- REPEAT: Tonbridge Power Up More Than 100% on Enbridge Offer
Enbridge Inc (ENB.TO) plans to take over a Canada-U.S. power transmission project by buying its cash-strapped developer for $20 million, marking an entry for the pipeline operator into electricity transmission, Reuters said.
Enbridge, best known as the main transporter of Canadian oil to the United States, said on Tuesday it had agreed to buy the shares of Tonbridge Power Inc (TBZ.V) for 54 cents apiece, giving it control of the Montana Alberta Tie Line project. Tonbridge shares have touched cents today, and are up more than 100%.
Reuters said the project is a two-phase development that will link Great Falls, Montana, with Lethbridge, Alberta, with a 345 km (214 mile) transmission line.
In June, Tonbridge had reportedly said it would need at least $25 million in additional funding to complete the power line, raising concerns over the project's future. It subsequently doubled that estimate.
Following the acquisition, Enbridge will inject the money needed to finish the first 300 megawatt phase and an expansion to 550-600 MW, Reuters said.
Reuters said the total cost to the company is expected to be $300 million, with half of that funded by a 30-year loan from the Western Area Power Administration of the U.S. Department of Energy.
Under a plan of arrangement, Enbridge will also repay about $50 million of debt incurred by Tonbridge, it added.
Tonbridge shareholders are scheduled to vote on the deal on September 26, and holders of more than 20% of the stock have said they will vote in favor.
A special committee of Tonbridge's board said the deal is in shareholders' best interests, according to Reuters.
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