Commission finds Brookfield’s conduct to be “clearly abusive” to Inter Pipeline Shareholders
CALGARY, AB, July 12, 2021 /CNW/ – Inter Pipeline Ltd. (“Inter Pipeline” or the “Company”) (TSX: IPL) today commented on a favourable ruling by the Alberta Securities Commission (the “ASC”) regarding the proposed strategic combination (the “Pembina Arrangement”) of Inter Pipeline with Pembina Pipeline Corporation (“Pembina”) and the unsolicited takeover bid for Inter Pipeline by an affiliate of Brookfield Infrastructure Partners L.P. (“Brookfield”).
In response to applications from Inter Pipeline and Pembina regarding Brookfield’s unprecedented use of total return swaps in connection with its unsolicited bid, the ASC stated in its oral decision: “We find Brookfield’s use and disclosure relating to the total return swap was clearly abusive to the Inter Pipeline shareholders and the capital market, and as such contrary to the public interest.” The ASC also noted that the disclosure in the Brookfield bid does not comply with securities requirements and that Brookfield’s limited disclosure regarding the total return swap adversely affected Inter Pipeline’s shareholders.
The ASC ordered Brookfield to enhance its disclosure regarding Brookfield’s use of total return swaps and also raised the minimum tender condition for Brookfield’s unsolicited bid to 55 percent from 50 percent of the shares tendered by shareholders other than Brookfield and persons acting jointly or in concert with it.
The ASC dismissed Brookfield’s applications to cease-trade Inter Pipeline’s supplemental shareholder rights plan and the Pembina Arrangement, deciding that the Inter Pipeline board of directors (the “Inter Pipeline Board”) had not used improper defensive tactics.
Margaret McKenzie, Chair of the Inter Pipeline board of directors, stated: “With the ASC’s favourable decision, our shareholders can proceed to VOTE FOR the Pembina Arrangement without the risk that Brookfield will be permitted to further increase its aggregate share and swap position to frustrate the ability of shareholders to choose. We remain firmly of the view that the Pembina Arrangement will create a compelling new Canadian-based business with a great future, and represents the best outcome for our shareholders.”
The ASC conducted a hearing on July 9, 2021 into aspects of the Pembina Arrangement and Brookfield’s unsolicited takeover bid.
Vote Yes For Pembina
Inter Pipeline reminds shareholders that the vote on the Pembina Arrangement is scheduled to be held at the Inter Pipeline shareholders’ meeting on July 29, 2021. Shareholders will also be asked to vote on other matters, including the re-election of Inter Pipeline’s board of directors.
The boards of directors of Inter Pipeline and Pembina have each unanimously approved the strategic combination of the two companies and continues to recommend that Inter Pipeline shareholders VOTE FOR the Pembina Arrangement. The combined business is expected to create significant growth, synergies and value-enhancement opportunities for shareholders, underpinned by a strong dividend.
Every vote is crucial to overcome Brookfield’s ownership block.
The Inter Pipeline Board also unanimously recommends that shareholders REJECT the unsolicited takeover offer from Brookfield. To REJECT the Brookfield offer, simply take NO ACTION with respect to it.
As previously announced on June 1, 2021, Pembina will acquire all the issued and outstanding common shares of Inter Pipeline pursuant to the Pembina Arrangement. Inter Pipeline shareholders will receive 0.5 of a common share of Pembina for each Inter Pipeline common share that they own.
Inter Pipeline – Pembina Joint Information Circular
Shareholders are urged to read the Joint Information Circular on the Company’s website at www.interpipeline.com and at www.sedar.com. The Circular has been mailed, together with the necessary voting forms, to all persons required to receive a copy under applicable securities laws.
The Joint Circular includes information on other matters, including nominees standing for election to the Inter Pipeline Board, and information for a special meeting of Pembina shareholders to vote for the issuance of new Pembina Shares in connection with the Pembina Arrangement.
The Joint Circular also includes a Letter to Shareholders summarizing the reasons why Inter Pipeline shareholders should APPROVE the strategic combination with Pembina and REJECT the Brookfield offer.
Inter Pipeline Shareholders are encouraged to vote as soon as possible and well in advance of the proxy submission deadline at 10:00 a.m. (MT) on July 27, 2021, or 48 hours (excluding Saturdays, Sundays and statutory holidays in the Province of Alberta) prior to the time of any adjournment or postponement of the meeting.
If approved, the Pembina Arrangement is expected to close late in the third quarter or early in the fourth quarter of 2021.
Shareholder Questions and Assistance
If you have questions or require assistance in considering the Pembina Arrangement, or with the completion and delivery of your proxy, please contact Inter Pipeline’s proxy solicitation agent, Kingsdale Advisors by telephone at 1-877-659-1820 (416-867-2272 for collect calls outside North America) or by email at email@example.com.
If you have tendered your Inter Pipeline Shares to the unsolicited Brookfield offer in error and wish to withdraw, simply ask your broker or contact Kingsdale Advisors for assistance.
About Inter Pipeline Ltd.
