TC Energy Partners With Global Infrastructure Partners in $3.9 Million Deal
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TC Energy has entered into an agreement to monetize a 40 percent interest in its Columbia Gas Transmission and Columbia Gulf Transmission systems. Columbia Gas and Columbia Gulf will be held in a new joint venture partnership with Global Infrastructure Partners (GIP).
Total proceeds for the transaction are expected to be $3.9 billion in cash, to be paid at closing, subject to certain customary adjustments. The value of the 40 percent equity interest implies an enterprise value to a comparable EBITDA multiple of approximately 10.5 times TC Energy’s base 2023 outlook and expected run-rate capital structure for the partnership entity.
TC Energy will continue to operate the systems, focusing on maximizing value through safe operations, reliability of service, and operational excellence. TC Energy and GIP will jointly invest in annual maintenance, modernization, and sanctioned growth capital to further enhance system capacity and reliability. GIP will fund its 40 percent share of gross capital expenditures, which are expected to average more than $1 billion annually over the next three years.
“Today’s announcement represents a major milestone in achieving our 2023 strategic priorities. To date, we have advanced our deleveraging goals by delivering on our $5+ billion asset divestiture program ahead of our year-end target, while maximizing the value of our assets and safely executing major projects, such as Coastal GasLink and Southeast Gateway,” said François Poirier, TC Energy’s president and chief executive officer.
“As part of our ongoing capital rotation program, we continue to evaluate opportunities to further our deleveraging objectives and optimally fund our secured capital program. Our commitment to strong balance sheet fundamentals and disciplined sanctioned net capital spending of $6 to $7 billion annually post 2024 will continue to provide the foundation for a long-term sustainable annual dividend growth rate of three to five percent,” added Poirier.
SUPPORTING THE ENERGY TRANSITION THROUGH CRITICAL NATURAL GAS INFRASTRUCTURE
The Columbia Gas and Columbia Gulf pipelines span more than 15,000 miles across a highly integrated North American natural gas network and are underpinned by strong long-term natural gas fundamentals and a rate-regulated commercial framework. These assets deliver a substantial portion of daily U.S. natural gas demand, including approximately 20 percent of U.S. liquified natural gas (LNG) export supply. The resiliency of these systems combined with their ability to connect the largest and lowest-cost natural gas basin to key demand centers and global export markets, uniquely positions them to remain a central player in further supporting the transition to lower-emitting energy sources.
“Long-term fundamentals continue to underscore the role of natural gas in a sustainable energy future. Our partnership with GIP will provide additional investment capacity to originate and execute Columbia Gas and Columbia Gulf projects to meet that need,” said Poirier.
“This, and future partnerships, across our portfolio will strengthen our ability to enable the energy transition while enhancing balance sheet strength. We look forward to combining the collective strengths of TC Energy’s strategic asset base and strong operating expertise, as well as GIP’s proven investment track record and extensive relationships in the global LNG market,” added Poirier.
“We are pleased to partner with TC Energy on energy infrastructure assets that are critical to the North American and global natural gas markets,” said Bayo Ogunlesi, Global Infrastructure Partners’ chairman and chief executive officer.
“We welcome the opportunity for this joint venture to leverage the combined assets and capabilities of TC Energy and GIP to serve growing market needs for cleaner fuels, energy security and energy affordability,” added Ogunlesi.
The transaction is expected to close in the fourth quarter of 2023, subject to customary closing conditions.
TC Energy is a team of 7,000+ energy problem solvers working to move, generate, and store the energy North America relies on. Today, they’re taking action to make that energy more sustainable and more secure. They’re innovating and modernizing to reduce emissions from its business. And, they’re delivering new energy solutions — from natural gas and renewables to carbon capture and hydrogen — to help other businesses and industries decarbonize too. Along the way, they invest in communities and partner with its neighbors, customers, and governments to build the energy system of the future.
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