Enbridge Energy Management, L.L.C. (EEQ) is a publicly traded limited liability company that manages and controls the business and affairs of Enbridge Energy Partners, L.P. (EEP) a master limited partnership (MLP) that owns petroleum and natural gas midstream businesses in the United States. EEQ’s only investment is its limited partner interest in Enbridge Partners (EEP) and its success depends on the performance of the Partnership. Enbridge Management i(EEP) shareholders receive quarterly distributions in Paid-In-Kind (PIK) distributions. Enbridge Management distributions are not taxable when received, thus shareholders are not issued an annual 1099 tax form. The sale of Enbridge Management shares is generally subject to capital gains treatment, providing a tax efficient form of investment.
The Partnership distributes all of its available cash to the General Partner and holders of its common units on a quarterly basis, depending on the operations of the Partnership. When the Partnership makes distributions of cash the number of i-units EEQ owns increases automatically and the amount of available cash that is attributable to the i-units is retained by the Partnership.
The amount of this increase is calculated by dividing the amount of the cash distribution paid by the Partnership on each of its common units by the average closing price of EEQ as determined for a 10-trading day period ending on the trading day immediately prior to the ex-dividend date for our shares. The number of shares that are then outstanding equal the number of i-units owned by EEQ. An owner of EEQ shares does not report on its federal income tax return any of our items of income, gain, loss and deduction relating to an investment by EEQ.