Blog Coverage TransCanada Offers to Sell its Stake in Iroquois and PNGTS to TC Pipelines, L.P.

LONDON, UK / ACCESSWIRE / February 28, 2017 / Active Wall St. blog coverage looks at the headline from energy infrastructure major TransCanada Corp. (NYSE: TRP) and TC Pipelines, L.P. (NYSE: TCP). TransCanada announced on February 27, 2017, that it has offered to sell its 49.3% stake in Iroquois Gas Transmission System, L.P. (Iroquois) along with its balance 11.8% stake in Portland Natural Gas Transmission System (PNGTS) to TC Pipelines. Register with us now for your free membership and blog access at:

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Calgary, Alberta based TransCanada is a leading energy infrastructure Company that build and operates natural gas and liquids pipelines, power generation, and gas storage facilities. It aims to be the leading energy infrastructure Company in North America. TransCanada’s natural gas pipelines extend more than 91,500 kilometers, gas storage, and related services have over 653 billion cubic feet of storage capacity. It owns or has interests in over 10,700 megawatts of power generation in Canada and the US and its liquids pipeline systems extend over 4,300 kilometers.

TransCanada owns 27% interest in TC PipeLines via a master limited partnership through its indirect wholly-owned subsidiary, TC PipeLines GP, Inc. The partnership was formed with an aim to acquire, own, and actively participate in the management of natural gas pipelines and related assets in the US. Currently, TC PipeLines has investments in seven critical FERC regulated, low-risk energy infrastructure pipelines, capable of moving 9.1 billion cubic feet per day of natural gas.

Commenting on the stake sale offer, Russ Girling, President and CEO of TransCanada said:

“This offer demonstrates the meaningful role that TC PipeLines, L.P. can fulfill in funding a portion of our $23 billion near-term capital program. Delivering on our industry-leading growth portfolio positions us to deliver significant sustainable growth in earnings, cash flow and dividends.”

Confirming the receipt of the offer and sharing his views on the matter, Brandon Anderson, President of TC PipeLines GP, Inc. added:

“These pipelines are critical energy infrastructure in the US northeast and are expected to be integral to those markets for years to come. Upon a successful transaction, we believe this investment will further strengthen our cash flows and our ability to increase our quarterly distributions this year in line with recent increases.”

The details of the Proposal

The actual terms and financial details of the proposal have not been disclosed by the involved parties. They have indicated that the details will be worked out after negotiations between them. The proposal also needs the clearance from the Conflicts Committee of the Board of Directors of TC PipeLines and from statutory bodies. TransCanada’s Board of Directors has already given their approval for the stake sale in Iroquois and PNGTS.

TC PipeLines has indicated that in the event that it receives all necessary approvals from its Clearance Committee, Board of Directors as well as statutory bodies, and if the terms of the transaction are satisfactory, the deal could close in H2 2017. Under these circumstances, TC PipeLines is planning to use a blend of debt and equity to fund the transaction.

About Iroquois and PNGTS

The Iroquois Gas Transmission System, L.P. is the pipeline that transports natural gas under long-term contracts and has been fully operational since 1992. The 669 kilometres long pipeline connects with Canadian Mainline near Waddington, New York to deliver natural gas to customers in the US Northeast region including New York City, Long Island and Connecticut. The affiliates of TransCanada and Dominion Resources, Inc. jointly own Iroquois through a joint venture.

The Portland Natural Gas Transmission System is an interstate natural gas pipeline Company providing natural gas transportation service for gas utilities, paper mills, and electric generation plants throughout New England since 1999. The 475 kilometres long high-capacity, high-pressure interstate natural gas pipeline is strategically situated between three major pipeline networks. It connects the TransQuebec and Maritimes Pipeline at the Canadian border and the Maritimes and Northeast Pipeline at Westbrook, Maine with the Tennessee Gas Pipeline System near Boston, Massachusetts in the US. TransCanada currently owns 11.81% direct stake in PNGTS.

Incidentally, in January 2017, TransCanada sold 49.9% stake in PNGTS to TC PipeLines for $228 million.

Stock Performance

At the close of trading session on Monday, February 27, 2017, TransCanada’s stock price slightly declined 0.09% to end the day at $46.24. A total volume of 1.42 million shares were exchanged during the session, which was above the 3-month average volume of 910.51 thousand shares. The Company’s share price has surged 30.85% in the past twelve months and advanced 2.41% on YTD basis. The stock currently has a market cap of $40.70 billion and has a dividend yield of 3.63%.

On Monday, TC Pipelines’ stock closed the trading session at $59.74, dropping 3.26% from its previous closing price of $61.75. A total volume of 135.58 thousand shares have exchanged hands, which was higher than the 3-month average volume of 132.26 thousand shares. TC Pipelines’ stock price rallied 11.13% in the last three months, 15.97% in the past six months, and 49.02% in the previous twelve months. Furthermore, since the start of the year, shares of the Company have gained 3.14%. At yesterday’s closing price, the stock’s net capitalization stands at $4.07 billion. Moreover, the Company’s shares have a dividend yield of 6.29%.

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