TC Energy Moves to Sell C$1 Billion Stake in Gas Pipeline Assets to Indigenous Communities

By Robb M. Stewart

Pipeline operator TC Energy has struck what it says is Canada's largest indigenous equity ownership agreement for the 1 billion Canadian dollars (US$721.8 million) sale of a minority stake in some of its assets in Western Canada to a group of local communities.

The deal with an indigenous-owned investment partnership will see TC Energy sell a 5.3% interest in its NGTL System and Foothills pipeline assets, and in turn is aimed at providing a path for 72 indigenous communities closest to the operations to own a portion of a more than 15,000-mile network of natural-gas infrastructure.

The purchase agreement, part of the company's efforts to cut debt and fund investments, has an implied enterprise value of about C$1.65 billion, including the proportionate share of the assets' debt.

TC Energy said the sale is backed by Alberta Indigenous Opportunities Corp., which will provide the communities with a C$1 billion equity loan guarantee to support the newly-formed indigenous-owned investment partnership.

The deal was negotiated by a consortium committee representing specific indigenous communities across Alberta, British Columbia and Saskatchewan. The consortium will next present the agreement to each community to determine their participation, through TC Energy said the deal and its scope don't depend on all or any given community deciding to participate. The deal is expected to close in the third quarter of the year.

NGTL System is TC Energy's gas gathering and transportation operation for the Western Canadian Sedimentary Basin, connecting most of the natural gas production in western Canada with domestic and export markets. The 769 mile million Foothills pipeline ships Alberta natural as to the U.S. border for export.

Investment in the assets promises a source of revenue for indigenous communities.

Earlier this year, Canada's federal government moved to amend rules governing state-owned assets as part of its efforts to offload the Trans Mountain pipeline, which it bought in 2018 to ensure construction was completed. Ottawa aims to sell the pipeline system and ensure indigenous ownership. Trans Mountain became operational in May, the twin of an existing line that together can triple shipments of Alberta Oil to the pacific coast to 890,000 barrels a day.

Write to Robb M. Stewart at robb.stewart@wsj.com

(END) Dow Jones Newswires

July 30, 2024 08:48 ET (12:48 GMT)

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