TC Energy's $1.14B Asset Sale: What's Next?

MS BLK TRP

TC Energy Corporation has taken a significant step towards its strategic goal of reducing debt and focusing on natural gas transportation by agreeing to sell the Portland Natural Gas Transmission System (PNGTS) to BlackRock-managed funds and Morgan Stanley Infrastructure Partners for a whopping $1.14 billion. This move is part of TC Energy’s broader plan to reduce debt by selling assets worth at least $3 billion.

The sale of PNGTS is a pivotal part of TC Energy’s strategy to address its substantial long-term debt and high costs associated with certain pipeline projects. By offloading this asset, the company aims to streamline its operations and strengthen its financial position. The deal includes BlackRock assuming $250 million of outstanding debt at PNGTS, contributing to TC Energy’s efforts in achieving its financial targets.

As a result of this transaction, TC Energy is set to generate pre-tax cash equity proceeds of approximately $545 million, which will significantly contribute to the company’s objective of raising more than C$5 billion through 2023. Furthermore, the sale underscores TC Energy’s commitment to limiting annual net capital expenditures post-2024 to between C$6 billion and C$7 billion.

This divestiture aligns with TC Energy’s broader vision for the future, focusing on optimizing its portfolio and enhancing its financial flexibility. With the PNGTS sale, TC Energy is positioning itself as a leaner and more agile player in the natural gas transportation sector, poised for sustainable growth and value creation.

The Sale Agreement

TC Energy Corporation, along with its partner, has entered into a purchase and sale agreement to divest the Portland Natural Gas Transmission System (PNGTS) to BlackRock and Morgan Stanley Infrastructure Partners for an impressive sum of $1.14 billion. This transaction marks a crucial milestone in TC Energy’s strategy aimed at reducing debt and reinforcing its commitment to natural gas transportation.

The gross purchase price for this landmark deal amounts to $1.14 billion, generating pre-tax cash equity proceeds of approximately $545 million net to TC Energy. Notably, PNGTS is a significant FERC-regulated transporter of natural gas serving upper New England and Atlantic Canada markets. This strategic divestiture underscores TC Energy’s unwavering focus on optimizing its asset portfolio while unlocking substantial value for the company.

By leveraging this sale agreement, TC Energy is taking proactive steps towards achieving its ambitious financial targets, including raising more than C$5 billion through 2023 and undertaking asset sales totaling at least C$3 billion in 2024. The PNGTS sale not only bolsters TC Energy’s financial position but also positions the company as a more agile and focused player in the natural gas transportation landscape.

This transformative transaction reflects TC Energy’s unwavering commitment to delivering sustained value for stakeholders while strategically realigning its business for long-term success in the evolving energy sector.

BlackRock and Morgan Stanley’s Acquisition

BlackRock Inc. and Morgan Stanley investment funds have emerged as key players in acquiring TC Energy Corp.’s Portland Natural Gas Transmission System for an impressive sum of about $1.14 billion. This strategic acquisition includes the assumption of $250 million in debt as part of TC Energy’s broader plan to divest assets with an aim to decrease debt levels.

The Portland Natural Gas Transmission System comprises 295 miles of natural gas pipelines in northern New England and Atlantic Canada, serving as a critical FERC-regulated transporter catering to these vital markets. BlackRock’s involvement in this acquisition underscores its expanding footprint in the infrastructure investment landscape, aligning with its strategic goal of becoming a significant player in alternative assets.

This deal further solidifies BlackRock’s position as a key player in infrastructure investments, complementing its recent acquisitions and investments aimed at bolstering its presence in this segment. Additionally, Barclays provided valuable financial advice to both TC Energy and Energir while Bracewell LLP served as the legal advisor to TC Energy for this transformative sale agreement.

The acquisition not only underlines BlackRock’s strategic expansion into infrastructure investments but also reinforces TC Energy’s commitment towards optimizing its asset portfolio while creating sustainable value for all stakeholders involved.

The information provided in this article is for general informational purposes only and should not be considered as financial advice.