The entrance to Enbridge Inc.'s crude oil storage tank farm in Cushing, Okla., March 24, 2016.NICK OXFORD/Reuters
Enbridge Income Fund Holdings Inc. is issuing $500-million of shares, extending a multibillion-dollar financing rush in the energy sector since the start of the year.
Enbridge Income Fund, which runs Enbridge's crude oil mainline system and its Alberta oil sands pipeline system, said it plans to sell 17.7 million shares at $28.25 each to underwriters in a bought deal. The syndicate has the option to purchase another 2.7 million shares to cover any overallotments.
The company plans to use the proceeds to fund the expansion of its oil pipeline business, even as energy producers cut back on spending. Enbridge Income Fund has said it plans to increase its dividend by 10 per cent annually in 2017 through 2019.
Despite the energy downturn, share issues have been brisk. Over the past month, Enbridge Inc. has sold $2.3-billion of shares, Pembina Pipeline Corp. raised $345-million and TransCanada Corp. set a Canadian record with a $4.4-billion bought deal to fund its takeover of Columbia Pipeline Group.
The financings in energy infrastructure are in addition to more than $1.2-billion among energy producers and service companies since the start of 2016, even as crude prices sank to just above $26 (U.S.) a barrel. They have since recovered to above $40.
Enbridge Income Fund said Enbridge Inc. will subscribe for five million shares, assuming the overallotment option is exercised, to keep its ownership stake at 19.9 per cent.
Jeffrey Jones