TC Energy On The Move: Asset Sale Paves Way For Debt Reduction

TC Energy Corp TRP and its partner Northern New England Investment Company, Inc. (a subsidiary of Énergir L.P.) disclosed the sale of its Portland Natural Gas Transmission System (PNGTS) for a gross purchase price of $1.14 billion.

Notably, the companies penned a purchase and sale agreement with BlackRock through a fund managed by its Diversified Infrastructure business and investment funds managed by Morgan Stanley Infrastructure Partners.

The selling price comprises the assumption of $250 million of outstanding Senior Notes held at PNGTS, and the transaction implies a valuation of approximately 11.0x reported 2023 comparable EBITDA.

PNGTS is a 475-kilometer (295-mile) FERC-regulated transporter of natural gas serving the upper New England and Atlantic Canada markets. 

The cash proceeds will be split pro-rata according to the current PNGTS ownership interests (TC Energy 61.7%, Énergir 38.3%) and paid at deal closure, upon the fulfillment of certain customary adjustments. 

As part of the transaction, the buyer will assume the outstanding Senior Notes held at PNGTS and currently consolidated on TC Energy’s balance sheet. 

The deal is expected to close in mid-2024, subject to the receipt of regulatory approvals and customary closing conditions.

François Poirier, TC Energy’s President and Chief Executive Officer, said, “Today’s announcement represents continued progress toward achieving our 2024 strategic priority of enhancing our balance sheet strength by delivering approximately $3 billion in asset divestitures.”

“We are committed to reaching our 4.75 times debt-to-EBITDA upper limit by year-end and expect to have further asset divestiture announcements through the year. This sale of a non-core asset at a strong valuation is a unique opportunity to support our capital rotation and deleveraging priorities while continuing to meet the needs of the communities PNGTS serves.”

TC Energy said its 2024 financial guidance and growth outlook through 2026 remain unchanged.

Last month, TC Energy reported fourth-quarter FY23 results above estimates and boosted its dividend.

Price Action: TRP shares are trading higher by 0.15% at $39.81 premarket on the last check Monday.