Inter Pipeline is a major petroleum transportation and natural gas liquids processing business based in Calgary, Alberta, Canada. Inter Pipeline owns and operates energy infrastructure assets in Western Canada and is building the Heartland Petrochemical Complex — North America’s first integrated propane dehydrogenation and polypropylene facility. Inter Pipeline is a member of the S&P/TSX 60 Index and its common shares trade on the Toronto Stock Exchange under the symbol IPL. www.interpipeline.com
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Certain information contained herein may constitute forward-looking statements that involve risks and uncertainties. Readers are cautioned not to place undue reliance on forward-looking statements, including, but not limited to, statements regarding the Pembina Arrangement, including the anticipated benefits thereof to Inter Pipeline’s shareholders including that it creates significant growth, synergies and value-enhancement opportunities for shareholders and is underpinned by a strong dividend; the timing of Inter Pipeline’s annual and special shareholder meeting; the anticipated timing of closing of the Pembina Arrangement; the unsolicited takeover bid by Brookfield and whether the expiry thereof may be extended; and the forwarding-looking statements and financial outlooks contained in the Letter to Inter Pipeline Shareholders and the Joint Circular under the heading “Forward-Looking Statements and Information”. Factors that could cause actual results to vary from forward-looking statements or may affect the operations, performance, development and results of Inter Pipeline’s businesses include, among other things, the ability of the parties to satisfy the conditions to closing of the Pembina Arrangement in a timely manner and substantially on the terms described in this press release; risks and assumptions associated with operations, including: the further development of its projects and facilities; assumptions concerning operational reliability; the potential delays of and increased costs of construction projects (including the Heartland Petrochemical Complex) and future expansions of Inter Pipeline’s assets; the realization of the anticipated benefits of acquisitions and other projects Inter Pipeline is developing; the timing, financing and completion of acquisitions, transactions or other projects Inter Pipeline is pursuing including the Pembina Arrangement; risks inherent in Inter Pipeline’s Canadian and foreign operations; risks associated with the failure to finalize formal agreements with counterparties in circumstances where letters of intent or similar agreements have been executed and announced by Inter Pipeline; Inter Pipeline’s ability to generate sufficient cash flow from operations to meet its current and future obligations; Inter Pipeline’s ability to maintain its current level of cash dividends to its shareholders; Inter Pipeline’s ability to access sources of debt and equity capital; Inter Pipeline’s ability to make capital investments and the amounts of capital investments; Inter Pipeline’s ability to maintain its credit ratings; the availability and price of labour, equipment and construction materials; the status, credit risk and continued existence of counterparties having contracts with Inter Pipeline and its affiliates and their performance of such contracts; competitive factors, pricing pressures and supply and demand in the oil and gas transportation, natural gas liquids processing and bulk liquid storage industries; increases in maintenance, operating or financing costs; availability of adequate levels of insurance; difficulty in obtaining necessary regulatory approvals or land access rights and maintenance of support of such approvals and rights; risks of war, hostilities, civil insurrection, instability and political and economic conditions in or affecting countries in which Inter Pipeline and its affiliates operate; severe weather conditions and risks related to climate change; terrorist threats; risks associated with technology and cyber security; availability of energy commodities; volatility of and assumptions regarding prices of energy commodities; fluctuations in currency and interest rates; changes in laws and regulations, including environmental, regulatory and taxation laws, and the interpretation of such changes to Inter Pipeline’s business; the risks associated with existing and potential or threatened future lawsuits and regulatory actions against Inter Pipeline and its affiliates; general economic and business conditions; the effects and impacts of the COVID-19 pandemic as further described in Inter Pipeline’s reports and filings, the extent and duration of which are uncertain at this time, on Inter Pipeline’s business and general economic and business conditions and markets, and such other risk factors, assumptions and uncertainties described from time to time in Inter Pipeline’s reports and filings with the Canadian securities regulatory authorities including in the Joint Circular and in Inter Pipeline’s most recent MD&A and Annual Information Form, and other documents it files from time to time. You can find these documents by referring to Inter Pipeline’s profile on SEDAR (www.sedar.com). Such information, although considered reasonable by Inter Pipeline at the time of preparation, may later prove to be incorrect and actual results may differ materially from those anticipated in the statements made. For this purpose, any statements that are not statements of historical fact are deemed to be forward-looking statements. The forward-looking statements contained in this news release are made as of the date of this news release, and, except to the extent required by applicable law, Inter Pipeline assumes no obligation to update or revise forward-looking statements made herein or otherwise, whether as a result of new information, future events, or otherwise. The forward-looking statements contained in this news release are expressly qualified by this cautionary note.
All dollar values are expressed in Canadian dollars unless otherwise noted.
Additional Information for U.S. Investors
This press release does not constitute an offer to sell or the solicitation of an offer to buy any securities. The securities described herein have not been, and will not be, registered under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”) or any state securities laws and accordingly may not be offered or sold within the United States or to “U.S. persons”, as such term is defined in Regulation S promulgated under the U.S. Securities Act, except in compliance with the registration requirements of the U.S. Securities Act and applicable state securities requirements or pursuant to exemptions therefrom. It is anticipated that any securities to be issued under the Pembina Arrangement will be offered and issued in reliance upon the exemption from the registration requirements of the U.S. Securities Act provided by Section 3(a)(10) thereof and pursuant to applicable exemptions under state securities laws.
SOURCE Inter Pipeline Ltd.