E Split Corp ENSPF

Request Help from Experts ATM vs Bought Deal Shares

[cttglvr]

Wondering if the experts can enlighten me.

On May 16, 2024, Enbridge Inc. (“Enbridge”) filed Canadian and US prospectus supplements to establish an "at-the-market" distribution program (the "ATM Program"). Pursuant to the ATM Program, Enbridge may issue and sell up to C$2.75 billion (or the U.S. dollar equivalent) of its common shares from treasury to the public from time to time.

This is common knowledge and we have heard nothing for 2 months about shares being issued.

CALGARY, AB, Sept. 5, 2023 /CNW/ - Enbridge Inc. Underwriters have agreed to purchase, on a bought deal basis, 89,490,000 common shares of the Company ("Common Shares") for aggregate gross proceeds of CDN$4 billion at an offering price of CDN$44.70 per Common Share (the "Offering").

This was the "bought deal" offering that surprised the markets last year.

Am I crazy in thinking that maybe Enbridge has already issued most of the shares they need through the ATM program? They've had 2 months to sell into the market. Could this be the reason the share price has been fairly aneimic with good volume? With earnings day coming up August 2 is it possible that they announce they have completed the necessary financing through the ATM program and/or combined with debt? With their debt getting a recent upgrade that should facilitate a lower cost for any debt issuance. 

Any constructive comments from our two resident experts would be greatly appreciated.

[ecolo101]

Possible interest rate cut in Canada next week could also help them. I do not this way of doing but I thought that a group of bankers needed to commit to the new shares at a given price. This is maybe not done yet. face value  becomes the key to secure the deal because They resell the shares to their customers. time will tell I guess. But you are right stock price does not have the traction

[Experienced]

ct...interesting point and question Frankly, I must admit that I didn't think of this possibility since as a general rule when a large company decides to raise money through and billion dollar equity sale, they do so through a bought deal deal with brokerage houses and usually at a discount to the prevailing market price at the time of the raise.  The discount to the market depends on a

[cttglvr]

Thanks for the reply Experienced. I was wondering and kind of hoping my theory has some merit. It would be great to hear August 2 when earnings are released that financing has been completed for the last aquisition. That if combined with an earnings beat would trigger a sharp relief rally in Enbridge.

[Konaboy]

I'm not really seeing the volume that you are referring to ... if they have been building then it would represent a material piece of total market volume over the past months, and I think some technical folks would have recognized the broker buying trend.

[Experienced]

Kona...not sure who you are rersponding to In my response to ct, I was not saying that they were doing it but merely pointing that we would all know after the fact through intelligent reading of the next Q report. That said, if ENB was doing it, they could sell as little as a million shares a day over two months to get the money they needed.  Such volumes are sizable for sure but represent

[Konaboy]

Understood, agree it could be done, but I would believe that the market would have caught on.  Just taking a look at the volume bar for the last few months, overall is down, making it more difficult/visible. Don't get me wrong, nothing would please me more if they have managed to do this on the sly, ENS is more than 10% of my portfolio.

[Experienced]

Kona...good points As I said, I don't know if they are doing this or not. As for the market catching on if they are, I will relate a story about ENB which you may or may not know about.  A couple of years ago, there were a few months were there was excessive trading on ENB at the close and huge blocks were being traded.  I must admit that I suspected that perhaps ENB was in play

[Konaboy]

Well, that's the thing.  I know that you are 'on' ENB, and if you did sniff something going on (to date), you would have rowwn us a bread crumb ;)

[Ganyman61]

Anybody know what the current nav is?

[ANALOG GUY]

Don't know the current but it was $11.48 at the close Tuesday 

[cttglvr]

On the Middlefield site this morning the NAV as of the close yesterday was $11.58. 

[Ganyman61]

So the commons are trading at small discount to nav.

[cttglvr]

At this moment yes by a few cents. It's been posted before but here it is again. https://middlefield.com/funds/navs/ If you copy and paste to Google search it will take you to the Middlefield NAV page. It's usually updated before noon to show the closing NAV from the day before,

[Ganyman61]

By my calculation it would take approx. 4.3 shares of ens commons to buy 1 enbridge share. I checked back to 2022 when enbridge was trading at close to 60$ and ens was about 16.70$ it would take 3.6 shares of commons to to buy 1 enbridge. Any thoughts?

[Obscure1]

What is your take-away from that information?

[Experienced]

lol Obscure....you should take a bow for educating people about the perils of bidding up the price of ENS so that the premium to NAV is so high that Middlefield can do a raise and make more money from management fees. Thinking you must be on their most wanted list....rofl