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TransCanada Sells Four Mexican Assets to GDF

TransCanada Sells Four Mexican Assets to GDF

Continuing its vast divestiture program, TransCanada PipeLines agreed to sell four natural gas pipelines and gas marketing businesses in Mexico to GDF International SA, a subsidiary of Gaz de France for approximately $150 million. The deal includes interest in a 700-kilometer pipeline, interest in another 200-kilometer pipeline under construction, a marketing company and a company offering bundled energy services.

Since last December, TransCanada has sold or has agreements to sell nearly $3.4 billion of its non-core assets as part of a divestiture program, as it moves to strengthen its financial position and focus on its core operations of gas transmission, power generation and marketing, where it feels it has a competitive advantage (see NGI, Dec. 13, 1999).

The Mexican asset sale has completed the company's planned divestiture program, according to CEO Doug Baldwin. However, he added that as TransCanada nears "the end of our divestiture of non-core businesses, the company will be reviewing the provision for discontinued operations taken last year to determine if any adjustment is required in the fourth quarter." Last week TransCanada also sold assets in Venezuela.

Gas de France said that the four companies would strengthen what it called a "priority development area." The French state-controlled company already has a 25% share of the Mexican distribution market. "This new acquisition is in line with the GDF development strategy," said the company in a written statement, with Mexico a priority area outside of France.

The deal gives GDF 67.5% of Energia Mayakan, which controls a 700-kilometer pipeline network in the Yucatan peninsula. It has been in operation since October 1999 and is used primarily to supply power stations.

TransCanada also sold 100% interest in TransCanada del Bajio, which is building a 200-kilometer pipeline network in the Bajio region, an industrial area northwest of Mexico City. The pipeline grid is expected to be operational in the first half of next year. Also sold was a 50% interest in TransNatural, a gas marketing company operating in the region supplied by TransCanada del Bajio. TransCanada also sold 100% of TransCanada International (Mexico) S.A. de C.V., a company that offers bundled energy services to industrial natural gas customers in Mexico.

The effective date for the sale is Sept. 30, 2000, and is expected to close in the first quarter of 2001 pending regulatory approval.

A few assets still remain on the seller's block, said Baldwin. They include the TransGas natural gas pipeline in Colombia; GasPacifico natural gas pipeline, which extends from Argentina to Chile; Paiton power plant in Indonesia; a few minor interests in Latin America; and the Harmattan gas gathering and processing facility in Canada.

Last month, TransCanada acquired about 3.9 million or more than 97% of its outstanding 5.5% cumulative redeemable first preferred shares Series S through a substantial issuer bid. It plans to acquire the remaining shares in the near future.

Carolyn Davis, Houston

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