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Page 16 - Balance Sheet Strengthening Actions

SPECTRA ENERGY PARTNERS, LP filed this Form SC 13D/A on 11/30/2017


 

 

 

Balance Sheet Strengthening Actions

 

The Company’s financing plan has been designed to fund its industry leading secured growth program while deleveraging the balance sheet. The plan achieves strong, investment grade credit metrics throughout the three-year period, with its Debt to EBITDA metric expected to reach 5x by the end of 2018, and trending to approximately 4.5x by 2020.

 

Total spending on secured growth and maintenance capital is expected to be approximately $22 billion through the end of 2020. This capital funding requirement, together with targeted debt reduction of approximately $4 billion, will be satisfied with the following sources:

 

·$14B – Internally generated cash flow, net of dividends/distributions
·$1.5B – Enbridge Inc. common equity (announced today)
·$0.5B – Enbridge Income Fund Holdings Inc. common equity (announced today)
·$4.0B – Hybrid securities (planned through the end of 2018)
·$3.0B – Non-core asset sales (planned through the end of 2018)

 

A combination of DRIP and sponsored vehicle equity will satisfy the remaining requirement. As such, no further follow-on Enbridge Inc. common equity is required to support the current financing plan. In addition, the Company can create significant further financing flexibility through incremental non-core asset sales or monetizations, issuance of hybrid securities and sponsored vehicle financing actions.

 

Mr. Monaco commented, “With on-going execution of our secured capital investment program, it’s important that we maintain a strong financial position and financing flexibility, which this plan achieves. Over the last two years, excluding the common equity issued today, we’ve raised approximately $7.5 billion in equity or equity equivalent funding, financed the Spectra acquisition with 100% equity and sold or monetized $2.6 billion in non-core assets, which demonstrates our commitment to pro-active management of the balance sheet during this period of growth. The asset sales and further actions we’re announcing today, along with our three-year financing plan, will provide the capital required to fund our secured growth program and provide the financial flexibility going forward to support the execution of our strategy.”

 

2018 Guidance and Three-Year Financial Outlook

 

Enbridge expects 2018 ACFFO/share from its existing operation and secured-only capital program in the range of $4.15 to $4.45/share, inclusive of the dilutive effect of the $1.5 billion common equity issuance announced today and the other planned funding and asset sale actions noted above. The secured-only financial outlook implies a three-year compound annual growth rate in ACFFO/share of approximately 10% off of the midpoint 2017 guidance range of $3.60 - $3.90/share, ending with a midpoint of approximately $5/share of ACFFO in 2020.

 

Dividend Increase and Dividend Growth Outlook

 

The Board of Directors approved an increase in the annual Dividend of 10% for 2018. The new quarterly dividend of $0.671/share will be payable on March 1, 2018, to shareholders of record on February 15, 2018. Enbridge expects to continue to deliver annual dividend growth of 10% through 2020, which is expected to result in a dividend payout through the planning horizon of below 65% of ACFFO/share.