaware Supreme Court. On March 20, 2017, the Delaware Supreme Court reversed in part and affirmed in part the ruling of the Court of Chancery. Specifically, the Delaware Supreme Court affirmed that the enactment of the Special Tax Allocation did not breach the Sixth Amended and Restated EEP LPA, but reversed on the question of whether the Derivative Action Plaintiff had adequately alleged that the price EEP paid in the 2015 Transaction, including the Special Tax Allocation component, was fair and reasonable to EEP. On November 15, 2017, the Derivative Action Plaintiff filed a Verified Second Amended Complaint (the “Second Amended Complaint”). The Second Amended Complaint added Piper Jaffray & Co. as successor to Simmons & Company International (“Simmons”) as a direct defendant. Simmons acted as the financial advisor to the Special Committee of EEP in the 2015 Transaction. The Second Amended Complaint also revised many of the allegations against Enbridge and the Director Defendants. On December 18, 2017, all defendants except Simmons filed their brief in support of their motion to dismiss the Second Amended Complaint. On January 19, 2018, Simmons filed its brief in support of its motion to dismiss the Second Amended Complaint.

On February 28, 2018, the Derivative Action Plaintiff filed a Motion for Leave to File a Verified Third Amended Complaint and a Motion to Intervene on behalf of a proposed new plaintiff, Judy Mesirov

 

95


Table of Contents

(subsequently amended). On March 23, 2018, the Derivative Action Plaintiff filed a Verified Third Amended Complaint and a Motion for Voluntary Dismissal of the Derivative Action Plaintiff. On April 3, 2018, all defendants filed their briefs in support of their motions to dismiss the Third Amended Complaint. Plaintiff Peter Brinckerhoff has now been dismissed as a named plaintiff. The Derivative Action Plaintiff filed a Fourth Amended Complaint, which is substantially the same as the Third Amended Complaint except that it substitutes Judy Mesirov in place of Peter Brinckerhoff as the named plaintiff. On August 29, 2018, the Court granted in part and denied in part defendants’ Motions to Dismiss the Third (now Fourth) Amended Complaint. All direct claims have now been dismissed. Currently, the claims remaining in the case are now the Derivative Claims for (i) breach of contract (including equitable remedies of rescission or reformation) against the General Partner, EEQ, Enbridge Energy Management, L.L.C., Enbridge, the Director Defendants, and Enbridge Pipelines (Alberta Clipper) L.L.C and Enbridge Energy, Limited Partnership and (ii) aiding and abetting a breach of contract against Simmons. On September 28, 2018, the Derivative Action Plaintiff filed a Fifth Amended Complaint, adding Enbridge and the Director Defendants as defendants to the Derivative Claims.

If the EEP merger closes and Enbridge acquires all of the outstanding Class A common units of EEP, the Derivative Action Plaintiff will lose standing to continue her Derivative Claims on behalf of EEP, and Enbridge will become the owner of such Derivative Claims, effectively extinguishing the Derivative Claims. Trial in the Derivative Action is currently scheduled for the second quarter of 2019.

For a discussion of the Derivative Action Subcommittee, see the section titled “The Merger—Background of the Merger” beginning on page 58.

Relationship of the Parties to the Merger Agreement

Under a delegation of control agreement among EEQ, the General Partner and EEP, the General Partner has delegated to EEQ, subject to limited exceptions, all of its rights and powers to manage and control the business and affairs of EEP and its operating limited partnerships. All directors of the General Partner are elected annually and may be removed by Enbridge (U.S.) Inc., as the sole shareholder of the General Partner, an indirect and wholly owned subsidiary of Enbridge. All directors of EEQ are elected and may be removed by the General Partner, as the sole holder of the Voting Shares. All of the directors and executive officers of the General Partner hold identical positions with EEQ. Certain executive officers and directors of Enbridge are also executive officers and directors of the General Partner and EEQ. J. Herbert England serves as a member of the boards of directors of all three companies. The compensation received by the executive officers of Enbridge is paid to them in their capacities as executive officers of Enbridge, the General Partner and EEQ, as applicable. The General Partner and EEQ have the same directors and, with the exception of William Yardley, who is an executive officer of the General Partner only, have the same executive officers.

In addition to its indirect ownership of all of the outstanding Voting Shares, Enbridge also indirectly owns approximately 11.5 million Listed Shares, representing in the aggregate approximately 11.7% of EEQ’s total outstanding limited liability company interests.

Interests of Directors and Executive Officers of EEQ in the Merger

In considering the recommendation of the Special Committee, the EEQ Board with respect to the Proposals, EEQ shareholders should be aware that certain of the directors and executive officers of Enbridge, EEQ and the General Partner have interests in the transaction that may differ from, or are in addition to, the interests of EEQ shareholders generally. These interests may present such directors and executive officers with actual or potential conflicts of interests, and these interests, to the extent they may be substantial, are described below. The members of the Special Committee and the EEQ Board were aware of and considered these interests and relationships, among other matters, when they approved the Merger Agreement and when the EEQ Board recommended that EEQ shareholders approve the Merger.

 

96


Table of Contents

Common Directors and Executive Officers

Certain executive officers of Enbridge are also directors and executive officers of EEQ and the General Partner. Enbridge compensates these officers for the performance of their duties to Enbridge, including in respect of the management of EEQ and the General Partner. Persons who are directors or officers of both Enbridge, EEQ and the General Partner owe duties to the equityholders of Enbridge, EEQ and the General Partner, as the case may be, and may have interests in the Merger that are different from the interests of EEQ shareholders generally.

The following chart sets forth, as of the date of this proxy statement/prospectus, the executive officers and directors of Enbridge who hold positions at EEQ and the General Partner.

 

Executive Officer/Director

  

EEQ / General Partner

  

Enbridge

J. Herbert England    Director    Director
D. Guy Jarvis    Director and Executive Vice President – Liquids Pipelines    Executive Vice President & President, Liquids Pipelines
John K. Whelen    Director    Executive Vice President & Chief Financial Officer

Six of the ten directors of EEQ and the General Partner hold positions at Enbridge or its subsidiaries (other than EEQ or the General Partner) and each executive officer of EEQ and the General Partner is currently serving, and is expected to continue to serve, as an executive or other officer of Enbridge or its subsidiaries following the Merger.

In addition, the Special Committee and the EEP Special Committee were comprised of the same three individuals, Messrs. Connelly, Waldheim and Westbrook. Messrs. Connelly, Waldheim and Westbrook each own Class A common units and do not own any Listed Shares.

Equity Interests of EEQ’s and the General Partner’s Directors and Executive Officers in EEQ and Enbridge

Three directors and three executive officers of EEQ and the General Partner beneficially own Listed Shares and will receive the applicable Merger Consideration in the Merger. Six directors of EEQ and the General Partner beneficially own EEP Class A common units and will receive the applicable merger consideration upon completion of the EEP merger in accordance with the EEP merger agreement. Please read the section titled “Security Ownership of Certain Beneficial Owners of EEQSecurity Ownership of the Management and Directors of EEQ and the General Partner” beginning on page 154 for further detail.

All of the executive officers and seven directors, including three non-management directors, of EEQ and the General Partner beneficially own Enbridge common shares. Those individuals who own Enbridge common shares, and all of those individuals in the aggregate, hold Enbridge common shares representing less than 1.0% of Enbridge common shares outstanding as of November 5, 2018.

