Enbridge Income Fund Holdings Inc.

Decision

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions -- related party transactions - income fund to acquire assets from a related party -- issuer to offer common shares to fund acquisition from related party -- issuer to use proceeds to acquire additional fund units of a related party, which in turn will subscribe for trust units of a related party -- fund jointly owned by issuer and related party -- issuer will provide a valuation and obtain minority approval of asset acquisition -- issuer exempt from valuation requirement in connection with subscription of fund units.

Applicable Legislative Provisions

Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions, ss. 5.4, 9.1(2).

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions.

September 9, 2011

IN THE MATTER OF

THE SECURITIES LEGISLATION OF

ONTARIO

(the "Jurisdiction")

AND

IN THE MATTER OF

THE PROCESS FOR EXEMPTIVE RELIEF

APPLICATIONS IN MULTIPLE JURISDICTIONS

AND

IN THE MATTER OF

ENBRIDGE INCOME FUND HOLDINGS INC.

(the "Filer")

DECISION

Background

The principal regulator in the Jurisdiction has received an application from the Filer for a decision under the securities legislation of the Jurisdiction of the principal regulator (the "Legislation") requesting relief (the "Exemptive Relief") from the requirement contained in section 5.4 of Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions ("MI 61-101") that the Filer include a formal valuation or a summary thereof of the ordinary trust units (the "Fund Units") of Enbridge Income Fund (the "Fund") to be acquired by the Filer in connection with the indirect acquisition by the Fund of certain renewable energy assets situated in Ontario (the "Renewable Assets") owned by Enbridge Inc. ("Enbridge").

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a passport application):

(a) the Ontario Securities Commission is the principal regulator for this application, and

(b) the Filer has provided notice that subsection 4.7(1) of Multilateral Instrument 11-102 Passport System ("MI 11-102") is intended to be relied upon in Québec.

Interpretation

Capitalized terms in this Application have the same meaning as those defined in National Instrument 14-101 Definitions, MI 61-101 and MI 11-102 unless otherwise defined herein.

Representations

This decision is based on the following factual information represented by the Filer.

1. The Filer was incorporated under the laws of the Province of Alberta on March 26, 2010.

2. The Filer's principal and head office is located at Suite 3000, 425 -- 1st Street SW, Calgary, Alberta, T2P 3L8.

3. The Filer's Articles of incorporation restrict the Filer's business to acquiring, holding, transferring, disposing of, investing in and otherwise dealing in assets, securities, properties or other interests of, or issued by, the Fund and its associates or affiliates, or any other business entity in which the Fund has an interest, as well as all other business and activities which are necessary, desirable, ancillary or incidental thereto, including but not limited to borrowing funds and incurring indebtedness; guaranteeing of debts or liabilities; and issuing, redeeming or repurchasing securities.

4. The Filer is a reporting issuer in all Provinces of Canada.

5. The authorized capital of the Filer consists of an unlimited number of common shares ("Common Shares"), first preferred shares, issuable in series and limited to one-half of the number of Common Shares issued and outstanding at the relevant time, and one special voting share, of which an aggregate of 25,125,000 Common Shares, no first preferred shares and one special voting share are issued and outstanding as at the date hereof.

6. Enbridge holds an aggregate of 5,000,000 Common Shares constituting 19.9% of the issued and outstanding Common Shares.

7. The Common Shares are listed on the Toronto Stock Exchange.

8. The only assets of the Filer are 25,125,000 Fund Units. The Filer does not have any outstanding debt or material liabilities.

9. The Fund is an unincorporated open-ended trust established under the laws of the Province of Alberta on May 22, 2003.

10. The Fund's principal and head office is located at Suite 3000, 425 -- 1st Street SW, Calgary, Alberta, T2P 3L8.

11. The Fund is a limited purpose trust and, generally speaking, its activities are restricted to acquiring, holding, and dealing with interests in operating investments that are involved in energy infrastructure and related businesses. The Fund's permitted activities also include issuing securities and engaging in financial and other activities ancillary or incidental to its purpose.

12. The Fund is a reporting issuer in all Provinces of Canada.

13. The authorized capital of the Fund consists of an unlimited number of Fund Units. As at the date hereof, 34,625,000 Fund Units are issued and outstanding, of which 25,125,000 are held by the Filer and 9,500,000 are held by Enbridge. As of the date hereof, on a fully diluted basis (which includes the ECT Preferred Units described below), Enbridge holds a 65.4% interest in the Fund and the Filer holds a 34.6% interest in the Fund.

14. The Fund Units are not listed on any exchange or market.

15. The Fund indirectly owns a 50% interest in the Canadian portion of the Alliance Pipeline System, crude oil and natural gas pipelines in Saskatchewan and various interests in entities that produce electricity from renewable and alternative energy sources.

16. Enbridge Commercial Trust ("ECT") is an unincorporated trust established under the laws of the Province of Alberta on December 20, 2002.

