Securities Law & Instruments

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- application for relief whereas distributions of Notes issued by either the Filer and offered for sale in Canada are exempt from the prospectus requirement under the Legislation -- requested relief granted.

Applicable Legislative Provisions

Securities Act, R.S.O. 1990, c. S.5, as am., s. 74(1).

Citation: Re Enbridge Inc., 2015 ABASC 959

November 30, 2015

IN THE MATTER OF THE SECURITIES LEGISLATION OF ALBERTA AND ONTARIO (the Jurisdictions) AND IN THE MATTER OF THE PROCESS FOR EXEMPTIVE RELIEF APPLICATIONS IN MULTIPLE JURISDICTIONS AND IN THE MATTER OF ENBRIDGE INC. (the Filer)

DECISION

Background

The securities regulatory authority or regulator (the Decision Maker) in each of the Jurisdictions has received an application from the Filer for a decision under the securities legislation of the Jurisdictions (the Legislation), in respect of certain negotiable promissory notes or commercial paper maturing not more than one year from the date of issue (Notes), that distributions of Notes issued by the Filer and offered for sale in Canada are exempt from the prospectus requirement under the Legislation (the Exemption Sought).

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a dual application):

(a) the Alberta Securities Commission is the principal regulator for this application;

(b) the Filer has provided notice that subsection 4.7(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in respect of the Exemption Sought in each of British Columbia, Saskatchewan, Manitoba, Québec, New Brunswick, Nova Scotia, Prince Edward Island and Newfoundland and Labrador; and

(c) this decision is the decision of the principal regulator and evidences the decision of the securities regulatory authority or regulator in Ontario.

Interpretation

Terms defined in National Instrument 14-101 Definitions or MI 11-102 have the same meaning if used in this decision, unless otherwise defined herein.

Representations

This decision is based on the following facts represented by the Filer:

1. The Filer is a corporation organized under the Canada Business Corporations Act with its head and registered office located in Calgary, Alberta.

2. The Filer is a reporting issuer in each of the provinces of Canada and is not in default of its obligations as a reporting issuer under the securities legislation of any of the jurisdictions in which it is a reporting issuer.

3. The common shares of the Filer are listed on the Toronto Stock Exchange and the New York Stock Exchange.

4. The Filer has implemented a commercial-paper program that involves the sale, from time to time, of Notes issued by the Filer to purchasers located in Canada.

5. The offering and sale of Notes issued by the Filer are subject to the prospectus requirement under the Legislation.

6. Prior to 20 August 2015 the Notes had a designated rating of "R-1 (low)" from DBRS Limited (DBRS) and "A-1 (low) (Canada national scale)" from Standard & Poor's Ratings Services (Canada), both of which satisfied the rating categories prescribed in the exemption (the CP Exemption) from the prospectus requirement under paragraphs 2.35(1)(b) and (c) of National Instrument 45-106 Prospectus Exemptions (NI 45-106).

7. Accordingly, prior to 20 August 2015 the Notes were offered and sold in Canada pursuant to, and in accordance with, the CP Exemption.

8. On 20 August 2015 DBRS issued a news release indicating, among other things, that it had downgraded the Notes by one ratings notch to "R-2 (high)" (the Downgrade) with stable trends, following the approval by the public shareholders of Enbridge Income Fund Holdings Inc. of a previously-announced transaction involving the Filer.

9. As a result of the Downgrade, the Filer is no longer able to rely on the CP Exemption for the distribution of Notes.

10. All Notes will have a maturity not exceeding 365 days from the date of issuance, and will be sold in denominations of not less than $250,000.

11. The Notes will be offered and sold in Canada only:

(a) through investment dealers registered, or exempt from the requirement to register, under applicable securities legislation in Canada (Canadian Dealers); and

(b) to persons or companies (Canadian Qualified Purchasers) that are "accredited investors" as defined in NI 45-106, other than those that are any of the following:

(i) an individual referred to in any of paragraphs (j), (j.1), (k) and (l) of that definition;

(ii) a person or company referred to in paragraph (t) of that definition in respect of which any owner of an interest, direct, indirect or beneficial, except the voting securities required by law to be owned by directors, is an individual referred to in any of paragraphs (j), (j.1), (k) and (l); and

(iii) a trust referred to in paragraph (w) of that definition.

12. The Filer will require each Canadian Dealer to apply procedures to ensure that sales of Notes by such Canadian Dealer, as well as any subsequent resales of previously-issued Notes by such Canadian Dealer, are made only to Canadian Qualified Purchasers.

Decision

Each of the Decision Makers is satisfied that the decision concerning the Exemption Sought meets the test set out in the Legislation to make the decision.

The decision of the Decision Makers is that the Exemption Sought is granted in respect of the distribution of a Note, provided that:

(a) the Note is not convertible or exchangeable into, or accompanied by a right to purchase, another security other than a Note;

(b) the Note is not a "securitized product", as defined in NI 45-106;

(c) the Note is of a class of Notes that has a rating issued by a "designated rating organization" or a "DRO affiliate", both as defined in NI 45-106, at or above one of the following rating categories:

Designated Rating Organization

Rating

 

DBRS

R-1 (low)

 

Fitch, Inc.

F1

 

Moody's Canada Inc.

P-1

 

Standard & Poor's Ratings Services (Canada)

A-1 (low) (Canada national scale)

and has no rating below:

Designated Rating Organization

Rating

 

DBRS

R-2 (high)

 

Fitch, Inc.

F2

 

Moody's Canada Inc.

P-2

 

Standard & Poor's Ratings Services (Canada)

A-1 (low) (Canada national scale)

(d) the distribution is made:

(i) to a purchaser that is purchasing as principal and is a Canadian Qualified Purchaser; and

(ii) through a Canadian Dealer; and

(e) each Canadian Dealer has agreed to apply the procedures referred to in paragraph 12 of this decision.

For the Commission:

"Stephen Murison"
Vice-Chair
 
"Fred Snell, FCA"
Member