Special Committee Compensation

In consideration of the expected time and effort that would be required of the members of the Special Committee in evaluating the proposed Merger, including negotiating the terms and conditions of the Merger Agreement, the EEQ Board determined that each member of the Special Committee would receive (1) a retainer fee of US$40,000, plus (2) a fee of US$1,500 in cash for each meeting of the Special Committee (or subcommittee thereof), in addition to reimbursement of out-of-pocket expenses relating to such meeting, plus (3) with respect to any in-person meetings of the Special Committee, reimbursement of travel costs in connection with such meetings and, solely with respect to any members who attend such meetings from outside of the Houston metro area, an additional US$1,500 travel fee. In the event that the Merger is consummated, each member of the Special Committee would receive an additional hourly fee of US$500 for any time spent in

 

97


Table of Contents

connection with any litigation arising out of their service on the Special Committee. The Chairman of the Special Committee would receive an additional retainer fee of US$40,000. The compensation for the Chairman and members of the Special Committee was approved by the EEQ Board and was not, and is not, contingent upon the approval of the Merger Agreement and the completion of the Merger or any other transaction. No other meeting fees or other compensation (other than reimbursement for out-of-pocket expenses in connection with their service on the Special Committee) will be paid to the members of the Special Committee in connection with their service on the Special Committee.

Executive Compensation

EEQ does not directly employ any of the individuals responsible for managing or operating its business. None of the individuals who have served as a director or executive officer at EEQ, the General Partner or Enbridge since the beginning of 2017 have any agreements or understandings with Enbridge, EEQ, the General Partner or any other party with respect to any type of compensation (whether present, deferred or contingent) that is based on or otherwise relates to the Merger and is reportable under Item 402(t) of Regulation S-K under the Securities Act, and thus no advisory vote pursuant to Rule 14a-21(c) of the Exchange Act is required to be included in the EEQ proxy in connection with this proxy statement/prospectus.

Indemnification

All of the directors and executive officers of EEQ have the right to indemnification under the EEQ LLC Agreement and the Merger Agreement. In addition, all of the directors of Enbridge and all of the officers of Enbridge have the right to indemnification under the organizational documents of Enbridge and indemnification agreements with Enbridge.

Indemnification and Insurance

The parties to the Merger Agreement have agreed that, from and after the Effective Time, to the fullest extent permitted under applicable law, each of Enbridge and EEQ, as the surviving entity, will jointly and severally indemnify, defend and hold harmless (subject to certain conditions regarding the advancement of expenses and applicable law) each present and former director and officer of EEQ, when acting in such capacity (including the heirs, executors and administrators of any such director or officer, the “Indemnified Parties”), against any costs or expenses (including reasonable attorneys’ fees), judgments, fines, penalties, sanctions, losses, claims, damages or liabilities incurred and amounts paid in settlement (including all interest, assessments and other charges paid or payable in connection with or in respect of any thereof) in connection with, arising out of or otherwise related to any acts or omissions or actual or threatened action, cause of action, claim, demand, litigation, suit, investigation, grievance, citation, summons, subpoena, inquiry, audit, hearing, originating application to a tribunal, arbitration, or other similar proceeding of any nature, civil, criminal, regulatory, administrative or otherwise, whether in equity or at law, in contract, in tort or otherwise (each, a “Proceeding”), in each case in connection with, arising out of or otherwise related to matters existing or occurring at or prior to the Effective Time, whether asserted or claimed prior to, at or after the Effective Time, including in connection with the transactions contemplated by the Merger Agreement and actions to enforce the indemnification provisions in the Merger Agreement or any other indemnification or the advancement right of any Indemnified Party.

In addition, the Merger Agreement contains certain obligations related to the maintenance of directors’ and officers’ liability insurance for the directors and officers covered under EEQ’s existing policies and fiduciary liability insurance for persons covered under EEQ’s existing policies with respect to matters existing or occurring at or prior to the Effective Time of the Merger.

Listing of Enbridge Common Shares

The completion of the Merger is conditioned upon the approval for listing of Enbridge common shares issuable pursuant to the Merger Agreement on the TSX and the NYSE, subject to official notice of issuance.

 

98


Table of Contents

The Waiver

Under Section 9.01(a)(v) of the EEQ LLC Agreement, EEQ is not, except in certain circumstances, permitted to effect a merger or similar transaction involving EEQ. Accordingly, in connection with your approval of the Merger and the Merger Agreement, your approval to waive the covenant under Section 9.01(a)(v) of the EEQ LLC Agreement is being solicited. The full text of the EEQ LLC Agreement is incorporated by reference into the EEQ Annual Report on Form 10-K for the year ended December 31, 2017, which is incorporated by reference into this proxy statement/prospectus.

The EEQ LLC Agreement Amendment

The EEQ LLC Agreement Amendment contemplates the enfranchisement of the Listed Shares, with each Listed Share entitled to one vote per share, by providing that the holders of the Listed Shares would be entitled to vote with the holders of the Voting Shares as a single class on certain matters, including the election or removal of directors and any further amendments of the EEQ LLC Agreement.

The amendment of the EEQ LLC Agreement, as provided for by the EEQ LLC Agreement Amendment, is a condition to the closing of the Merger. Therefore, if the EEQ LLC Agreement is not amended, the Merger will not occur.

In order to fully inform you with respect to the EEQ LLC Agreement Amendment, a copy of the complete text of the EEQ LLC Agreement Amendment is attached as Annex C to this proxy statement/prospectus. See also the EEQ LLC Agreement, which is incorporated by reference herein in its entirety.

Delisting and Deregistration of the Listed Shares

Enbridge expects that, as promptly as practicable after the Effective Time, the Listed Shares currently listed on the NYSE will cease to be listed on the NYSE and will be deregistered under the Exchange Act.

Required Approval by the EEQ Shareholders

The approval of the EEQ Merger Proposal, including the approval of the Merger Agreement and the EEQ LLC Agreement Amendment Proposal require the affirmative vote of the holders of a majority of the outstanding Listed Shares (other than the Excluded Shares) entitled to vote on such matters at a meeting of the holders of Listed Shares.

No Dissenters’ or Appraisal Rights

Holders of Listed Shares do not have appraisal rights under applicable law or contractual appraisal rights under the EEQ LLC Agreement or the Merger Agreement.

No Enbridge Shareholder Approval Required

The approval of the Merger Agreement and the Merger by Enbridge does not require the affirmative vote or consent of Enbridge shareholders.

Accounting Treatment of the Merger

The Merger will be accounted for in accordance with Financial Accounting Standards Board Accounting Standards Codification (ASC) 810, Consolidation—Overall—Changes in a Parent’s Ownership Interest in a Subsidiary. Because Enbridge controlled EEQ both before and after the completion of the Merger, the changes in Enbridge’s ownership interest in EEQ will be accounted for as an equity transaction and no gain or loss will be recognized in the condensed consolidated statements of earnings resulting from the Merger. In addition, consistent with ASC 740, Income Taxes, the tax effects of the Merger is presented in additional paid-in capital.

