TC Energy, in partnership with Énergir, has agreed to sell the Portland Natural Gas Transmission System (PNGTS) for $1.14bn.
The asset will be acquired by a BlackRock-managed fund and Morgan Stanley Infrastructure Partners.
The sale forms part of TC Energy's broader plan to reduce its debt by selling at least C$3bn ($2.21bn) worth of assets.
TC Energy president and CEO François Poirier said: "Today’s announcement represents continued progress toward achieving our 2024 strategic priority of enhancing our balance sheet strength by delivering approximately $3bn in asset divestitures. We are committed to reaching our 4.75 times debt-to-EBITDA [earnings before interest, taxes, depreciation and amortisation] 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.”
As of 31 December 2023, TC Energy has debt of around C$49.98bn. It is also grappling with high costs at its Coastal GasLink pipeline in British Columbia, according to Reuters.
TC Energy expects the sale of PNGTS to generate pre-tax cash equity proceeds of approximately C$740m net for the company.
TC Energy holds a 61.7% stake in PNGTS, while Énergir unit Northern New England Investment Company owns the remaining 38.3%.
The cash proceeds from the sale will be distributed proportionally based on these ownership interests.
Additionally, the buyer will take on $250m of outstanding senior notes associated with PNGTS.
PNGTS, a 475km US Federal Energy Regulatory Commission-regulated natural gas transporter, serves markets in upper New England and Atlantic Canada.
The pipeline connects to the Trans Quebec and Maritimes Pipeline via the Canadian Mainline.
Subject to regulatory approvals and customary closing conditions, the transaction is slated to close in mid-2024.
Barclays served as the exclusive financial advisor to both TC Energy and Énergir for this transaction.
In November 2023, Reuters reported that TC Energy was considering forming joint ventures in Mexico and Canada.
