Enbridge Income Fund Holdings Inc. EBGUF

Enb will likely get to 50.00 now....imho

[soundandfury]

This will take the bite out of the roll up conversion as enf will be 35.00 or possibly more.......i think patience will be rewarded in this case........thats a very nice profit you made there

[autofocus111]

@soundandfury Unfortunately, the rollup pins ENF to ENB.   ENF @ 35 is a reasonable target now that L3 has been given the go-ahead. But ENF, as a Line 3 'pure play', would have likely outperformed ENB on the news. I guess I'll have to settle for just eating my cvake, not having it too.

[autofocus111]

Actually, thinking a bit more about this, perhaps ENF BOD can use this postive decision as leverage to force ENB to up the stock ratio of the initial offer. That would drive ENF share price up closer th the valuations it deserves given it is to large degree a L3  pure play

[Sadie222]

Since ENB owns the US portion of L3, they get more value out of this than ENF. As ENB goes up as a result, so do we. ENF gains separately because of the increased throughput on the Canadian side, which we own. We also get a return from the US section, which should increase as well.  The ratio is arbitrary, not based on value but on one selected trading day. That’s my objection. The ratio

[TickerTwit]

I was very surprised when they based the conversion ratio on a single day's close. But the ratio would have been favourable to ENF shareholders either way. ENB share price had fallen about 28% since its top at 59, while ENF was down about 22% from its top at 36. The 5% premium effectively shortened the ENF drop to about 18%. Being handed an arbitrage win of 28% vs 18% is a windfall in a

[Sadie222]

Depends on your starting point. iIRC I used the previous month, or perhaps the last time their paths crossed, and got a 2% drop for ENB and a 4% drop for ENF in the same period.

[TickerTwit]

And on your own relative valuation of the two. I gave ENF a higher relative valuation against ENB because I considered it a superior dividend-growth vehicle. I don't now, after ENB called an end to dropdowns, but if the share prices climb enough that dropdowns make sense again (less dilutive at higher share prices)? Buyback plans might change. .

[Sadie222]

I don’t know the financial mechanics of the drop-downs, but it was the taxation changes to the LPs that forced the end of drop-downs, not share pricing. The are a bunch of them involved in the fund. Unless the taxation rules revert, I don’t see a resumption of drop-downs. ENF would have to grow the same way as everyone else.

[TickerTwit]

Share prices are crucial. The Canadian ENB dropdowns are puchased by ENF (a "sponsored vehicle"), and ENF may need to issue equity to fund the purchase. If ENF's share price is low, then dropdowns become too dilutive; ENB has recognized this problem and told us so. The US tax changes triggered lower share prices in all of the sponsored vehicles. You'd expect ENF wouldn't be

[Sadie222]

And that’s what I hadn’t considered - issuing shares to finance a purchase.  IIRC the last time I grabbed the falling knife there was a share issue the next day for $2 less than what I paid. Colour me pi$$ed. Selling the shares at market would have netted them more but they chose not to. Could The fund expand without share issues? That’s something the committee has to look at. Even with a

[Sadie222]

Speaking of which Enbridge issued shares in Nov 2017 (private) for $44,84 ENF issued shares for $27.80 same month. That ratio is much lower than the offer. Even if the ENF shares had been offered at market, the ratio is still less than the offer. So, who’s been setting the share prices? Something isn’t making sense to my little head. I almost feel better about the offer, having gone thru that

[autofocus111]

@Sadie When the L3RP started to run into the USA-side hurdles, I stated my concern about what the implication of a rejection by MN PUC would mean to ENF. The Canada-side of the project was already well underway (USA-side that was not the case th a large extent), and it was not clear to me how a rejection would affect the sunk costs of the Canada-side investment. Certainly if it became a stranded

[Sadie222]

With the line in disrepair, the CDN side had to be done anyway. That’s just lroutine” maintenance. It would be harder to pay off if running at half pressure, but not a total loss. It also saves the cost of patching leaks for a while and that, together with the related cleanup, ain’t cheap. I think I read that the line wiuld be in service next year. They’re already on it.