TransCanada Corporation (TSX:TRP) (NYSE:TRP) has entered into agreements to sell a 25 percent interest in each of Gas Transmission Northwest LLC (GTN) and Bison Pipeline LLC to TC PipeLines, LP (NASDAQ:TCLP) for an aggregate purchase price of US$605 million, which includes US$81 million or 25 percent of GTN's debt. The sale is expected to close in May 2011 and is subject to certain closing conditions.
"The proceeds from the sale of a 25 percent interest in both GTN and Bison will be used to help fund TransCanada's capital program," said Russ Girling, president and chief executive officer of TransCanada. "Once the transaction is complete, TransCanada will hold a 75 percent ownership interest in both pipelines and will continue to manage and operate these high quality assets as part of its integrated North American natural gas transmission network.
"This transaction demonstrates one of the many options available to fund our current growth portfolio without additional common equity," added Girling. "We will continue to look at alternatives to further enhance our financial flexibility including subordinated securities, examining opportunities for portfolio management and an ongoing role for the Partnership."
The GTN pipeline system is a 2,178 kilometre (km) (1,353 mile) natural gas transmission system that transports Western Canada Sedimentary Basin and Rocky Mountain-sourced natural gas to third party natural gas pipelines and markets in Washington, Oregon and California, and connects with the Partnership's Tuscarora pipeline system.
Bison is a new 484 km (303 mile) natural gas pipeline connecting Rocky Mountain gas supply to downstream markets via the Northern Border pipeline system. The pipeline was constructed in 2010 and placed into service in January 2011. Shippers have contracts for 0.4 billion cubic feet per day on both Bison and Northern Border that expire in 2021. The Partnership has a 50 per cent ownership interest in Northern Border.
TransCanada currently holds a 38.2 per cent interest in TC PipeLines, LP, a United States Master Limited Partnership, which was formed to acquire, own and actively participate in the management of U.S. natural gas pipelines and related assets.