Enbridge to take on $300MM MATL transmission project with Tonbridge acquisition

Source: Enbridge Inc.

Enbridge Inc. has entered into an arrangement agreement with Tonbridge Power Inc., and related lock-up agreements with Tonbridge directors, management and its major shareholder. The agreement is subject to approval by not less than two-thirds of Tonbridge common shares voted at a special meeting expected to be held on September 26, 2011 and to receipt of certain regulatory approvals. Holders of more than 20% of the Tonbridge common shares have agreed to vote in favour of the transaction.

Enbridge will offer to acquire all outstanding common shares of Tonbridge for $20 million through a plan of arrangement, and to repay approximately $50 million of debt incurred in the development of the Montana-Alberta Tie-Line (MATL) power transmission project being developed by Tonbridge. Enbridge will be entitled to receive approximately $9 million in a combination of cash and warrants if the arrangement is not completed in certain circumstances.

Following the acquisition, Enbridge will inject further funding to complete the first 300 megawatt (MW) phase of MATL as well as a low cost expansion to 550-600 MW. The total cost to Enbridge for both phases of MATL is expected to be approximately $300 million, of which approximately half is being funded through a low cost 30-year loan from the Western Area Power Administration of the US Department of Energy.

MATL is a 345-kilometer transmission line from Great Falls, Montana to Lethbridge, Alberta, designed to take advantage of a growing supply of electric power in Montana, including green power production, and the buoyant power demand of Alberta. Required permits for the first phase of MATL have been obtained and the project has secured long-term, take-or-pay contracts for the system's entire northbound capacity. In addition, Tonbridge also has a 200-kilometer southern extension of MATL, the Green Line, under development.

"The MATL project is the first step in Enbridge's plans to develop a power transmission growth platform," said J. Richard Bird, Executive Vice President, Chief Financial Officer and Corporate Development of Enbridge. "Power transmission fits well with Enbridge's overall energy infrastructure value proposition, typically involving long-lived assets with stable cash flows and earnings. The transmission industry growth fundamentals are strong, with significant North America wide investment required to replace aging infrastructure, address grid bottlenecks and tie renewable power projects to more distant markets. The local fundamentals of the MATL project are particularly strong and meet the criteria we established for our initial entry point investment."

Added Mr. Bird, "The project comes with an established project development team which, with support from Enbridge's Major Projects execution group and our financial resources, will be well positioned to develop the existing Tonbridge opportunities under the Enbridge banner, as well as to support other transmission development opportunities Enbridge is examining. We welcome this team to Enbridge."



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