 

99


Table of Contents

THE MERGER AGREEMENT

This section describes the material terms of the Merger Agreement, which was executed on September 17, 2018. The description of the Merger Agreement in this section and elsewhere in this proxy statement/prospectus is qualified in its entirety by reference to the complete text of the Merger Agreement, a copy of which is attached as Annex A to this proxy statement/prospectus and is incorporated by reference herein in its entirety. This summary does not purport to be complete and may not contain all of the information about the Merger Agreement that is important to you. You are encouraged to read the Merger Agreement carefully and in its entirety, because it is the legal document that governs the Merger.

Explanatory Note Regarding the Merger Agreement

The Merger Agreement and this summary are included solely to provide you with information regarding the terms of the Merger Agreement. Factual disclosures about Enbridge, EEQ, or any of their respective subsidiaries or affiliates contained in this proxy statement/prospectus or in Enbridge’s or EEQ’s public reports filed with the SEC may supplement, update or modify the factual disclosures about Enbridge or EEQ, as applicable, contained in the Merger Agreement. The representations, warranties and covenants made in the Merger Agreement by Enbridge, EEQ, and Merger Sub were made solely for the purposes of the Merger Agreement and as of specific dates and were qualified and subject to important limitations agreed to by Enbridge, EEQ and Merger Sub in connection with negotiating the terms of the Merger Agreement. In particular, in your review of the representations and warranties contained in the Merger Agreement and described in this summary, it is important to bear in mind that the representations and warranties were negotiated with the principal purposes of establishing the circumstances in which a party to the Merger Agreement may have the right not to complete the Merger if the representations and warranties of the other party prove to be untrue due to a change in circumstance or otherwise, and allocating risk between the parties to the Merger Agreement, rather than establishing matters as facts. The representations and warranties may also be subject to a contractual standard of materiality different from those generally applicable to shareholders and reports and documents filed with the SEC, and in some cases were qualified by the matters contained in the disclosure letters that EEQ and Enbridge delivered to each other in connection with the Merger Agreement, which disclosures were not reflected in the Merger Agreement. Moreover, information concerning the subject matter of the representations and warranties, which do not purport to be accurate as of the date of this proxy statement/prospectus, may have changed since the date of the Merger Agreement. You should not rely on the Merger Agreement representations, warranties, covenants or any descriptions thereof as characterizations of the actual state of facts of Enbridge, EEQ or Merger Sub or any of their respective subsidiaries or affiliates.

The Merger

The Merger Agreement provides that, upon the terms and conditions in the Merger Agreement, and in accordance with the EEQ LLC Agreement, the Delaware General Corporation Law and the DLLCA, at the Effective Time of the Merger, Merger Sub will be merged with and into EEQ, with EEQ being the sole surviving entity of the Merger and an indirect wholly owned subsidiary of Enbridge (the “Surviving Entity”).

Closing and Effective Time of the Merger

The closing of the Merger (the “Closing”) will take place on the third business day following the day on which the last to be satisfied or waived of the conditions to the completion of the Merger, described in the section titled “The Merger Agreement—Conditions to the Completion of the Merger” beginning on page 117 (other than those conditions that by their nature are to be satisfied at the Closing, so long as such conditions are reasonably capable of being satisfied, or that may be waived at Closing, but subject to the satisfaction or waiver of those conditions), have been satisfied or waived in accordance with the Merger Agreement or at such other date, time or place (or by means of remote communication) as EEQ and Enbridge may mutually agree in writing. If the parties to the EEP merger are ready, willing and able to consummate the EEP merger substantially

 

100


Table of Contents

simultaneously with the Merger, then each of the Merger and the EEP merger shall be consummated substantially concurrently on the same date.

Assuming timely satisfaction of the necessary closing conditions, the parties currently expect the Closing to occur in the fourth quarter of 2018. The Merger will become effective at the time when the Certificate of Merger has been duly filed with and accepted by the Secretary of State of the State of Delaware or at such later date and time as may be agreed by the parties in writing and specified in the Certificate of Merger.

Amendment of the EEQ LLC Agreement

Immediately prior to the Effective Time of the Merger, the General Partner, as record holder of all of the voting shares of EEQ, will amend the EEQ LLC Agreement as set forth in Exhibit A to the Merger Agreement (the EEQ LLC Agreement Amendment). Such amendment contemplates the enfranchisement of Listed Shares and is a condition to the closing of the Merger. Therefore, if the EEQ LLC Agreement is not amended, as provided for by the EEQ LLC Agreement Amendment, the Merger will not occur.

Organizational Documents of the Surviving Entity

At the Effective Time, (a) the certificate of formation of EEQ as in effect immediately prior to the Effective Time will continue as the certificate of formation of the Surviving Entity, until duly amended as provided therein or by applicable law, and (b) the EEQ LLC Agreement, as amended by the EEQ LLC Agreement Amendment, will remain unchanged and will continue as the limited liability company agreement of the Surviving Entity, until duly amended as provided therein or by applicable law, and in each case any further amendments or restatements must be consistent with the obligations set forth in the Merger Agreement.

Merger Consideration

At the Effective Time, by virtue of the Merger and without any action on the part of the parties or EEQ shareholders, each EEQ Listed Share issued and outstanding, other than Excluded Shares (each such Listed Share, an “Eligible Share”) will be converted into the right to receive 0.335 of an Enbridge common share (such number of Enbridge common shares, the “Merger Consideration”).

Each Eligible Share, upon being converted into the right to receive the Merger Consideration, and each certificate and each book-entry account formerly representing any Eligible Shares, will thereafter represent only the right to receive the Merger Consideration with respect to such Eligible Shares, and the right, if any, to receive cash in lieu of fractional shares and any dividends or other distributions declared by Enbridge in respect of Enbridge common shares, the record date for which is at or after the Effective Time.

No fractional Enbridge common shares will be issued upon the conversion of Listed Shares. All fractional Enbridge common shares that a holder of Eligible Shares would otherwise be entitled to receive will be aggregated and rounded to three decimal places. Such holder of Eligible Shares will be entitled to receive an amount in cash, without interest, rounded down to the nearest cent, equal to the product of (a) the amount of the fractional share interest in an Enbridge common share to which such holder would otherwise be entitled and (b) an amount equal to the average of the volume-weighted average price per share of Enbridge common shares on the NYSE (as reported by Bloomberg L.P., or, if not reported therein, in another authoritative source mutually selected by Enbridge and EEQ) on the trading day immediately prior to the Effective Time for ten trading days ending on the fifth full business day immediately prior to the Closing Date.

At the Effective Time, by virtue of the Merger and without further action on the part of the parties or any holder of any limited liability company interests in EEQ, each Excluded Share will remain outstanding as a Listed Share in the Surviving Entity and each voting share will remain outstanding as a voting share in the Surviving Entity, in each case, unaffected by the Merger.

 

101


Table of Contents

At the Effective Time of the Merger, by virtue of the Merger and without any action on the part of the parties, all shares of common stock in Merger Sub issued and outstanding immediately prior to the Effective Time will cease to be outstanding, be cancelled without payment of any consideration therefor and cease to exist.

United States Tax Treatment of the Merger

For U.S. federal income tax purposes, the Merger should qualify as a “reorganization” within the meaning of Section 368(a) of the Code, and the Merger Agreement is intended to be and is adopted as a part of a “plan of reorganization” for the purposes of Sections 354 and 361 of the Code.

