Notice is hereby provided to all persons who held Class A common units of Enbridge Energy Partners, L.P. (“EEP”) immediately preceding the consummation of the Merger (as defined herein). The purpose of this notice is to inform you about developments with respect to the litigation in the Delaware Court of Chancery (the “Delaware Court”) captioned Mesirov v. Enbridge Energy Co., Inc., C.A. No. 11314-VCS (Del. Ch.) (the “Derivative Action”) previously described in the Schedule 14A Definitive Proxy Statement filed by EEP on November 9, 2018 (the “Proxy Statement”), including dismissal of the Derivative Action and an agreement by EEP to pay attorneys’ fees and expenses to counsel for Plaintiff (“Derivative Counsel”) in the Derivative Action.
On July 20, 2015, Peter R. Brinckerhoff, individually and as trustee of the Peter R. Brinckerhoff Trust, filed a Verified Class Action and Derivative Complaint in the Delaware Court against nominal defendant EEP and defendants Enbridge Inc. (“Enbridge”), Enbridge Energy Company, Inc. (“EEP GP”), Enbridge Energy Management, L.L.C. (“EEM”), Jeffrey A. Connelly, Rebecca B. Roberts, Dan A. Westbrook, J. Richard Bird, J. Herbert England, C. Gregory Harper, D. Guy Jarvis, Mark A. Maki, John K. Whelen, Enbridge Pipelines (Alberta Clipper) L.L.C., and Enbridge Energy, Limited Partnership (collectively, “Defendants”). Brinckerhoff subsequently withdrew as the plaintiff and Judy Mesirov intervened as the plaintiff. The Derivative Action challenges a January 2, 2015 transaction (the “Transaction”) by which EEP purchased from EEP GP, an Enbridge-controlled entity that serves as EEP’s general partner, EEP GP’s 66.67% interest in the Alberta Clipper pipeline (the “Pipeline Interest”) in exchange for EEP’s issuance of 18,114,975 shares of a new Class E partnership interest (the “Class E Units”) to EEP GP and EEP’s repayment of an outstanding loan made by EEP GP to EEP. The publicly announced nominal consideration for the Transaction was approximately $1 billion. A Verified Second Amended Complaint added as a defendant Piper Jaffray & Co. as successor to Simmons & Company International (“Simmons”), the financial advisor to the special committee that evaluated the Transaction on behalf of EEP. On August 29, 2018, the Delaware Court issued a Memorandum Opinion granting in part and denying in part Defendants’ motions to dismiss (the “August 29 Mesirov Decision”), dismissing the direct class claim respecting a tax aspect of the Transaction and allowing to proceed the derivative claims for breach of Section 6.6(e) of EEP’s limited partnership agreement, and against Simmons for aiding and abetting a breach of contractual fiduciary duties (the “Derivative Claims”). The parties engaged in extensive discovery. Over 209,000 pages of documents were produced by Defendants and third parties to Plaintiff’s counsel. Plaintiff’s counsel deposed thirteen individuals. On October 1, 2018, the parties exchanged expert reports. On October 12, 2018, Defendants moved for summary judgment and filed opening briefs.
As more fully explained in the Proxy Statement, on May 17, 2018, representatives of Enbridge delivered a proposal to acquire all of the outstanding Class A common units of EEP not already owned by Enbridge and its affiliates (the “Merger”). On May 17, 2018, the board of directors of EEM, in its capacity as the board of directors of the delegate of EEP GP, formally constituted a special committee of directors of EEP (the “EEP Special Committee”), appointed Jeffrey Connelly, Dan Westbrook and William Waldheim to serve on the EEP Special Committee, and authorized the EEP Special Committee to, among other things, review, evaluate, consider and negotiate the proposed Merger. On July 23, 2018, the EEP Special Committee adopted a resolution forming a sub-committee (the “Derivative Action Subcommittee”) of the committee comprised solely of Mr. Waldheim, who is not a defendant in the Derivative Action, in order to review, evaluate and consider the Derivative Action and to determine the value, if any, of the Derivative Claims and materiality thereof and to make such recommendations to the EEP Special Committee as it deems appropriate. On August 9, 2018, the Derivative Action Subcommittee determined a risk adjusted range of values for the Derivative Claims of $88.4 million to $111.2 million (with a midpoint of $99.8 million) (such midpoint, the “Estimated Derivative Claims Value”). On August 9, 2018, the EEP Special Committee accepted the range of values determined by the Derivative Action Subcommittee for the Derivative Claims and directed their legal counsel to request that the financial advisors to the EEP Special Committee factor the Estimated Derivative Claims Value into their analysis of the proposed Merger. Representatives of EEP and Enbridge subsequently engaged in price negotiations respecting the Merger. On September 17, 2018, the parties entered into an Agreement and Plan of Merger. On December 20, 2018, the Merger closed.
On December 21, 2018, the Delaware Court entered a Stipulation and Order of Dismissal dismissing the Derivative Action, with the claims being dismissed with prejudice as to the Plaintiff (the “Order”). The Order provides that EEP will pay Plaintiff’s counsel $14,500,000 in attorney’s fees and costs. Because EEP has agreed to undertake this payment, there will be no direct costs to EEP’s Class A Unitholders. The Delaware Court has not and will not pass on the fee payment. A copy of the Order can be accessed on the website of co-counsel for Plaintiff here.
Any former unitholder of EEP seeking additional information about this matter should contact Lawrence P. Eagel, co-counsel for Plaintiff, at email@example.com or 212.308.5888, or Michael Steinberg, counsel for Enbridge, at firstname.lastname@example.org or 310.712.6670.