TC PipeLines, LP to Acquire Additional Interest in Northern Border Pipeline
February 15 2006 - 7:04AM
Business Wire
TC PipeLines, LP (NASDAQ:TCLP) (the Partnership) today announced it
has entered into an agreement with Northern Border Partners, L.P.
to acquire an additional 20 per cent general partnership interest
in Northern Border Pipeline Company (NBPL), a Texas general
partnership, for $300 million plus up to $10 million in transaction
costs payable to a subsidiary of TransCanada Corporation
(TransCanada). The Partnership will also indirectly assume
approximately $120 million of debt of NBPL. The acquisition cost is
subject to certain closing adjustments. The transaction is
effective as of December 31, 2005 and is expected to close in the
second quarter 2006, subject to regulatory approvals and the
completion of related transactions and other closing conditions. On
closing, the Partnership's interest in NBPL will increase to 50 per
cent from 30 per cent. Concurrent with this transaction,
TransCanada will sell its 17.5 per cent general partner interest in
Northern Border Partners, L.P. to a subsidiary of ONEOK, Inc.
(ONEOK) for a net payment of $30 million subject to certain closing
adjustments. TransCanada is the parent company of TC PipeLines GP,
Inc., the sole general partner of TC PipeLines, LP. In early 2007 a
subsidiary of TransCanada will become the operator of NBPL which is
currently operated by Northern Plains Natural Gas Company, LLC, a
subsidiary of ONEOK. "Northern Border Pipeline is a key link in the
transportation of western Canadian natural gas supply from the
Alberta Hub to the growing U.S. Midwest market, including the
Chicago market. The Alberta Hub is one of the largest natural gas
hubs in North America and is expected to grow as proposed projects
to bring northern frontier natural gas to market are developed,"
said Ron Turner, president and chief executive officer of the
general partner, TC PipeLines GP, Inc. "We are confident our
increased ownership interest will be a positive step for the
Partnership." The acquisition will be immediately accretive by
approximately 10 to 15 cents per unit to the Partnership's cash
flow. The transaction will also be accretive to earnings. The
timing and amount of any changes in distributions to unitholders
remains subject to board approval. The Partnership will initially
fund the transaction at closing through a bridge loan facility. The
Partnership intends to refinance the bridge loan with a combination
of equity and debt. Northern Border Pipeline Company owns a
1,249-mile interstate pipeline system that transports natural gas
from the Montana-Saskatchewan border, where it connects to
TransCanada's Foothills System, to interconnecting pipelines in the
upper Midwestern United States. Northern Border Pipeline Company
provides its shippers access to markets in the Midwest through
interconnecting pipeline facilities, as well as direct access to
Chicago markets. Northern Border Pipeline shippers can arrange
transportation with third parties to provide access beyond Chicago
to markets throughout the United States. Analyst/Media
Teleconference Dial-in and Webcast Information The Partnership will
hold a conference call Wednesday, February 15, 2006 at 1 p.m.
(Eastern). Ron Turner, president and chief executive officer and
Russ Girling, chief financial officer of the general partner, will
discuss the fourth quarter 2005 financial results, and general
developments and issues concerning the Partnership, including
details of this announcement. Those interested in listening to the
call may dial (866) 540-8136. A replay of the conference call will
also be available two hours after the call and until midnight
(Eastern), February 22, 2006 by dialing (800) 408-3053, then
entering pass code 3174446. A live webcast of the conference call
will also be available through the Partnership's website at
www.tcpipelineslp.com. An audio replay of the call will be
maintained on the website. Note: All financial figures are in U.S.
dollars unless noted otherwise. TC PipeLines, LP is a publicly
traded limited partnership. It currently owns a 30 per cent
interest in Northern Border Pipeline Company, a Texas general
partnership, and a 49 per cent interest in Tuscarora Gas
Transmission Company, a Nevada general partnership. Northern Border
Pipeline, which is currently owned 70 per cent by Northern Border
Partners, L.P., a publicly traded master limited partnership
controlled by affiliates of ONEOK, Inc., owns a 1,249-mile United
States interstate pipeline system that transports natural gas from
the Montana-Saskatchewan border to markets in the midwestern United
States. Tuscarora owns a 240-mile United States interstate pipeline
system that transports natural gas from Oregon, where it
interconnects to TransCanada's Gas Transmission Northwest System.
TC PipeLines, LP is managed by its general partner, TC PipeLines
GP, Inc., an indirect wholly owned subsidiary of TransCanada
Corporation. TC PipeLines GP, Inc., also holds common units of the
Partnership. Common units of TC PipeLines, LP are quoted on the
Nasdaq Stock Market and trade under the symbol "TCLP." For more
information about TC PipeLines, LP, visit www.tcpipelineslp.com.
Cautionary Statement Regarding Forward-Looking Information This
news release may include forward-looking statements regarding
future events and the future financial performance of TC PipeLines,
LP. Words such as "believes," "expects," "intends," "forecasts,"
"projects," and similar expressions identify forward-looking
statements. All forward-looking statements are based on the
Partnership's current beliefs as well as assumptions made by and
information currently available to the Partnership. These
statements reflect the Partnership's current views with respect to
future events. The Partnership assumes no obligation to update any
such forward-looking statement to reflect events or circumstances
occurring after the date hereof. Important factors that could cause
actual results to materially differ from the Partnership's current
expectations include the completion of the acquisition of an
additional 20 per cent interest in Northern Border Pipeline Company
and the related transactions, regulatory decisions, particularly
those of the Federal Energy Regulatory Commission and the
Securities and Exchange Commission, the ability of Northern Border
Pipeline to recontract its available capacity at maximum rates,
operational decisions of Northern Border Pipeline's operator, the
failure of a shipper on either one of the Partnership's pipelines
to perform its contractual obligations, cost of acquisitions,
future demand for natural gas, overcapacity in the industry, and
other risks inherent in the transportation of natural gas as
discussed in the Partnership's filings with the Securities and
Exchange Commission, including the Partnership's Annual Report on
Form 10-K for the year ended December 31, 2004. TC PipeLines, LP
(NASDAQ:TCLP)
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