Enbridge Atlantic (Holdings) Inc.

Decision

Headnote

National Policy 11-203 Process For Exemptive Relief Applications in Multiple Jurisdictions - Application for relief from the formal bid requirements in connection with a put right granted to limited partners in the partnership agreement. Although structured as a take-over bid, the put right is, in substance, an issuer bid which is exempt from the formal bid requirements. All limited partners are treated equally. Details concerning the operation of the put right is disclosed in the partnership agreement, including disclosure of the mechanism for determining the purchase price of the units by independent valuation.

Applicable Legislative Provisions

Securities Act, R.S.O. 1990, c. S.5, as am., ss. 93-99.1, 101 (2), 104(2)(c).

April 25, 2008

IN THE MATTER OF

THE SECURITIES LEGISLATION OF

NEW BRUNSWICK AND ONTARIO

(the Jurisdictions)

AND

IN THE MATTER OF

THE PROCESS FOR EXEMPTIVE RELIEF

APPLICATIONS IN MULTIPLE JURISDICTIONS

AND

IN THE MATTER OF

ENBRIDGE ATLANTIC (HOLDINGS) INC.

(the Filer)

 

DECISION

Background

The securities regulatory authority or regulator in each of the Jurisdictions (the Decision Maker) has received an application from the Filer for a decision under the securities legislation of the Jurisdictions (the Legislation) for an exemption from the take-over bid requirements in Multilateral Instrument 62-104 Take-over Bids and Issuer Bids in connection with the purchase (the Acquisition) of units (Units) of Enbridge Gas New Brunswick Limited Partnership (the Issuer) by the Filer or another direct or indirect wholly-owned subsidiary of Enbridge Inc. (the Offering Enbridge Subsidiary) to which the rights and obligations of the Filer under the Partnership Agreement (defined below) have been assigned from limited partners of the Issuer (the Limited Partners) from time to time in accordance with the Put Right (defined below).

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions for a dual application:

(a) the New Brunswick Securities Commission is the principal regulator for this application,

(b) the Filer has provided notice that section 4.3(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in Alberta and Québec, and

(c) the decision is the decision of the principal regulator and evidences the decision of the securities regulatory authority or regulator in Ontario.

Interpretation

Terms defined in National Instrument 14-101 Definitions and MI 11-102 have the same meaning if used in this decision, unless otherwise defined.

Representations

This decision is based on the following facts represented by the Filer:

1. The Filer is a corporation incorporated under the Canada Business Corporations Act on June 9, 2005. The Filer has an authorized capital consisting of an unlimited number of common shares and an unlimited number of preferred shares of which all of the issued and outstanding common shares are held by Enbridge Inc. No preferred shares are outstanding.

2. The Filer's registered and head office is located at North York, Ontario.

3. The Filer is not a reporting issuer or equivalent in any Canadian jurisdiction and none of the outstanding securities of the Filer are listed on a stock exchange.

4. The Issuer is a limited partnership formed under the Limited Partnership Act (New Brunswick) by the filing under such Act of a declaration dated January 18, 2000. The Issuer is authorized to issue an unlimited number of Units, of which 156,341 Units are issued and outstanding.

5. The Issuer is not a reporting issuer or equivalent in any Canadian jurisdiction. None of the Issuer's outstanding securities are listed on a stock exchange.

6. The affairs of the Issuer are governed by an amended and restated limited partnership agreement made as of June 23, 2005 among Enbridge Gas New Brunswick Inc., as general partner (the General Partner), and Enbridge Energy Distribution Inc. (EEDI) and each person who is a Limited Partner in accordance with the terms of that agreement (the Partnership Agreement).

7. The General Partner's registered and head office is located at North York, Ontario.

8. Neither the General Partner nor EEDI is a reporting issuer or equivalent in any Canadian jurisdiction. Neither has any outstanding securities listed on a stock exchange.

9. The business of the Issuer is controlled by the General Partner. The Partnership Agreement prohibits Limited Partners from taking part in the control of the business of the Partnership, as does its governing legislation.

10. EEDI and the Filer, also Limited Partners, and the General Partner are all wholly-owned subsidiaries, either directly or indirectly, of Enbridge Inc.

11. Enbridge Inc. is a reporting issuer or equivalent in all of the provinces of Canada. The issued and outstanding common shares of Enbridge Inc. are listed on the TSX and the NYSE.

12. Enbridge Inc. is not in default of securities legislation in any jurisdiction.

13. The Issuer has always maintained a capital structure by which a significant percentage of outstanding Units are owned by wholly-owned subsidiaries of Enbridge Inc. The Filer and EEDI currently own 46.62% and 23.17% of the outstanding Units, respectively.

14. In addition to EEDI and the Filer, there are 190 Limited Partners. They include corporations, partnerships, trusts and individuals, many of which are accredited investors.

15. The Partnership Agreement provides that each Limited Partner is entitled to require the Filer to purchase such Limited Partner's Units by giving irrevocable written notice to the Filer at any time between January 1 and January 15 in any year (the Put Right).

16. Pursuant to the Partnership Agreement, the price of the Units to be sold by a Limited Partner to the Filer pursuant to the Put Right is to be the fair market value of the Units, as determined by a qualified independent valuator appointed by the General Partner, as at December 31 of the immediately preceding year. Closing is to occur on the later of (i) March 31st or (ii) the 5th business day following delivery of the valuation.

17. The Filer or the Offering Enbridge Subsidiary intend to purchase from time to time Units from the Limited Partners in accordance with the right held by the Limited Partners under the Partnership Agreement.

18. The Partnership Agreement provides adequate information to the Limited Partners respecting the Put Right, by which all Limited Partners are bound.

19. The exercise of the Put Right does not result in a change in the de facto control of the Issuer.

Decision

Each of the Decision Makers is satisfied that the decision meets the test set out in the Legislation for the Decision Maker to make the decision.

The decision of the Decision Makers under the Legislation is that the Exemption Sought is granted.

"Donne Smith"
Chair
 
"Hugh Flemming"
Member