Exchange Procedures

Immediately prior to the Effective Time, Enbridge will deposit, or cause to be deposited, with a nationally recognized financial institution or trust company selected by Enbridge with EEQ’s prior approval (which will not be unreasonably withheld, conditioned or delayed) to serve as the exchange agent (the “Exchange Agent”), for the benefit of the holders of Eligible Shares upon Closing, an aggregate number of Enbridge common shares to be issued in non-certificated book-entry form comprising the amounts required to be delivered in respect of Eligible Shares and an aggregate amount of cash comprising approximately the amounts required to be delivered in lieu of any fractional shares. In addition, Enbridge will deposit, or cause to be deposited, with the Exchange Agent, as necessary from time to time after the Effective Time, dividends or other distributions, if any, to which the holders of Eligible Shares may be entitled, with both a record date and payment date after the Effective Time and prior to the surrender of such Eligible Shares, as further described in the section titled “The Merger Agreement—Dividends with Respect to Unexchanged Listed Shares” beginning on page 103. Such Enbridge common shares, cash in lieu of fractional shares and the amount of any dividends or other distributions deposited with the Exchange Agent collectively constitute the “Exchange Fund”.

With respect to certificates, as promptly as reasonably practicable after the Effective Time (and in any event within three business days thereafter), the Surviving Entity will cause the Exchange Agent to mail to each holder of record of each certificate (a) notice advising such holders of the effectiveness of the Merger, (b) a letter of transmittal in customary form, which will specify that delivery will be effected, and risk of loss and title to a certificate will pass, only upon delivery of the certificate (or an affidavit of loss in lieu of the certificate with the posting of a bond as indemnity) to the Exchange Agent and (c) instructions for surrendering a certificate (or the making of an affidavit of loss in lieu of a certificate and the posting of a bond as indemnity) to the Exchange Agent.

Upon surrender to the Exchange Agent of a certificate (or an affidavit of loss in lieu of a certificate with the posting of a bond as indemnity) together with a duly executed and completed letter of transmittal and such other documents as may reasonably be required pursuant to such instructions, the Surviving Entity will cause the Exchange Agent to mail to each holder of record of any certificate in exchange therefor, as promptly as reasonably practicable thereafter, (a) a statement reflecting the number of whole Enbridge common shares, if any, that such holder is entitled to receive in the name of such record holder and (b) a check in the amount (after giving effect to any required tax withholdings) of any cash in lieu of fractional shares plus any unpaid dividends or other distributions that such holder has the right to receive. Any certificate that has been so surrendered will be cancelled by the Exchange Agent.

With respect to book-entry shares not held through The Depository Trust Company (“DTC”), as promptly as reasonably practicable after the Effective Time (and in any event within three business days thereafter), the Surviving Entity will cause the Exchange Agent to mail to each holder of record of a non-DTC book-entry share, (a) notice advising such holders of the effectiveness of the Merger, (b) a statement reflecting the number of whole Enbridge common shares, if any, that such holder is entitled to receive pursuant to the Merger Agreement and in the name of such record holder and (c) a check in the amount (after giving effect to any required tax withholdings) of any cash in lieu of fractional shares plus any unpaid dividends or other distributions that such

 

102


Table of Contents

holder has the right to receive. Any holder of an Eligible Share that is duplicatively evidenced by both a certificate and book-entry account will not receive the notice, statement and check contemplated by the preceding paragraph with respect to such Eligible Share, but will surrender the applicable certificate in accordance with the procedures set forth above regarding the surrender of certificates to receive the Merger Consideration and any other amounts due under the Merger Agreement with respect to such Eligible Share, and no additional Merger Consideration or other amounts under the Merger Agreement will accrue or be payable to the duplicative book-entry account for such Eligible Share.

With respect to book-entry shares held through DTC, Enbridge and EEQ will cooperate to establish procedures with the Exchange Agent and DTC to ensure that the Exchange Agent will transmit to DTC or its nominees as soon as reasonably practicable on or after the Closing Date, upon surrender of Eligible Shares held of record by DTC or its nominees in accordance with DTC’s customary surrender procedures, the Merger Consideration, cash in lieu of fractional Enbridge common shares, if any, and any unpaid dividends or distributions, in each case, that such holder has the right to receive pursuant to the terms of the Merger Agreement.

No interest will be paid or accrued on any amount payable for Eligible Shares.

In the event of a transfer of ownership of any certificate that is not registered in the transfer books of EEQ as of the Effective Time, the proper number of Enbridge common shares, together with a check for any cash (after giving effect to any required tax withholdings) to be paid upon due surrender of the certificate and any dividends or distributions in respect thereof, may be issued or paid to such a transferee if the certificate is presented to the Exchange Agent, accompanied by all documents required to evidence and effect such transfer and to evidence that any applicable stock transfer taxes have been paid or are not applicable, in each case, in form and substance reasonably satisfactory to the Exchange Agent. Until surrendered, each certificate will be deemed at any time after the Effective Time to represent only the right to receive the Merger Consideration, cash in lieu of fractional Enbridge common shares, if any, and any unpaid dividends or other distributions. With respect to book-entry shares, payment of the applicable Merger Consideration and any cash in lieu of fractional shares and any unpaid dividends or other distributions will only be made to the person in whose name such book-entry shares are registered in the stock transfer books of EEQ as of the Effective Time.

Dividends with Respect to Unexchanged Listed Shares

All Enbridge common shares to be issued pursuant to the Merger will be deemed issued and outstanding as of the Effective Time and whenever a dividend or other distribution is declared by Enbridge in respect of the Enbridge common shares, the record date for which is at or after the Effective Time, that declaration will include dividends or other distributions in respect of all Enbridge common shares issuable pursuant to the Merger Agreement. No dividends or other distributions in respect of Enbridge common shares will be paid to any holder with respect to any unsurrendered certificate until the certificate (or affidavit of loss in lieu of the certificate with the posting of a bond as indemnity) is surrendered for exchange. Subject to applicable law, following such surrender, dividends or distributions with respect to Enbridge common shares issued in exchange for Eligible Shares will be paid to the holders of record of such Eligible Shares, without interest, (a) promptly after the time of such surrender for any dividends or other distributions payable with respect to Enbridge common shares with a record date after the Effective Time but a payment date prior to surrender and (b) at the appropriate payment date for any dividends or other distributions payable with respect to Enbridge common shares with a record date after the Effective Time and prior to surrender, but with a payment date subsequent to surrender.

Termination of the Exchange Fund

Any portion of the Exchange Fund (including the proceeds of any investments of the Exchange Fund and any Enbridge common shares) that remains unclaimed as of the date that is 12 months following the Effective Time will be delivered to Enbridge. Any holder of Eligible Shares will thereafter be entitled to look only to

 

103


Table of Contents

Enbridge for delivery of the Merger Consideration, cash in lieu of fractional Enbridge common shares, if any, and any unpaid dividends or other distributions, in each case, that such holder has the right to receive without interest. None of the Surviving Entity, Enbridge, the Exchange Agent or any other person will be liable to any former holder of Listed Shares for any amount properly delivered to a public official pursuant to applicable abandoned property, escheat or similar laws. Any portion of the Exchange Fund which remains undistributed to the holders of Eligible Shares immediately prior to the time at which the Exchange Fund would otherwise escheat to, or become property of, any governmental entity, will, to the extent permitted by applicable law, become the property of Enbridge, free and clear of all claims or interest of any person previously entitled thereto.

