Boston, MA 10/02/2014 (wallstreetpr) – TC Pipelines, LP (NYSE:TCP) announced that it would be acquiring the remaining 30% stake in Bison Pipeline LLC for $215 million. TransCanada Corporation (USA) (NYSE:TRP) was holding the stake and decided to sell its stake in favor of TC Pipelines.
Accretive To Earnings
The company indicated that the purchase of remaining stake would be immediately accretive to its earnings and partnership cash flows, its statement revealed. It said that the purchase of Bison Pipeline would improve long-term cash flow stability of Partnership and predictability. The optimism was due to a higher percentage of total cash flows originated from contracts of long-term ship-or-pay.
TC Pipelines, LP (NYSE:TCP) said that the acquisition of the remaining stake would be funded from debt, as well as, equity proceeds from its At-The-Market program. The company indicated that Bison pipeline was focused towards transporting Rocky Mountain natural gas to markets in Midwest through a Partnership’s Northern Border pipeline system. TC Pipeline said that it was supported by contracts extending till 2020 by long-term ship-or-pay.
President Comments
TC Pipelines, LP (NYSE:TCP) President, Steve Becker, said that the transaction marked a series of predicted dropdowns by TransCanada to help in funding its big capital raising program. He also said that the purchase of the remaining stake only demonstrated its commitment to providing long-term value and stability to its unit holders. This also fits well with its continuous tactics of owning assets of long-lived infrastructure to strengthen its long-term contracts.
The TC Pipelines, LP (NYSE:TCP) disclosed that its Board of Directors of the general partner has given its approval based on the recommendations of its conflicts committee that consisted of completely independent directors. The committee has hired Deutsche Bank to guide it on the financial aspect while Orrick, Herrington & Sutcliffe LLP provided legal advice on the deal. The natural gas market outlook was advised by Wood Mackenzie.
