TransCanada Corp. (TSX: TRP) (NYSE: TRP) has entered into an agreement to sell a 49.9% interest in Portland Natural Gas Ltd. Partnership (PNGTS) to its master limited partnership, TC PipeLines LP (NYSE:TCP), for a purchase price of US$223 million. The sale is expected to close at the end of 2015.
"The PNGTS transaction is a continuation of our strategy to drop down the remainder of TransCanada's US natural gas pipeline assets to the TC PipeLines partnership," said Russ Girling, TransCanada's president and CEO. "Asset sales to the partnership provide TransCanada with cash proceeds to help fund our capital program and further diversify the partnership's asset base, positioning it for continued growth."
The US$223 million transaction is comprised of US$188 million in cash together with the assumption of a proportionate share of PNGTS debt in the amount of US$35 million. The EBITDA from this 49.9% interest in PNGTS is expected to be approximately US$23 million in 2016. The sales agreement also provides for additional payments from TC PipeLines LP if PNGTS is expanded in the future.
PNGTS is a 474-kilometer (295-mile) high-capacity, high-pressure interstate natural gas pipeline that began serving New England's energy needs in March 1999. The pipeline connects with the TransQuébec and Maritimes Pipeline at the Canadian border near East Hereford, Québec, and delivers natural gas to customers in the US northeast. It shares facilities with the Maritimes and Northeast Pipeline from Westbrook, Maine to a connection with the Tennessee Gas Pipeline System near Boston, Massachusetts. After completion of the transaction, TransCanada will continue to hold a direct 11.8% interest in PNGTS.