Lost, Stolen or Destroyed Share Certificates

In the event that any certificate will have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming such certificate to be lost, stolen or destroyed and the posting by such person of a bond in customary amount and upon such terms as may be required as indemnity against any claim that may be made against it with respect to such certificate, the Exchange Agent will issue in exchange for such lost, stolen or destroyed certificate, the Merger Consideration, cash in lieu of fractional Enbridge common shares, if any, and any unpaid dividends or other distributions, in each case, payable or issuable had such lost, stolen or destroyed certificate been surrendered.

Withholding Rights

Each of Enbridge, Merger Sub, EEQ, the Exchange Agent and the Surviving Entity will be entitled to deduct and withhold from the consideration otherwise payable pursuant to the Merger Agreement, without duplication, such amounts, which may include Enbridge common shares, as may be required to be deducted and withheld with respect to the making of such payment under the Code or any provision of state, local or foreign tax law. To the extent that amounts are so withheld by, Enbridge, Merger Sub, EEQ, the Exchange Agent or the Surviving Entity, as applicable, such withheld amounts (a) will be timely remitted by Enbridge, Merger Sub, EEQ, the Exchange Agent or the Surviving Entity, as applicable, to the applicable governmental entity, and (b) to the extent such withheld amounts are remitted to the appropriate governmental entity, will be treated for all purposes of the Merger Agreement as having been paid to the holder of Listed Shares in respect of which such deduction and withholding was made by Enbridge, Merger Sub, EEQ, the Exchange Agent or the Surviving Entity, as applicable. If withholding is taken in Enbridge common shares, Enbridge, Merger Sub, EEQ, the Surviving Entity and the Exchange Agent, as applicable, shall be treated as having sold such consideration for an amount of cash equal to the fair market value of such consideration at the time of such deemed sale and paid such cash proceeds to the appropriate governmental entity.

Adjustments to Prevent Dilution

If, from the date of the Merger Agreement to the earlier of the Effective Time and termination of the Merger Agreement, the issued and outstanding Listed Share or securities convertible or exchangeable into or exercisable for Listed Shares or the issued and outstanding Enbridge common shares or securities convertible or exchangeable into or exercisable for Enbridge common shares, will have been changed into a different number of shares or securities or a different class by reason of any reclassification, stock split (including a reverse stock split), stock dividend or distribution (other than as required by the EEQ LLC Agreement), recapitalization, merger, issuer tender or exchange offer, or other similar transaction, or a stock dividend with a record date within such period will have been declared, then the Merger Consideration (and the Exchange Ratio) will be equitably adjusted to provide the holders of Listed Shares and Enbridge the same economic effect as contemplated by the Merger Agreement prior to such event, and such items so adjusted will, from and after the date of such event, be the Merger Consideration (and the Exchange Ratio).

No Dissenters’ Rights

No dissenters’ or appraisal rights will be available with respect to the Merger or the other transactions contemplated by the Merger Agreement.

 

104


Table of Contents

Representations and Warranties

The Merger Agreement contains customary representations and warranties by EEQ that are subject, in some cases, to specified expectations and qualifications contained in the Merger Agreement, in forms, statements, certifications, reports or documents filed with or furnished by EEQ to the SEC (including the exhibits and schedules thereto) prior to the date of the Merger Agreement or in the disclosure letter delivered by EEQ to Enbridge in connection with the Merger Agreement. These representations and warranties relate to, among other things:

 

   

the organization, good standing and qualification to do business of EEQ;

 

   

the capital structure of EEQ, including regarding:

 

   

the number of issued and outstanding Listed Shares and voting shares;

 

   

the due authorization and validity of the Listed Shares and voting shares, and the limited liability company interests represented thereby;

 

   

the absence of any outstanding bonds, debentures, notes or other obligations the holders of which have the right to vote (or are convertible into or exercisable for securities having the right to vote) with the holders of Listed Shares on any matter; and

 

   

the absence of preemptive or other outstanding rights, options, warrants, conversion rights, stock appreciation rights, redemption rights, repurchase rights, agreements, arrangements, calls, commitments or similar rights;

 

   

the corporate power, authority and approval relating to the execution, delivery and performance of EEQ’s, obligations under the Merger Agreement and waiver of Section 9.01(a)(v) of the EEQ LLC Agreement, subject to the approval by the affirmative vote of the holders of a majority of the outstanding Listed Shares (other than Excluded Shares) entitled to vote on the matters;

 

   

the Special Committee’s unanimous determination that the Merger Agreement, Merger and EEQ LLC Agreement Amendment, are fair and reasonable to EEQ, including the Unaffiliated EEQ Shareholders, and recommendation that the holders of the Listed Shares approve the Merger Agreement, transactions contemplated thereby, EEQ LLC Agreement Amendment and waiver of Section 9.01(a)(v) of the EEQ LLC Agreement;

 

   

the EEQ Board’s unanimous determination that the Merger Agreement, Merger and EEQ LLC Agreement Amendment, are fair and reasonable to EEQ, including the Unaffiliated EEQ Shareholders, and recommendation that the holders of the Listed Shares approve the Merger Agreement, transactions contemplated thereby, EEQ LLC Agreement Amendment and waiver of Section 9.01(a)(v) of the EEQ LLC Agreement;

 

   

government filings, notices, reports, consents, registrations, approvals, permits, expirations of waiting periods or authorizations in connection with the execution, delivery and performance of the Merger Agreement or the consummation of the Merger;

 

   

the execution, delivery and performance of the Merger Agreement by EEQ not contravening, violating, resulting in a breach of or otherwise conflicting with the organizational documents of EEQ or the material contracts of EEQ or resulting in the creation of any lien on any of the assets or businesses of EEQ under any such material contract;

 

   

filings with the SEC since December 31, 2016, the financial statements included therein and the maintenance of a system of internal controls;

 

   

the absence of a Material Adverse Effect with respect to EEQ since December 31, 2017;

 

   

the absence of any Proceedings pending or, to the knowledge of EEQ, threatened in writing against EEQ;

 

105


Table of Contents
   

the absence of certain undisclosed liabilities or obligations, other than those incurred in the ordinary course since December 31, 2017;

 

   

the absence of any material judgment, order, writ, injunction, stipulation, ruling, determination, decree or award of any governmental entity against EEQ;

 

   

compliance with applicable laws and the possession of and compliance with licenses and permits necessary to the conduct of business as presently conducted, none of which will cease to be effective as a result of the Merger;

 

   

environmental matters;

 

   

tax matters;

 

   

real property;

 

   

certain material contracts;

 

   

the opinion of Goldman Sachs, as financial advisor to the Special Committee; and

 

   

the absence of undisclosed broker or finders fees.

