DBRS Morningstar Places Inter Pipeline Ltd. Under Review With Developing Implications Following Agreement to be Acquired by Pembina Pipeline Corporation

DBRS Limited (DBRS Morningstar) placed Inter Pipeline Ltd.’s (IPL or the Company) Issuer Rating, Unsecured Medium Term Notes, and Fixed-to-Floating Rate Subordinated Notes ratings Under Review with Developing Implications. These rating actions follow the announcement that the Company has entered into an agreement with Pembina Pipeline Corporation (Pembina, rated BBB (high) Under Review with Developing Implications by DBRS Morningstar) whereby Pembina will acquire all of the outstanding shares of IPL in a share-for-share transaction (the Transaction). Each common shareholder of IPL will receive 0.5 common shares of Pembina and the Transaction is valued at approximately $15.2 billion, including the assumption of IPL’s debt. The Transaction has been unanimously approved by the board of directors of both companies and is structured via a plan of arrangement. Subject to applicable regulatory, court, and common shareholder approvals, the transaction is expected to close in Q4 2021.

Pembina’s ratings have been placed Under Review with Developing Implications (see DBRS Morningstar’s press release “DBRS Morningstar Places All Ratings of Pembina Pipeline Corporation Under Review With Developing Implications” dated June 1, 2021) to assess the impact of the Transaction on Pembina’s future strategy including its business and financing plans and potential expansion plans at the Heartland Petrochemical Complex. Assuming the Transaction closes as planned and assuming IPL’s debt is ranked pari passu with Pembina’s debt, IPL’s ratings at close are likely to align with Pembina’s ratings.

DBRS Morningstar notes that that Brookfield Infrastructure Partners L.P. (BIP), together with its institutional partners, has an outstanding, unsolicited offer to acquire all outstanding common shares of IPL. DBRS Morningstar will review the Under Review with Developing Implications status after 1) more details become available with respect to BIP’s unsolicited offer in light of the announcement of the Transaction; and 2) DBRS Morningstar resolves the Under Review-Developing status on Pembina’s ratings.

ESG CONSIDERATIONS
A description of how DBRS Morningstar considers ESG factors within the DBRS Morningstar analytical framework can be found in the DBRS Morningstar Criteria: Approach to Environmental, Social, and Governance Risk Factors in Credit Ratings at https://www.dbrsmorningstar.com/research/373262.

Notes:
All figures are in Canadian dollars unless otherwise noted.

The principal methodologies are Rating Companies in the Oil and Gas and Oilfield Services Industries (August 17, 2020; https://www.dbrsmorningstar.com/research/365808), Rating Companies in the Pipeline and Diversified Energy Industry (November 19, 2020; https://www.dbrsmorningstar.com/research/370267), DBRS Morningstar Criteria: Rating Corporate Holding Companies and Parent/Subsidiary Rating Relationships (November 2, 2020; https://www.dbrsmorningstar.com/research/369167), and DBRS Morningstar Criteria: Preferred Share and Hybrid Security Criteria for Corporate Issuers (November 2, 2020; https://www.dbrsmorningstar.com/research/369165). Other applicable methodologies include the DBRS Morningstar Criteria: Approach to Environmental, Social, and Governance Risk Factors in Credit Ratings (February 3, 2021; https://www.dbrsmorningstar.com/research/373262).

For more information regarding rating methodologies and Coronavirus Disease (COVID-19), please see the following DBRS Morningstar press release: https://www.dbrsmorningstar.com/research/357883.

The related regulatory disclosures pursuant to the National Instrument 25-101 Designated Rating Organizations are hereby incorporated by reference and can be found by clicking on the link under Related Documents or by contacting us at [email protected].

The rated entity or its related entities did participate in the rating process for this rating action. DBRS Morningstar had access to the accounts and other relevant internal documents of the rated entity or its related entities in connection with this rating action.

Generally, the conditions that lead to the assignment of a Negative or Positive trend are resolved within a 12-month period. DBRS Morningstar trends and ratings are under regular surveillance.

For more information on this credit or on this industry, visit www.dbrsmorningstar.com or contact us at [email protected].

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