Enbridge Inc T.ENB.PR.F

Lot of people upset here; not sure I understand why . . .

[Karl63]

Well I'm newer to the investing climate than many, so I'm sincerely hoping someone can explain things to me . . .

Many are mentioning the underwriter price of the bought deal, the $44.70, as if that price is what ENB is suddenly worth.  But isn't that the discount price that the underwriters receive for providing guaranteed upfront financing?  More important, the underwriters expect to make a profit on the sale of these shares, so how does that translate to fears that our shares are going to $44.70, or even less?  I don't know what kind of profit the underwriters expect, but given that Enb closed at 48.16, wouldn't they be able to sell all their shares at, say, $1 less?  If that were the case, then all things being equal, why wouldn't our shares temporarily drift down to that $47.16 level, and not to the $44.70?.

And as far as being dilutive, it's not as if they're not receiving good assets for their money . . . yes, there are more shares issued, but the company has more assets and greater income earning capability; ie the company via expansion is worth more.

Yet I know that shares have dropped after hours by 7% or so; is that a logical or illogical reaction?  Are we facing major disappointment tomorrow morning, or a terrific buying opportunity?

[Albatross]

Good points Karl. It would be nice to know a bit more about the assets in question but I figure they are going to produce a stable cash flow and are within the Enbridge financial guard rails. It's nice to see them go back to the basics with more natural gas distribution. A lot of this renewable energy simply isn't providing the same growth.  Shares have dipped for reasons as can be

[TimeScape]

Typically when a company does a major financing, the share price will open up the next morning somewhat close to the issue price, so you would expect ENB shares to open somewhere close to the $44.70 issue price.  Maybe a bit over $45 would be usual, but this looks like a very good acquisition for ENB, at a good price, and the market may like it enough that the share price won't drop quite

[Retireby90]

$44.70 is the distribution price to investors - the syndicate paid less than $44.70. That's the profit for the underwriters. 

[Ocalaman]

Its very straighforward, its called honesty of senior management to shareholders. In the latest Q results they published slides that showed thier growth will be organic and through tuck in's and at the same time they were possible negotiating with Dominion to purchase these entities. Dominion was widely known to be jettising businesses and just recently sold a business to Berkshire Hathaway so

[Albatross]

$19B cash/share/debt for $1.9B EBITDA