TransCanada announces sale of power assets, equity issuance to help finance Columbia acquisition
CALGARY — TransCanada Corp. said Tuesday it is pursuing the sale of its U.S. Northeast Power division for US$3.7 billion as part of a broader effort to fund the recent purchase of Houston-based Columbia Pipeline Group.
The company also said it plans to undertake a bought-deal financing worth US$3.2 billion, which will also be partly used to repay loans for the US$13 billion acquisition of Columbia. TransCanada took out a US$6.9 billion loan facility to help fund the acquisition. The deal closed in July.
The company plans to raise the US$3.7 billion largely through the sale of its Ravenswood, Ironwood, Ocean State Power and Kibby Wind assets. Helix Generation LLC will buy the assets for US$2.2 billion, the company said.
It will also sell its TC Hydro asset to Great River Hydro LLC for US$1.06 billion.
TD Securities Inc., BMO Capital Markets and RBC Capital Markets have agreed to buy and sell 54.75 million common shares in TransCanada at $58.50 each as part of the offering.
In addition, TransCanada said it will maintain its current stake in various natural gas pipeline assets in Mexico, which will “allow us to fully capture future growth associated with the portfolio,” TransCanada CEO Russ Girling said in a statement.
Further, the company said it plans to buy all remaining units of Columbia for US$17 each, totaling US$915 million.
The announcements come as the company undergoes a highly ambitious acquisition program, in which it plans to grow its portfolio by roughly $25 billion in the next five years.
Much of that growth will come from the massive Columbia acquisition, which gave the company access to natural gas assets in fast-growing shale fields in northeastern U.S.
Amid low commodity prices, midstream companies such as TransCanada are rapidly bulking up their asset bases during times of low costs. TransCanada rival Enbridge Inc. announced massive plans last month to purchase Houston-based Spectra Energy Corp. for $37 billion.
After the latest stock offering, TransCanada will have raised almost $8 billion from share sales this year. That includes an option for banks to sell additional shares. The company in March raised $4.42 billion in the largest stock sale in Canadian history to help fund its acquisition of Columbia.
The power asset sales are expected to close in the first half of 2017, TransCanada’s statement shows.
TransCanada cancelled its upcoming third quarter conference call with investors as part of Tuesday’s announcements.
The company recorded a net loss for the quarter of $135 million, or 17 cents per share. Over the same quarter last year the company reported a net gain of $402 million, or 57 cents per share.
Its adjusted earnings were $622 million over the quarter, or 78 cents per share, compared with $440 million, or 62 cents per share, a year earlier.