17. ECT's principal and head office is located at Suite 3000, 425 - 1st Street SW, Calgary, Alberta, T2P 3L8.

18. ECT is not a reporting issuer.

19. The authorized capital of ECT consists of an unlimited number of ECT common units ("ECT Common Units") and an unlimited number of ECT non-voting preferred units ("ECT Preferred Units"). As at the date hereof, there are 34,625,000 ECT Common Units outstanding (all of which are owned by the Fund) and 38,023,750 ECT Preferred Units outstanding (all of which are owned by Enbridge). The ECT Preferred Units are convertible at any time and from time to time into Fund Units on a 1:1 basis at the option of the holder.

20. ECT's activities are restricted to the direct or indirect conduct of the business of, or activities pertaining to, energy infrastructure including the ownership, operation and lease of assets and property, investments, and other rights or interests in companies or other entities involved in the energy infrastructure business and engaging in all activities ancillary or incidental to the foregoing.

21. ECT holds all of the outstanding securities of certain partnerships and corporations which own the assets of the Fund and which will acquire securities in the entities that own the Renewable Assets. All such entities are indirectly wholly-owned by Enbridge and are sole purpose entities formed for the purpose of owning and operating the Renewable Assets, which comprise their sole assets.

22. The proposed acquisition of the Renewable Assets (the "Transaction") will be effected by: (i) the acquisition by one or more wholly-owned indirect subsidiaries of the Fund from wholly-owned indirect subsidiaries of Enbridge of all of the outstanding shares of the general partners of the limited partnerships that hold the Renewable Assets; (ii) the subscription and purchase by wholly-owned indirect subsidiaries of the Fund of limited partnership units of the limited partnerships that hold the Renewable Assets; and (iii) the repurchase for cancellation by the limited partnerships that hold the Renewable Assets of all of the limited partnership units currently held indirectly by Enbridge, such that the Fund will indirectly be the sole owner of the limited partnerships that own the Renewable Assets and the general partners that manage such limited partnerships. The wholly-owned subsidiaries of the Fund which will be directly acquiring the shares and limited partnership units are hereafter collectively referred to as the "Purchasers".

23. Pursuant to the Transaction, the price for the Renewable Assets of approximately $1.3 billion (subject to finalization) will be financed as follows: (i) the Filer will issue Common Shares to the public and to Enbridge (such that Enbridge will retain its 19.9% interest in the Filer) and the Filer will use the proceeds therefrom to acquire additional Fund Units; (ii) the Fund will use the proceeds from the issuance of the Fund Units to the Filer (and to Enbridge if the Filer does not acquire all of Fund Units), to acquire ECT Common Units; (iii) the Fund will borrow $655 million from Enbridge on commercial terms and in turn loan such amount to ECT; (iv) ECT will issue additional ECT Preferred Units to Enbridge; (v) the proceeds received by ECT from the Fund (from the sale of ECT Common Units and the loan) and from the issuance of the ECT Preferred Units will be loaned to the Purchasers; and (vi) the Purchasers will acquire the entities which own the Renewable Assets.

24. The Transaction contemplates that Enbridge will subscribe for a new series of ECT Preferred Units (to be created) with a different redemption price and liquidation preference amount, but otherwise on the same terms as the outstanding ECT Preferred Units, and that the issuances of: (i) the Fund Units to the Filer and to Enbridge (if any); (ii) the ECT Common Units to the Fund; (iii) the ECT Preferred Units to Enbridge; and (iv) the Common Shares to Enbridge will be at the same price as that under the public offering of Common Shares by the Filer (the "Financing").

25. The Filer is a flow through entity. Pursuant to the restructuring of the Fund that was completed on December 17, 2010, the public shareholders of the Fund and Enbridge (with respect to 5,000,000 Fund Units) exchanged their Fund Units for Common Shares on a 1:1 basis.

26. Completion of the Transaction is subject to a number of conditions, including completion of the Financing, regulatory approvals, third party consents and any Board and shareholder approvals.

27. The Board of Directors of the Filer and the Board of Trustees of ECT have formed a joint independent committee (the "Independent Committee") to review, consider, negotiate and approve the Transaction. To assist in the discharge of its responsibilities, the Independent Committee has retained:

(a) CIBC World Markets Inc. to act as independent financial advisor to the Independent Committee and, in particular, to prepare and deliver a formal valuation in accordance with MI 61-101 of the Renewable Assets and a written opinion as to the fairness of the Transaction from a financial point of view to the Filer (the "Valuation and Fairness Opinion");

(b) independent legal counsel; and

(c) SAIC Energy, Environment & Infrastructure, LLC to prepare and deliver an independent engineering report in respect of the Renewable Assets.

28. Upon receiving a recommendation from the Independent Committee and the Board of Directors of the Filer that the Transaction be proceeded with, the Filer intends to hold a meeting (the "Meeting") of the holders of the Common Shares to obtain approval of, inter alia, the Transaction in accordance with the majority of the minority requirements under MI 61-101. Enbridge and its affiliates will not be entitled to vote.

29. The materials to be sent to holders of Common Shares in connection with the Meeting will include full details of the Transaction as required under applicable securities legislation, including the Valuation and Fairness Opinion.

Decision

The principal regulator is satisfied that the decision meets the test set out in the Legislation for the principal regulator to make the decision.

The decision of the principal regulator under the Legislation is that the Exemptive Relief is granted.

"Michael Brown"
Assistant Manager, Corporate Finance
Ontario Securities Commission