TC Energy TRP.TO said on Monday it has agreed to sell Portland Natural Gas Transmission System (PNGTS) to a BlackRock-managed fund and Morgan Stanley Infrastructure Partners for $1.14 billion as part of its ongoing efforts to reduce debt and fund investments.
The Calgary, Alberta-based company, best known for its Keystone oil pipeline, is undergoing an overhaul and had said last year that it would spin off its liquids business to focus on transporting natural gas.
The company is grappling with long-term debt of about C$49.98 billion ($36.84 billion) as of Dec. 31, 2023, as well high costs at its Coastal GasLink pipeline in British Columbia.
“The sale is an excellent first step towards meeting TC Energy’s C$3 billion asset sale goal. The valuation is reasonable,” Morningstar analyst Stephen Ellis said.
CEO Francois Poirier had said in 2022 TC Energy planned to raise more than C$5 billion ($3.69 billion) through 2023.
PNGTS is a 475-kilometer (295-mile) transporter of natural gas serving the upper New England and Atlantic Canada markets.
Blackrock BLK.N will assume $250 million of outstanding debt at PNGTS. The deal is expected to close mid-2024, with the cash being split pro-rata according to the current PNGTS ownership interests.
TC Energy owns PNGTS along with Northern New England Investment Company, a unit of Energir, in a 61.7%-38.3% ratio. Both companies agreed to sell the portfolio to BlackRock through its Diversified Infrastructure business fund, and investment funds managed by Morgan Stanley Infrastructure Partners.
TC Energy is aiming to sell at least C$3 billion ($2.21 billion) worth of assets this year to reduce debt, likely through two to four sales.
The company said in November it was open to joint ventures in Mexico and Canada as part of its divestiture plans, looking to limit annual net capital expenditures to between C$6 billion and C$7 billion post-2024.
($1 = 1.3565 Canadian dollars)
(Reporting by Seher Dareen and Vallari Srivastava in Bengaluru; Editing by Shilpi Majumdar and Shailesh Kuber)
