TC PipeLines LP announced the closing of the previously announced acquisition of a 49.9 percent interest in Portland Natural Gas Transmission System (PNGTS) from TransCanada Corp.
The acquisition, effective Jan. 1, is expected to be immediately accretive to distributable cash flow and earnings. TransCanada Corp. announced the US$223 million sale Nov. 6.
“The PNGTS transaction is a continuation of our strategy to drop down the remainder of TransCanada’s U.S. natural gas pipeline assets to the TC PipeLines partnership,” said Russ Girling, TransCanada’s president and CEO in November. “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 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 (Earnings Before Interest, Taxes, Depreciation and Amortization) from this 49.9 percent interest in PNGTS is expected to be approximately US$23 million in 2016. The sales agreement also provides for additional payments from TC PipeLines if PNGTS is expanded in the future.
PNGTS is a 295 mile (474 km) high-capacity, high-pressure interstate natural gas pipeline which 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 U.S. 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 percent interest in PNGTS.
TC PipeLines is a Delaware master limited partnership with interests in seven federally regulated U.S. interstate natural gas pipelines which serve markets in the Western, Midwestern and Eastern United States. The partnership is managed by its general partner, TC PipeLines GP Inc., a subsidiary of TransCanada Corp.
Tags: natural gas, TC Pipelines, TransCanada