The Merger Agreement also contains customary representations and warranties by Enbridge and Merger Sub that are subject, in some cases, to specified expectations and qualifications contained in the Merger Agreement, in forms, statements, certifications, reports or documents filed with or furnished by Enbridge to the SEC (including the exhibits and schedules thereto) or filed on the System for Electronic Document Analysis and Retrieval maintained by the Canadian securities regulators prior to the date of the Merger Agreement or in the disclosure letter delivered by Enbridge to EEQ in connection with the Merger Agreement. These representations and warranties relate to, among other things:

 

   

the organization, good standing and qualification to do business of Enbridge and its subsidiaries (other than EEQ);

 

   

the capital structure of Enbridge and Merger Sub, including regarding:

 

   

the number of Enbridge common shares and preference shares issued and outstanding;

 

   

the due authorization and validity of all outstanding Enbridge common shares;

 

   

the absence of any outstanding bonds, debentures, notes or other obligations the holders of which have the right to vote (or are convertible into or exercisable for securities having the right to vote) with Enbridge shareholders on any matter;

 

   

the absence of preemptive or other outstanding rights, options, warrants, conversion rights, stock appreciation rights, redemption rights, repurchase rights, agreements, arrangements, calls, commitments or similar rights; and

 

   

Enbridge’s 100% indirect ownership of Merger Sub and Merger Sub’s lack of assets, liabilities or obligations of any nature other than those incident to its formation in connection with the Merger;

 

   

the corporate power, authority and approval relating to the execution, delivery and performance of Enbridge’s and Merger Sub’s obligations under the Merger Agreement;

 

   

government filings, notices, reports, consents, registrations, approvals, permits or authorizations in connection with the execution, delivery and performance of the Merger Agreement or the consummation of the Merger;

 

   

the execution, delivery and performance of the Merger Agreement by Enbridge not contravening, violating, resulting in a breach of or otherwise conflicting with the organizational documents of Enbridge or its subsidiaries (other than EEQ) or the material contracts of Enbridge or resulting in the creation of any lien on any of the assets or businesses of any of Enbridge or its subsidiaries (other than EEQ) under any such material contract;

 

106


Table of Contents
   

filings with the SEC since December 31, 2016, the financial statements included therein and the maintenance of a system of internal controls;

 

   

the absence of a Material Adverse Effect with respect to Enbridge and its subsidiaries (other than EEQ), taken as a whole, since December 31, 2017;

 

   

the absence of any Proceedings pending or, to the knowledge of Enbridge, threatened in writing against Enbridge or its subsidiaries (other than EEQ);

 

   

the absence of certain undisclosed liabilities or obligations, other than those incurred in the ordinary course since December 31, 2017;

 

   

the absence of any material judgment, order, writ, injunction, stipulation, ruling, determination, decree or award of any governmental entity against Enbridge or its subsidiaries (other than EEQ);

 

   

compliance with applicable laws and the possession of and compliance with licenses and permits necessary to the conduct of business, none of which will cease to be effective as a result of the Merger;

 

   

environmental matters;

 

   

tax matters;

 

   

real property;

 

   

certain material contracts;

 

   

the absence of undisclosed broker or finders fees;

 

   

insurance; and

 

   

Enbridge having provided to EEQ a correct and complete copy of the EEP merger agreement.

Many of the representations and warranties contained in the Merger Agreement are qualified by a “Material Adverse Effect” standard (that is, they would not be deemed untrue or incorrect unless their failure to be true and correct, individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect on Enbridge or EEQ) and/or by a general materiality standard.

A “Material Adverse Effect” means with respect to EEQ or Enbridge, as applicable, any effect, event, development, change or occurrence, individually or in the aggregate with any other events, developments, changes, or occurrences, that is materially adverse to the financial condition, properties, assets, operations, liabilities, business or results of operations of Enbridge and its subsidiaries (other than EEQ) or EEQ, in each case taken as a whole, except that none of the following, alone or in combination, will be deemed to constitute a Material Adverse Effect, or be taken into account in determining whether a Material Adverse Effect has occurred or would reasonably be expected to occur:

 

   

effects, events, developments, changes or occurrences affecting the economy, credit, capital, securities or financial markets, or political, regulatory or business conditions, in general in the U.S., Canada or elsewhere in the world;

 

   

effects that are the result of factors affecting the energy products gathering, drilling, processing, treating, transportation, storage, marketing and other related industries, markets or geographical areas in which such party and its subsidiaries conduct their respective businesses (including any change in the prices of energy products, industry margins or any regulatory changes or changes in applicable law);

 

   

effects caused by the entry into, announcement or performance of the transactions contemplated by the Merger Agreement, including the Merger, including any impact on relationships, contractual or otherwise, with customers, suppliers, distributors, lenders, partners, governmental entities or employees or any transaction litigation or actions taken or requirements imposed by any governmental entity in connection with the transactions contemplated by the Merger Agreement, including the Merger;

 

107


Table of Contents
   

changes or modifications in GAAP or applicable accounting regulations or principles, or in the interpretation or enforcement thereof, after the date of the Merger Agreement;

 

   

any effect resulting from any adoption, implementation, promulgation, repeal, modification, reinterpretation, change of enforcement or proposal of any law, decision or protocol or any other legislative or political conditions or policy or practices of any governmental entity;

 

   

changes in stock price, trading volume, or credit rating or any failure by such party to meet any internal or public projections or forecasts or estimates of revenues or earnings for any period (provided that this exception will not prevent or otherwise affect a determination that any effect underlying such failure has resulted in, or contributed to, or would reasonably be expected to result in, or contribute to, a Material Adverse Effect);

 

   

any effect, event, development, change or occurrence resulting from acts of war (whether or not declared), civil disobedience, hostilities, terrorism, military actions or the escalation of any of the foregoing, any hurricane, flood, tornado, earthquake or other weather or natural disaster or acts of God, whether or not caused by any person;

 

   

the performance by any party of its obligations under the Merger Agreement, including any action taken or omitted to be taken at the request or with the consent of Enbridge, with respect to EEQ, or at the request or with the consent of EEQ with respect to Enbridge, as applicable;

 

   

any effect, event, development, change, occurrence or announcement of an effect, event, development, change or occurrence affecting the credit rating or other rating of financial strength of such party or any of its subsidiaries or any of their respective securities (provided that this exception will not prevent or otherwise affect a determination that any effect underlying such decline or change has resulted in, or contributed to, or would reasonably be expected to result in, or contribute to, a Material Adverse Effect);

 

   

a decline in the market price, or change in trading volume, of the Listed Shares on the NYSE or the Enbridge common shares on the TSX or the NYSE, as applicable (provided that this exception will not prevent or otherwise affect a determination that any effect underlying such decline or change has resulted in, or contributed to, or would reasonably be expected to result in, or contribute to, a Material Adverse Effect);

 

   

any Proceeding commenced by or involving any current or former member, partner, unitholder or stockholder of such person, on their own behalf or on behalf of such person, arising out of or related to the Merger Agreement or the transactions contemplated thereby; or

 

   

effects, events, developments, changes or occurrences caused by the entry into, announcement, consummation or performance of, or failure to enter into or consummate the Other Merger Transactions, including any impact on relationships, contractual or otherwise, with customers, suppliers, distributors, lenders, partners, governmental entities or employees or any litigation related to certain other transactions involving Enbridge or actions taken or requirements imposed by any governmental entity in connection with certain other transactions involving Enbridge.

However, with respect to the first, second, fourth, fifth and seventh bullets listed above, such effect, event, development, change or occurrence will be taken into account in determining whether a Material Adverse Effect has occurred to the extent that it disproportionately adversely affects such party and its subsidiaries compared to other companies operating in the industries in which such party and its subsidiaries operate.

