A leading master limited partnership,
Enbridge Energy Partners, LP
) intends to exercise its option to reduce its economic interests
in the Lakehead system expansion of both the Eastern Access and
Mainline Expansion projects to 25% from 40%.
In addition, Enbridge Energy and some of its subsidiaries have
also proposed to sign an agreement on Jun 28, 2013 with a
) whereby the latter will purchase the accounts receivables of
some of EEP's subsidiaries on a monthly basis through 2016 until
EEP's large growth capital commitments are permanently funded.
During this period, the funding will also provide an annual
saving in EEP's cost of funding.
Through this transaction, Enbridge Energy expects to obtain
around $100 million from its general partner associated with 15%
of the capital that it has financed so far for these expansion
projects. Enbridge Energy will get the amount in this ongoing
Moreover, it is projected that receivables worth about $215
million will be purchased each month, at their accrued value
minus a discount to reimburse Enbridge for its investment and
risk of non-collection. The main goal of the accounts receivable
transaction is to boost EEP's available liquidity.
Per the Eastern Access and Mainline Expansion Joint Funding
Arrangements with its general partner, the reduction in interest
will also reduce the associated funding of these liquids market
access projects by about 15 percentage points, from 40% to 25%,
with the option expiring on Jun 30.
Within one year of the final project in-service dates, EEP will
have the option to increase its economic interest by about 15
percentage points in the Lakehead System expansion of both the
projects. Final phases of the Eastern Access and Mainline
Expansion projects are currently targeted for completion in 2016.
The funds raised will help in maintaining liquidity while it
plans to reschedule permanent funding of a corresponding portion
of its growth program. This will lead to an annual saving in
funding costs of around $10 million.
Enbridge Energy carries a Zacks Rank #3 (Hold). However, there
are other Zacks Ranked #1 (Strong Buy) stocks -
Hornbech Offshore Services, Inc.
Gulfmark Offshore, Inc.
) - that are expected to perform impressively over the short
ENBRIDGE EGY PT (EEP): Free Stock Analysis
ENBRIDGE INC (ENB): Free Stock Analysis
GULFMARK OFFSHR (GLF): Free Stock Analysis
HORNBECK OFFSHR (HOS): Free Stock Analysis
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