LNG

TC Energy, the leading North American natural gas pipelines operator, is moving to complete final works surrounding the link to the LNG Canada project in British Columbia while selling a pipeline gas connection to a First Nation-run venture amid an increase in US natural gas flows.

TC Energy Corp., the North American pipelines company and supplier of LNG feed gas, said a transaction had been agreed to sell Portland Natural Gas Transmission System (PNGTS) for US$1.14 billion including debts to funds of BlackRock and Morgan Stanley Infrastructure Partners.

TC Energy has a partner in the PNGTS asset called Northern New England Investment Company, which is a subsidiary of Énergir L.P.

The sale to BlackRock, through a fund managed by its infrastructure business, and investment funds managed by Morgan Stanley Infrastructure, is for a gross price of US$1.14Bln, which includes the assumption of US$250 million of outstanding senior notes held at PNGTS.

PNGTS is a 475-kilometres (295-mile) FERC-regulated transporter of natural gas serving the upper New England and Atlantic Canada markets.

Natural gas flows

The pipeline receives natural gas from the Trans-Quebec and Maritimes (TQM) Pipeline via the Canadian Mainline.

TC Energy said it would provide customary transition services and would work jointly with the buyers to ensure the safe and orderly transition of “this critical natural gas system”.

The Calgary, Alberta-based company’s other key assets include the completed Coastal GasLink in British Columbia to supply feed gas to the LNG Canada project which advancing commissioning activities.

The PNGTS transaction implies a valuation of approximately 11.0 times reported 2023 comparable EBITDA.

“This announcement represents continued progress toward achieving our 2024 strategic priority of enhancing our balance sheet strength by delivering approximately $3 billion in asset divestitures,” said François Poirier, TC Energy’s President and Chief Executive.

“We are committed to reaching our 4.75 times debt-to-EBITDA upper limit by year-end and expect to have further asset divestiture announcements through the year,” Poirier added.

Asset sales

“This sale of a non-core asset at a strong valuation is a unique opportunity to support our capital rotation and deleveraging priorities while continuing to meet the needs of the communities PNGTS serves,” the CEO said.

TC Energy added that cash proceeds from the deal would be split pro-rata according to the current PNGTS ownership interests of TC Energy 61.7 percent and Énergir 38.3 percent and will be paid at closing subject to customary adjustments.

“As part of the transaction, the buyers will assume the outstanding senior notes held at PNGTS and currently consolidated on TC Energy’s balance sheet,” said TC Energy.

“The transaction is expected to close in mid-2024, subject to the receipt of regulatory approvals and customary closing conditions,” it added.