Interim Operations

Under the terms of the Merger Agreement, EEQ and Enbridge have agreed that, after the date of the Merger Agreement and prior to the Effective Time, except as contemplated by the Merger Agreement, required by law or contract in effect as of the date of the Merger Agreement or agreed upon by the parties in writing (which

 

108


Table of Contents

approval will not be unreasonably withheld, conditioned or delayed), the business of each of Enbridge and EEQ and their respective subsidiaries will be conducted in the ordinary course and each of Enbridge and EEQ and their respective subsidiaries will use their commercially reasonable efforts to preserve their business organizations intact and maintain existing relations and goodwill with governmental entities, customers, suppliers, licensors, distributors, creditors, lessors, employees and business associates. EEQ and Enbridge have also agreed that, after the date of the Merger Agreement and prior to the Effective Time, except as, among other things (a) contemplated by the Merger Agreement or in any contract entered into by Enbridge with respect to the Other Merger Transactions, (b) required by law or the terms of any material contract of either Enbridge or EEQ, or (c) as approved in writing by the other party (which approval shall not be unreasonably withheld, conditioned or delayed), EEQ and Enbridge will not, and will not permit their respective subsidiaries to:

 

   

make any material change to the nature of its business and operations;

 

   

make any change to its organizational documents as in effect on the date of the Merger Agreement in any manner that would reasonably be expected to prohibit, prevent or materially impede, hinder or delay the ability of the party to satisfy any of the conditions to, or consummation of, the Merger or the Other Merger Transactions;

 

   

merge or consolidate itself or any of its subsidiaries with any other person or adopt a plan or agreement of complete or partial liquidation, dissolution, restructuring, recapitalization or other reorganization, except such transactions solely between or among, or solely involving, the party and one or more of its wholly owned subsidiaries, or a subsidiary of such party and one or more wholly owned subsidiaries of such subsidiary, as would not reasonably be expected to result in a Material Adverse Effect with respect to EEQ or Enbridge, as applicable, or as would not reasonably be expected to prohibit, prevent or materially impede, hinder or delay the ability of such party to satisfy any of the conditions to, or consummation of, the Merger or the Other Merger Transactions;

 

   

except as required by the EEQ LLC Agreement, issue, sell, grant, transfer or authorize the issuance, sale or grant, or otherwise enter into any contract with respect to the voting of, any of its partnership interests, limited liability company interests, shares of capital stock or equity interests, as applicable (other than the issuance of partnership interests, limited liability company interests, shares of capital stock or equity interests (A) by its wholly owned subsidiary to it or another of its wholly owned subsidiaries or (B) in respect of equity-based awards outstanding as of the date of the Merger Agreement in accordance with their terms and, as applicable, the plan documents as in effect on the date of the Merger Agreement), or securities convertible or exchangeable into or exercisable for any such partnership interests, limited liability company interests, shares of capital stock or equity interests, as applicable, or any options, warrants or other rights of any kind to acquire any partnership interests, limited liability company interests, shares of capital stock or equity interests, as applicable, or such convertible or exchangeable securities;

 

   

reclassify, split, combine, subdivide or redeem, purchase or otherwise acquire any of its partnership interests, limited liability company interests, shares of capital stock or equity interests, as applicable, or securities convertible or exchangeable for such interests, as applicable;

 

   

waive, release, assign, settle or compromise any claim, action or proceeding, including any state or federal regulatory proceeding seeking damages or injunction or other equitable relief, which waiver, release, assignment, settlement or compromise would reasonably be expected to result in a Material Adverse Effect on EEQ or Enbridge, as applicable;

 

   

other than in the ordinary course, make, change or revoke any material tax election, adopt or change any material tax accounting method, file any material amended tax return, settle any material tax claim, audit, assessment or dispute for an amount materially in excess of the amount reserved or accrued on the party’s most recent consolidated balance sheet included in the public filings of EEQ or Enbridge, as applicable, or surrender any right to claim a refund of a material amount of taxes;

 

   

make any material change to its accounting policies, except as may be required as a result of a change in GAAP;

 

109


Table of Contents
   

make or declare any dividends or distributions to the holders of EEP common units or Enbridge common shares, in each case, other than in the ordinary course; or

 

   

agree, authorize or commit to do any of the foregoing.

Change in Recommendation

No Solicitation. Except as expressly permitted by the Merger Agreement, EEQ will not, and none of its subsidiaries nor any of the directors, officers or employees of it or its subsidiaries will, and EEQ will instruct its and its subsidiaries’ directors, officers, principals, partners, managers, members (if such person is a member-managed limited liability company or similar entity), employees, consultants, investment bankers, financial advisors, legal counsel, attorneys-in-fact, accountants or other advisors, agents or other representatives of such person, in each case acting in their capacity as such (the “Representatives”) not to, directly or indirectly:

 

   

initiate, solicit, propose, encourage or facilitate any inquiry or the making of any proposal or offer that constitutes, or could reasonably be expected to lead to, an acquisition proposal;

 

   

engage in, continue or otherwise participate in any discussions with or negotiations relating to any acquisition proposal or any inquiry, proposal or offer that could reasonably be expected to lead to an acquisition proposal;

 

   

provide any non-public information to any person in connection with any acquisition proposal or any proposal or offer that would reasonably be expected to lead to an acquisition proposal; or

 

   

otherwise facilitate any effort or attempt to make an acquisition proposal.

No act or failure to act by Enbridge or any of its affiliates or Representatives will be a violation or breach of the above.

Exceptions. Prior to the time, but not after, the approval of the Merger Agreement, the transactions contemplated thereby, the EEQ LLC Agreement Amendment and the waiver of Section 9.01(a)(v) of the EEQ LLC Agreement by the affirmative vote of the holders of a majority of the outstanding Listed Shares, other than Excluded Shares (the “Requisite Company Vote”) is obtained, in response to an unsolicited, bona fide written acquisition proposal that did not arise from or in connection with a material breach of certain obligations set forth in the Merger Agreement, EEQ may:

 

   

provide information in response to a request therefor (including non-public information regarding EEQ) to the person who made such acquisition proposal, provided that such information has previously been made available to, or is made available to, Enbridge prior to or concurrently with the time such information is made available to such person and, prior to furnishing any such information, EEQ receives from the person making such acquisition proposal an executed confidentiality agreement containing customary terms (it being understood that such confidentiality agreement need not contain a standstill provision prohibiting the making or amending of an acquisition proposal); and

 

   

participate in any discussions or negotiations with any such person regarding such acquisition proposal; in each case, if, and only if, prior to taking any action described above, the Special Committee determines in good faith after consultation with outside legal counsel, based on the information then available and after consultation with its financial advisor, that such acquisition proposal (a) constitutes a superior proposal or would reasonably be expected to result in a superior proposal and (b) did not result from a breach of the provisions related to a change in recommendation in the Merger Agreement.

Notice of Acquisition Proposals. EEQ will promptly (and, in any event, within 24 hours) give notice to Enbridge if (a) any inquiries, proposals or offers with respect to an acquisition proposal are received by; (b) any non-public information is requested in connection with any acquisition proposal from; or (c) any discussions or negotiations with respect to an acquisition proposal are sought to be initiated or continued with, it or any of its

 

110


Table of Contents

Representatives, setting forth in such notice the name of such person and the material terms and conditions of any proposals or offers (including, if applicable, complete copies of any written requests, proposals or offers, including proposed agreements) and thereafter will keep Enbridge reasonably informed, on a current basis (and, in any event, within 24 hours), of the status and terms of any such proposals or offers (including any amendments thereto) and the status of any such discussions or negotiations, including any change in its intentions as previously notified.

