Enbridge Inc. agreed June 7 to the sale of its minority stake in oil producer Noverco Inc. to Trencap LP for $1.14 billion in cash.
Noverco, which operates as an oil producer, indirectly owns Énergir LP, a Quebec-based business with interests primarily in gas distribution and power distribution in Quebec and Vermont. The company is currently owned 38.9% by Enbridge and 61.1% by Trencap LP, a consortium lead by Caisse de dépôt et placement du Québec (CDPQ).
Enbridge said the sale of its stake in Noverco represents a valuation of approximately 29x reported 2020 GAAP earnings of $39 million.
“We’re pleased to opportunistically monetize this non-strategic financial investment in Noverco at an attractive valuation and surface this value for our shareholders,” Enbridge CFO Colin Gruending said in a statement.
“This transaction further enhances our already sector-leading financial strength and flexibility and demonstrates our disciplined approach to capital allocation,” Gruending added.
Sale proceeds will initially be used by Enbridge to repay short term debt. As a result, the company said the transaction will be neutral to distributable cash flow per share.
Closing of the transaction is expected to occur by early 2022 and is subject to the receipt of regulatory approvals and customary closing conditions. RBC Capital Markets is financial adviser to Enbridge on the transaction.
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