TC Sells Pipeline Stake to GIP for $3.9 Billion to Cut Debt

Kevin Orland and Sophie Caronello
Mon, July 24, 2023 at 8:18 AM MDT·2 min read


(Bloomberg) -- TC Energy Corp. agreed to sell a 40% stake in two US natural gas pipeline networks for $3.9 billion (C$5.2 billion) in cash, a deal that will allow the Canadian company to meet a goal of reducing its debt ahead of schedule.

The transaction with private equity firm Global Infrastructure Partners will put the assets — the Columbia Gas Transmission and Columbia Gulf Transmission networks in the US — in a joint venture between TC and GIP, with TC continuing to operate the systems.

TC Energy has met its target of reducing debt by C$5 billion or more this year ahead of time, Chief Executive Officer Francois Poirier said Monday in a statement. The company has grappled with a major cost overrun at its Coastal GasLink pipeline, which it’s building to supply LNG Canada, a gas export project in British Columbia. The asset-sale program also is intended to help TC Energy keep its dividend growing by 3% to 5% per year.

“We like the move to take a sizable chunk out of TC Energy’s ‘$5+ billion’ asset monetization program and the reduction in the go-forward capital intensity for the company via a transaction with a well-regarded partner,” Robert Kwan, an analyst with Royal Bank of Canada, said in a note. Still, the sale’s valuation is “very slightly below what we had previously embedded in our existing assumptions for the entire asset monetization program.”

TC Energy shares fell 3.3% to C$50.53 at 10:13 a.m. in Toronto, the biggest decline in the 40-company S&P/TSX Energy Index. The shares are down 6.4% this year, compared with a 2% drop for the index.

The Columbia Gas and Columbia Gulf pipelines cover more than 15,000 miles (24,000 kilometers) and account for about 20% of US liquefied natural gas export supply.