TC Energy Corporation told investors it has entered into a deal to monetise a 40% interest in its Columbia Gas Transmission (Columbia Gas) and Columbia Gulf Transmission (Columbia Gulf) systems.
The company announced in a statement that the two units will be held in a new joint venture (JV) partnership with private equity firm Global Infrastructure Partners (GIP), which will pay C$5.2 billion (US$3.9 billion) in cash for the 40% stake.
The Columbia Gas and Columbia Gulf pipelines span more than 15,000 miles across a highly integrated North American natural gas network, delivering a substantial portion of daily US natural gas demand, including approximately 20% of US liquified natural gas (LNG) export supply.
The company said the resiliency of these systems combined with their ability to connect the largest and lowest-cost natural gas basin to key demand centres and global export markets, uniquely positions them to remain a central player in further supporting the transition to lower-emitting energy sources.
TC Energy said it will continue to operate the systems, focusing on maximizing value through safe operations, reliability of service and operational excellence. The two companies will jointly invest in annual maintenance, modernization and sanctioned growth capital to further enhance system capacity and reliability.
GIP will also fund its 40% share of gross capital expenditures, which are expected to average more than C$1.3 billion (US$1 billion) annually over the next three years, the company added.
"Today’s announcement represents a major milestone in achieving our 2023 strategic priorities,” TC Energy president and CEO François Poirier said.
“To date, we have advanced our deleveraging goals by delivering on our $5+ billion asset divestiture program ahead of our year-end target, while maximizing the value of our assets and safely executing major projects, such as Coastal GasLink and Southeast Gateway.”
As part of its ongoing capital rotation program, TC Energy said it continues to evaluate opportunities to further its deleveraging objectives and optimally fund its secured capital program.
“Our commitment to strong balance sheet fundamentals and disciplined sanctioned net capital spending of $6 to $7 billion annually post-2024 will continue to provide the foundation for a long-term sustainable annual dividend growth rate of 3% to 5%,” Poirier added.
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