Enbridge selling renewable power plants, U.S. gas assets for $3.2B

CALGARY — Shares in Enbridge Inc. rose Wednesday after it announced it will gain nearly $3.2 billion through two deals to sell renewable power facilities in North America and Europe and natural gas gathering and processing assets in the United States.

The deals announced hours before its annual general meeting in Calgary allow Enbridge to declare mission accomplished on its goal of raising $3 billion from non-core asset sales in 2018 to reduce its heavy debt load and help fund its $22-billion growth program.

Enbridge shares rose as high as $41.48 in morning trading on the Toronto Stock Exchange, up about 2.6 per cent from Tuesday’s close.

Enbridge said it had inked a $1.75-billion agreement with the Canada Pension Plan Investment Board (CPPIB) to sell a 49 per cent stake in most of its wind and solar power assets.

“The monetization of $1.75 billion of renewable assets through our newly formed joint venture with CPPIB is an important step in achieving the objective we set when we rolled out our three-year plan and strategic priorities in December,” said Enbridge CEO Al Monaco in a news release.

“This deal makes a significant contribution to our $3-billion asset sales target for the year and will also eliminate $500 million of equity capital requirement that we had previously included in our funding plan.”

Separately, the Calgary-based firm said it will also sell Midcoast Operating LP to an affiliate of private equity firm ArcLight Capital Partners LLC for about $1.44 billion.

Midcoast operates facilities in Texas and Oklahoma to process and treat natural gas and natural gas liquids.

The sale is an important step in the company’s shift to a pure regulated pipeline and utility model, Monaco said.

Enbridge and CPPIB have agreed to create a joint venture that includes all of its Canadian renewable power assets, as well as the Cedar Point Wind Farm in Colorado and the Silver State North Solar Project in Nevada.

The deal also includes Enbridge’s interests in two German offshore wind projects that are under construction — CPPIB has agreed to fund its share of the remaining costs to complete the projects, estimated at about $500 million.

In a news release, the CPPIB said it is buying a stake in 14 long-term fully contracted operating wind and solar assets in four Canadian markets. With the two plants in the U.S., there is a combined installed capacity of approximately 1.3 gigawatts, it said.

“Since December 2017, CPPIB has committed to wind and solar investments in Brazil, India, Canada, and now the U.S. and Germany,” said Bruce Hogg, managing director and head of power and renewables for the CPPIB.

“Through the joint venture, we will have the opportunity to grow our renewables portfolio across the European offshore wind market. As power demand grows worldwide, we will continue to seek opportunities to expand our power and renewables portfolio globally.”

Enbridge and CPPIB have also signed a deal to form a 50-50 joint venture to pursue future European offshore wind projects.

Enbridge said it will retain its interests in certain other U.S. renewable power assets.

Both the Midcoast and CPPIB transactions are expected to close in the third quarter, subject to regulatory approvals and customary closing conditions.

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