TC Energy sells 65% stakes in Coastal GasLink pipeline

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TC Energy Corporation has entered into an agreement to sell a 65% equity interest in the Coastal GasLink Pipeline Project (Coastal GasLink or the Project) to KKR and Alberta Investment Management Corporation (AIMCo) on behalf of certain AIMCo clients.

Concurrent with the completion of the sale, TC Energy expects that Coastal GasLink will enter into a secured project financing construction credit facility with a syndicate of banks to fund up to 80 percent of the Project during construction. Both transactions are expected to close in the first half of 2020, subject to customary regulatory approvals and consents, including the consent of LNG Canada.

The Company expects to record an after-tax gain of approximately $600 million upon closing of the transaction which includes the gain on sale, required revaluation of a residual ownership interest to fair market value and recognition of previously unrecorded tax benefits.

Coastal GasLink involves the construction of 670 kilometres (416 miles) of pipeline and associated facilities. Once completed, the pipeline will have an initial capacity of 2.1 billion cubic feet per day and connect abundant Western Canadian Sedimentary Basin natural gas supply from the Dawson Creek, B.C. area to the LNG Canada liquefaction and export facility being constructed in Kitimat, B.C. All necessary regulatory permits have been received for the Project and construction activities have commenced.

Following the close of the transaction, TC Energy will hold a 35 per cent limited partnership equity interest in Coastal GasLink and will be contracted by the limited partnership to construct and operate the pipeline. This transaction was contemplated in the Company’s agreements with LNG Canada.

TC Energy is also committed to working with the 20 First Nations that have executed agreements with Coastal GasLink to provide them with an opportunity to invest in the Project. As a result, in conjunction with this sale, the Company will provide the First Nations with an option to acquire a 10% equity interest in Coastal GasLink on similar terms.

RBC Capital Markets is acting as exclusive financial advisor to TC Energy and as Global Lead Coordinating Arranger on the project finance construction facility.


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