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Financing Activities
In 2008, the Company generated $1,840.2 million through financing activities compared with $904.2 million and $268.1 million in 2007 and 2006, respectively.
Short-term borrowings at EGD are used primarily to finance working capital, including inventory.
In 2008, the Company added new credit facilities of $1.3 billion. Increased funding through commercial paper issuances and draws under committed credit facilities was required in 2008 to fund capital expenditures and the Company's investment in EEP. In 2007, the Company expanded its available liquidity through credit facility expansions and additions totaling $1.9 billion.
In the last quarter of 2008, the Company issued $0.5 billion of long-term notes. Specifically, EGD issued a $0.2 billion five-year term note and Enbridge Pipelines Inc. closed a $0.3 billion ten-year term note. The Company had total note maturities of $0.6 billion, of which $0.3 billion was repaid by EGD. Financing activities in 2007 included the issuance of US$1.1 billion of term notes in the U.S. market and $0.2 billion of term notes in the Canadian market to offset term note maturities of $0.6 billion. During 2006, the Company issued $1.1 billion and repaid $400 million of term notes.
During 2008, the Company borrowed $0.3 billion and US$0.9 billion in project financing that is non-recourse to the Company, for the Canadian and U.S. components of the Southern Lights project. This financing resulted in the full repayment and cancellation of a US$0.5 billion facility established in 2007 to fund project costs directly related to the Southern Lights Project on an interim basis, which had been guaranteed by the Company.
Dividends paid on common shares decreased in 2008 due to the increased use of the Company's dividend reinvestment plan, which provided a $130.1 million increase in equity funding. Dividends paid on common shares increased in 2007 due to an increased number of common shares outstanding and a higher dividend rate.
Equity Issuance
On February 2, 2007, Enbridge closed the issuance to the public of 13.5 million common shares for $38.75 per share and issued 1.5 million common shares to Noverco for $38.75 per share, which maintained Noverco's ownership interest in Enbridge at approximately 9.5%. Net proceeds from both offerings totaled $566.4 million.
Preferred Securities
The Company redeemed its $200 million, 7.8% Preferred Securities on February 15, 2007.
EXPECTED CAPITAL EXPENDITURES
The numerous organic growth projects and other growth initiatives described in the business unit sections will require capital funding. The Company also requires capital for ongoing core maintenance and capital improvements in many of its businesses. In total, Enbridge expects to spend approximately $3.7 billion during 2009 on capital projects and maintenance. The Company expects to finance these expenditures through cash from operating activities and available liquidity. The Company may also raise capital through the monetization or disposition of selected assets.
The decision to finance with debt or equity is based on the capital structure for each business and the overall capitalization of the consolidated enterprise. Certain of the regulated pipeline and gas distribution businesses issue long-term debt to finance capital expenditures. For certain construction projects, financing costs are eligible for reimbursement through tolls. This external financing may be supplemented by debt or equity injections from the parent company. Debt, and equity when required, has been issued by the Company to finance business acquisitions, investments in subsidiaries and long-term investments.
Funds for debt retirements are generated through cash provided from operating activities as well as through the issue of replacement debt.
Capital Expenditures (millions of Canadian dollars)
Capital expenditures increased in 2008 primarily
due to expenditures on growth in projects as well as
core maintenance expenditures incurred.
Payments due for contractual obligations over the next five years and thereafter are as follows:
(millions of Canadian dollars) |
Total | Less than 1 year |
1-3 years | 3-5 years | After 5 years |
||||||
| Long-term debt 1 | 10,673.7 | 533.1 | 750.0 | 450.0 | 8,940.6 | ||||||
| Non-recourse long-term debt 1 | 1,617.2 | 176.2 | 259.7 | 218.3 | 963.0 | ||||||
| Capital and operating leases | 180.0 | 15.1 | 32.3 | 35.2 | 97.4 | ||||||
| Long term contracts 2, 3 | 3,345.4 | 2,058.8 | 616.4 | 407.5 | 262.7 | ||||||
| Pension obligations 4 | 48.4 | 48.4 | – | – | – | ||||||
| Total Contractual Obligations | 15,864.7 | 2,831.6 | 1,658.4 | 1,111.0 | 10,263.7 |
- Excludes interest. Changes to the planned funding requirements are dependent on the terms of any debt re-financing agreements.
- Approximately $1,579.0 million of these contracts are commitments for materials related to the construction of Liquids Pipelines projects. Changes to the planned funding requirements, including cancelation, are dependent on changes to the related projects.
- Contracts totaling $35 million are within proportionately consolidated joint venture entities and contracts totaling $230.3 million are between the Company and proportionately consolidated joint venture entities.
- Assumes no discretionary payments will be made into the pension plans in 2009. Contributions subsequent to 2009 will be made in accordance with the independent actuarial valuations required as of December 31, 2009. Contributions, including discretionary payments, may be larger than current amounts pending future asset performance.