Pembina Pipeline Acquires Enbridge's Interests in Alliance Pipeline, Aux Sable for $3.1 Billion

(P&GJ) — Enbridge Inc. has entered into a definitive agreement to sell its 50% interest in Alliance Pipeline and its 42.7% interest in Aux Sable to Pembina Pipeline Corp. for a purchase price of $3.1 billion, including non-recourse debt at Alliance of approximately $0.3 billion, and subject to customary closing adjustments.

Alliance delivers liquids rich natural gas sourced in Northeast B.C., Northwest Alberta and the Bakken region to Chicago.

Aux Sable operates natural gas liquids (NGL) extraction and fractionation facilities in both Canada and the U.S., with extraction rights on Alliance, offering connectivity to key U.S. NGL hubs.

Pembina would assume C$327 million of debt as part of the deal, helping Enbridge offload some leverage, Reuters reported.

The sale price represents an attractive valuation of approximately 11 times projected 2024 EBITDA for Alliance and approximately 7 times for Aux Sable, which is in line with other commodity exposed businesses.

As part of the transaction, Pembina, a long-standing partner on Alliance and the current operator of Aux Sable, will also assume operatorship of Alliance. Enbridge will work closely with Pembina to ensure a safe and orderly transition.

The divestiture represents an important element of Enbridge's financing plan. The sales proceeds will fund a portion of the strategic U.S. gas utilities acquisitions and be used for debt reduction. Any remaining Acquisitions funding will be satisfied through utilizing any, or all, of the following financing programs available to Enbridge including our ongoing capital recycling program, issuance of further hybrid securities and bonds, reinstatement of our DRIP Program, or at-the-market equity issuances.   

The effective date of the transaction is January 1, 2024, with closing expected to occur in the first half of 2024, subject to the receipt of regulatory approvals and customary closing conditions.

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