Item 1.01 Entry into a Material Definitive Agreement.
On April 27, 2017, Enbridge Energy Partners, L.P. (“
EEP
”
or the “
Partnership
”) concluded its previously announced strategic review and entered into several transactions
(the “
Restructuring Transactions
”) to strengthen the Partnership’s financial position and outlook.
Purchase and Sale Agreement
On April 27, 2017, EEP entered into a definitive Purchase and
Sale Agreement (“
PSA
”) with Enbridge Energy Company, Inc. (“
EECI
” or the “
General
Partner
”) pursuant to which EECI will acquire all of EEP’s ownership interests in the Midcoast Energy Partners,
L.P. (“
MEP
”) gas gathering and processing business (“
MEP Sale
”), subject to customary closing
conditions including expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of
1976. EECI will acquire EEP’s 48.4% limited partner interest in Midcoast Operating, L.P. (“
MOLP
”), EEP’s
51.9% limited partner interest in MEP, and EEP’s 100% membership interest in Midcoast Holdings, L.L.C. (“
MH
”),
MEP’s general partner, for $2.15 billion, which includes cash consideration of $1.31 billion and outstanding indebtedness
at MEP, which was $840 million as of March 31, 2017. The value of the MEP Sale is economically equivalent to the per unit price
paid by EECI to the public unitholders of MEP pursuant to the Agreement and Plan of Merger, dated as of January 26, 2017, by and
among EECI, Enbridge Holdings (Leather) L.L.C., MEP and the general partner of MEP, which closed on April 27, 2017. From the date
of the PSA, without consent of EECI, EEP shall not permit the declaration of distributions to the holders of equity interests in
MEP, other than in the ordinary course of business;
provided that
MOLP may not declare any distributions to EEP after the
date of the PSA.
The foregoing description of the PSA and the transactions contemplated
thereby does not purport to be complete and is qualified in its entirety by reference to the full text of the PSA, a copy of which
is attached as Exhibit 10.1 hereto and incorporated herein by reference.
Contribution and Redemption Agreement
On April 27, 2017, EEP entered into a Contribution and Redemption
Agreement (the “
Contribution and Redemption Agreement
”) with EECI, pursuant to which EEP issued 64,308,682 Class
A common units representing limited partner interests to EECI in exchange for an aggregate purchase price of approximately $1.2
billion. EEP then used the proceeds from the Class A common unit issuance to redeemed in full the 48,000,000 outstanding Series
1 Preferred Units held by EECI. As part of the Contribution and Redemption Agreement, EEP also agreed to repay to EECI the $357
million deferred distribution balance related to the Series 1 Preferred Units, using a portion of the proceeds EEP will receive
upon the closing of the MEP Sale.
The foregoing description of the Contribution and Redemption
Agreement and the transactions contemplated thereby does not purport to be complete and is qualified in its entirety by reference
to the full text of the Contribution and Redemption Agreement, a copy of which is attached as Exhibit 10.2 hereto and incorporated
herein by reference.
Joint Funding Arrangement for Bakken Pipeline System
On April 27, 2017, EEP finalized the previously announced joint
funding arrangement for the Bakken Pipeline System investment by entering into the Contribution Agreement (the “
Contribution
Agreement
”), dated as of April 27, 2017, by and among EEP, EECI and Enbridge Holdings (DakTex) L.L.C. (the “
Joint
Funding LLC
”), and the Amended and Restated Limited Liability Company Agreement (the “
Joint Funding LLCA
”)
of the Joint Funding LLC, dated as of April 27, 2017, by and among EEP and EECI. Pursuant to the Contribution Agreement, (i) EECI
contributed approximately $1.14 billion to the Joint Funding LLC in exchange for Class A units in the Joint Funding LLC representing
a 75% membership interest in the Joint Funding LLC (with EEP retaining the remaining 25% membership interest) and (ii) the Joint
Funding LLC distributed the approximate $1.14 billion contributed by EECI to EEP. Pursuant to the Joint Funding LLCA, beginning
on the in-service date for the Bakken Pipeline System, EEP will have a five-year option to acquire an additional 20% interest in
the Joint Funding LLC from EECI at net book value, adjusted for capitalized interest incurred prior to the option closing date
with respect to capital contributions made in respect of the option interest being purchased. All available cash will be distributed
to the members of Joint Funding LLC no less frequently than quarterly.
With the finalization of the joint funding arrangement, EEP
repaid a $1.5 billion intercompany loan to Enbridge (U.S.) Inc., which was used initially by EEP to close the Bakken Pipeline System
investment acquisition in February 2017.
The foregoing description of the Contribution Agreement and
the Joint Funding LLCA does not purport to be complete and is qualified in its entirety by reference to the full text of such agreements,
copies of which are attached hereto as Exhibits 10.3 and 10.4, respectively.
The description of the Class F units provided below under Item
5.03 is incorporated into this Item 1.01 by reference thereto.