Enbridge Announces Series 11 Preferred Shares Conversion Option and Dividend Rate Update
Enbridge has confirmed that it will not exercise its right to redeem its Cumulative Redeemable Preference Shares, Series 11 (Series 11 Shares) on March 1, 2025, as previously anticipated. Instead, the company has outlined a conversion option that will allow the holders of Series 11 Shares the opportunity to convert their shares into Cumulative Redeemable Preference Shares, Series 12 (Series 12 Shares), on a one-for-one basis, effective from March 1, 2025. This decision presents a choice for Series 11 shareholders to either convert all or part of their holdings into the new series of shares or continue holding their Series 11 Shares.
Conversion Rights and Conditions
Holders of Series 11 Shares will have the option to convert their shares into Series 12 Shares during a designated conversion period, which runs from January 30, 2025, through 5:00 p.m. EST on February 14, 2025. To exercise this right, beneficial holders must act promptly and communicate with their brokers or intermediaries as soon as possible. It is strongly recommended that holders take action well in advance of the deadline to ensure all necessary steps are completed by their broker. Any conversion requests made after the deadline will not be honored.
In addition to the basic conversion option, Enbridge has specified a few conditions related to the conversion process:
- Series 11 Share Threshold: If, after the conversion period, Enbridge determines that fewer than 1,000,000 Series 11 Shares will remain outstanding, all remaining Series 11 Shares will automatically be converted into Series 12 Shares on a one-for-one basis as of March 1, 2025.
- Series 12 Share Threshold: If Enbridge determines that fewer than 1,000,000 Series 12 Shares would remain outstanding following the conversion, no Series 11 Shares will be converted into Series 12 Shares. Currently, there are 20,000,000 Series 11 Shares outstanding.
Dividend Rate for Series 11 Shares
For Series 11 Shares that remain outstanding after March 1, 2025, Enbridge has set the new dividend rate for the upcoming five-year period, starting on March 1, 2025, and extending to March 1, 2030. The dividend rate will be fixed at 5.477 percent per annum, reflecting the five-year Government of Canada bond yield of 2.837 percent, as of the date of this announcement, plus a margin of 2.64 percent, as outlined in the terms of the Series 11 Shares.
Holders of these shares will continue to receive quarterly fixed cumulative preferential cash dividends, as and when declared by Enbridge’s Board of Directors, for the duration of this period.
Dividend Rate for Series 12 Shares
In the case of Series 12 Shares issued following the conversion of Series 11 Shares, holders will be entitled to receive quarterly floating-rate cumulative preferential cash dividends. The dividend rate applicable to these Series 12 Shares for the initial period beginning on March 1, 2025, and ending on June 1, 2025, will be 1.41151 percent, based on the most recent annual rate for three-month Government of Canada treasury bills (which, as of the date of this release, is 2.96 percent), plus the margin of 2.64 percent specified in the terms of the Series 12 Shares. This results in a floating quarterly dividend rate of 1.41151 percent for the period.
The floating quarterly dividend rate for Series 12 Shares will be subject to quarterly resets, meaning that the rate will change every three months based on the then-current rate for Government of Canada treasury bills.
Conversion Process for Beneficial Holders
For beneficial holders of Series 11 Shares who wish to exercise their conversion right, it is essential to contact their brokers or intermediaries as soon as possible during the conversion period, which begins on January 30, 2025, and concludes at 5:00 p.m. EST on February 14, 2025. Shareholders should take action well before the deadline to allow sufficient time for the necessary steps to be completed.
Brokers and intermediaries will be able to provide detailed guidance on the steps involved in converting shares, and they will also assist with ensuring that any conversions are properly processed within the allotted timeframe. Holders are reminded that any notices submitted after the conversion deadline will not be valid.
Enbridge’s announcement includes forward-looking statements regarding the conversion process, the potential impact on the Series 11 and Series 12 Shares, and the dividend rates for the respective shares. While these statements reflect Enbridge’s current expectations and assumptions, they are subject to known and unknown risks, uncertainties, and factors that may cause actual events to differ from those anticipated. Forward-looking statements are not guarantees of future performance, and readers are cautioned against placing undue reliance on them.
Among the factors that could influence the actual outcomes are the decisions made by holders of the Series 11 Shares regarding whether or not to convert their holdings into Series 12 Shares. The company’s ability to meet its obligations, such as paying dividends, is also influenced by various other factors, including financial market conditions, interest rates, and regulatory changes.
Enbridge believes that the forward-looking statements made in this release are reasonable based on the information currently available. However, these statements involve inherent risks, uncertainties, and assumptions that may affect the actual outcomes. Enbridge does not assume any obligation to update or revise these forward-looking statements unless required by law or applicable regulation. Consequently, investors and stakeholders should be aware that the actual course of action may differ materially from the expectations set forth in this release.
Enbridge’s decision to provide Series 11 shareholders with the option to convert their holdings into Series 12 Shares, coupled with the updated dividend rates for both Series 11 and Series 12 Shares, provides flexibility for investors and reflects the company’s ongoing efforts to manage its capital structure. Investors should carefully consider the conversion option and dividend updates in light of their individual investment strategies and preferences.
Those wishing to convert their shares must act within the specified timeframes and follow the necessary steps with their brokers or intermediaries. As always, it is essential to stay informed and ensure that all actions are taken before the conversion period ends.
Enbridge Inc. is a leading North American energy infrastructure company that focuses on the transportation, distribution, and generation of energy. The company operates in diverse sectors, including natural gas, liquids, and renewable energy, with a strong commitment to safety, environmental responsibility, and sustainability.
