New Issue:ENB FixedReset, 4.40%+264

Enbridge Inc. has announced:

that it has entered into an agreement with a group of underwriters to sell ten million Cumulative Redeemable Preference Shares, Series 11 (the “Series 11 Preferred Shares”) at a price of $25.00 per share for distribution to the public. Closing of the offering is expected on May 22, 2014.

The holders of Series 11 Preferred Shares will be entitled to receive fixed cumulative dividends at an annual rate of $1.10 per share, payable quarterly on the first day of March, June, September and December, as and when declared by the Board of Directors of Enbridge, yielding 4.40 per cent per annum, for the initial fixed rate period to but excluding March 1, 2020. The first quarterly dividend payment date is scheduled for September 1, 2014. The dividend rate will reset on March 1, 2020 and every five years thereafter at a rate equal to the sum of the then five-year Canadian Government bond yield plus 2.64 per cent. The Series 11 Preferred Shares are redeemable by Enbridge, at its option, on March 1, 2020 and on March 1 of every fifth year thereafter.

The holders of Series 11 Preferred Shares will have the right to convert their shares into Cumulative Redeemable Preference Shares, Series 12 (the “Series 12 Preferred Shares”), subject to certain conditions, on March 1, 2020 and on March 1 of every fifth year thereafter. The holders of Series 12 Preferred Shares will be entitled to receive quarterly floating rate cumulative dividends, as and when declared by the Board of Directors of Enbridge, at a rate equal to the sum of the 90-day Government of Canada Treasury bill rate plus 2.64 per cent.

Enbridge has granted to the underwriters an option, exercisable at any time up to 48 hours prior to the closing of the offering, to purchase up to an additional two million Series 11 Preferred Shares at a price of $25.00 per share.

The offering is being made only in Canada by means of a prospectus supplement to the base shelf prospectus of the Corporation dated June 6, 2013. Proceeds will be used to partially fund capital projects, to reduce existing indebtedness and for other general corporate purposes of the Corporation and its affiliates.

The syndicate of underwriters is led by Scotiabank, CIBC, RBC Capital Markets, and TD Securities.

They announced shortly afterwards:

that as a result of strong investor demand for its previously announced offering of Cumulative Redeemable Preference Shares, Series 11 (the “Series 11 Preferred Shares”), the size of the offering has been increased to 20 million shares. The aggregate gross proceeds will be C$500 million. Closing of the offering is expected on May 22, 2014.

This issue is virtually identical to ENB.PF.A, a FixedReset 4.40%+266, which commenced trading March 13, 2014, with a first Exchange date of 2019-12-1. That issue closed Friday at 25.60-65 and closed today at 25.30-39 … the new price is not an indicator of expensiveness because it goes ex-dividend tomorrow.

Update, 2015-05-15: DBRS rates Pfd-2(low).

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