TransCanada Corp., Calgary, (Toronto: TRP; NYSE: TRP) plans to sell a 25% interest in each of Gas Transmission Northwest LLC and Bison Pipeline LLC to master limited partnership TC PipeLines LP (Nasdaq: TCLP) for an aggregate purchase price of US$605 million, which includes US$81 million--or 25% of Gas Transmission's debt.
The GTN pipeline system is a 2,178 kilometer (km) (1,353 mile) natural gas transmission system that transports Western Canada Sedimentary Basin and Rocky Mountain-sourced natural gas to third party natural gas pipelines and markets in Washington, Oregon and California, and connects with TC PipeLines' Tuscarora pipeline system.
Bison is a new 484 km (303 mile) natural gas pipeline connecting Rocky Mountain gas supply to downstream markets via the Northern Border pipeline system. The pipeline was constructed in 2010 and placed into service in January 2011. Shippers have contracts for 0.4 billion cubic feet per day on both Bison and Northern Border that expire in 2021. TC PipeLines has a 50% ownership interest in Northern Border.
"The proceeds from the sale of a 25% interest in both GTN and Bison will be used to help fund TransCanada's capital program," says Russ Girling, president and chief executive, TransCanada. "Once the transaction is complete, TransCanada will hold a 75% ownership interest in both pipelines and will continue to manage and operate these high quality assets as part of its integrated North American natural gas transmission network."
TransCanada currently holds a 38.2% interest in TC PipeLines, which was formed to acquire, own and actively participate in the management of U.S. natural gas pipelines and related assets.
The sale is expected to close in May.
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