No Change in Recommendation. Except as permitted by the Merger Agreement, the Special Committee agrees it will not:

 

   

withhold, withdraw, qualify or modify (or publicly propose or resolve to withhold, withdraw, qualify or modify) the recommendation of the EEQ Board that the holders of Listed Shares approve the Merger Agreement and the transactions contemplated thereby, including the Merger, the EEQ LLC Agreement Amendment and the waiver of Section 9.01(a)(v) (the “Company Recommendation”) in a manner adverse to Enbridge;

 

   

fail to include the Company Recommendation in the proxy statement/prospectus;

 

   

fail to recommend, within ten business days after the commencement of such acquisition proposal through a tender or exchange offer pursuant to Rule 14d-2 under the Exchange Act for outstanding Listed Shares (other than by Enbridge or an affiliate of Enbridge), against acceptance of such tender offer or exchange offer by its shareholders;

 

   

approve or recommend, or publicly declare advisable or publicly propose to enter into, any letter of intent, memorandum of understanding, agreement in principle, acquisition agreement, merger agreement, option agreement, joint venture agreement, partnership agreement or other agreement, other than a confidentiality agreement referred to in the Merger Agreement relating to any acquisition proposal (an “Alternative Acquisition Agreement”, and any of the actions set forth in the above, a “Change of Recommendation”); or

 

   

except as expressly permitted by the Merger Agreement, recommend that EEQ enter into an Alternative Acquisition Agreement.

Prior to the time Requisite Company Vote is obtained, the Special Committee may effect a Change of Recommendation if (a) an unsolicited, bona fide written acquisition proposal that did not arise from or in connection with a breach of the obligations set forth in the Merger Agreement is received by EEQ and is not withdrawn, and (b) the Special Committee determines in good faith, after consultation with outside legal counsel and its financial advisor, that such acquisition proposal constitutes a superior proposal. However, a Change of Recommendation may not be made unless and until EEQ has given Enbridge written notice of such action and the basis thereof five days in advance (unless at the time such notice is otherwise required to be given there are fewer than five days prior to the expected date of the special meeting, as may be adjusted, in which case such notice will be provided as far in advance as practicable), which notice will set forth in writing that the Special Committee intends to consider whether to take such action and comply in form, substance and delivery with the provisions of the Merger Agreement. After giving such notice and prior to effecting such Change of Recommendation, EEQ will negotiate in good faith with Enbridge (to the extent Enbridge wishes to negotiate) to make such revisions to the terms of the Merger Agreement as would permit the Special Committee not to effect a Change of Recommendation in response thereto. At the end of the five-day period (or such shorter period as is permitted), prior to taking action to effect a Change of Recommendation, the Special Committee shall take into account any changes to the terms of the Merger Agreement proposed by Enbridge in writing and any other information offered by Enbridge in response to the notice, and will have determined in good faith, after consultation with outside legal counsel and its financial advisor, that the superior proposal would continue to constitute a superior proposal if such changes offered in writing were to be given effect. Any modification to any acquisition proposal will be deemed to be a new acquisition proposal, except that the advance written notice obligation will be reduced to three days.

 

111


Table of Contents

Prior to the time Requisite Company Vote is obtained, the Special Committee may also effect a Change of Recommendation in response to an effect, event, development, change or occurrence that is not known or reasonably foreseeable to or by the Special Committee as of the date of the Merger Agreement (or if known, the consequences of which were not known to or by the Special Committee as of the date of the Merger Agreement), which effect, event development, change or occurrence (or consequences) becomes known to or by the Special Committee prior to Requisite Company Vote having been obtained (an “Intervening Event”) if the Special Committee has reasonably determined in good faith, after consultation with outside legal counsel and its financial advisor, that the failure to do so would be materially adverse to the interests of EEQ or the Unaffiliated EEQ Shareholders or would otherwise be reasonably likely to be inconsistent with its duties under applicable law or obligations under the EEQ LLC Agreement. However, a Change of Recommendation may not be made unless and until EEQ has given Enbridge written notice of such action and the basis thereof five days in advance (unless at the time such notice is otherwise required to be given there are fewer than five days prior to the expected date of the special meeting, as may be adjusted, in which case such notice will be provided as far in advance as practicable), which notice will set forth in writing that the Special Committee intends to consider whether to take such action and a reasonably detailed description of such Intervening Event. After giving such notice and prior to effecting such Change of Recommendation, EEQ will negotiate in good faith with Enbridge (to the extent Enbridge wishes to negotiate) to make such revisions to the terms of the Merger Agreement as would permit the Special Committee not to effect a Change of Recommendation in response thereto. At the end of the five-day period (or such shorter period as is permitted), prior to taking action to effect a Change of Recommendation, the Special Committee will take into account any changes to the terms of the Merger Agreement proposed by Enbridge in writing and any other information offered by Enbridge in response to the notice, and will have determined in good faith, after consultation with outside legal counsel and its financial advisor, that the failure to effect a Change of Recommendation would continue to be materially adverse to the interests of EEQ or the Unaffiliated EEQ Shareholders or would otherwise be reasonably likely to be inconsistent with its duties under applicable law or obligations under the EEQ LLC Agreement.

Certain Permitted Disclosures. The Merger Agreement does not prohibit EEQ or the Special Committee from disclosures to the Unaffiliated EEQ Shareholders of a position contemplated by Rules 14d-9 and 14e-2(a) promulgated under the Exchange Act or any disclosure the Special Committee has reasonably determined in good faith, after consultation with outside legal counsel, that the failure to do so would be materially adverse to the interests of EEQ or the Unaffiliated EEQ Shareholders or would otherwise be reasonably likely to be inconsistent with its duties under applicable law or obligations under the EEQ LLC Agreement.

Existing Discussions. EEQ will, and will cause its subsidiaries and Representatives to, immediately cease and cause to be terminated any existing activities, discussions or negotiations with any person conducted with respect to any acquisition proposal, or proposal that would reasonably be expected to lead to an acquisition proposal. EEQ will promptly deliver a written notice to each such person providing only that EEQ is ending all discussions and negotiations with such person with respect to any acquisition proposal, or proposal or transaction that would reasonably be expected to lead to an acquisition proposal and informing such persons of the obligations undertaken in the Merger Agreement, which notice will also request the prompt return or destruction of all confidential information concerning EEQ and any of its subsidiaries furnished to such person by or on behalf of EEQ or any of its subsidiaries, as applicable.

Proxy Statement/Prospectus Filing; Information Supplied

As promptly as reasonably practicable after the date of the Merger Agreement, EEQ will prepare and file with the SEC the proxy statement/prospectus relating to the special meeting (as amended and supplemented from time to time) and Enbridge will prepare and file with the SEC the registration statement on Form S-4 of which this proxy statement/prospectus forms a part. Each of EEQ and Enbridge have agreed to use their respective reasonable best efforts to respond promptly to comments from the SEC and have the registration statement declared effective under the Securities Act as promptly as practicable after such filing, to promptly thereafter mail the proxy statement/prospectus (including the registration statement) to the holder of Listed Shares and to

 

112