Continuing its vast divestiture program, TransCanada PipeLinesagreed to sell four natural gas pipelines and gas marketingbusinesses in Mexico to GDF International SA, a subsidiary of Gazde France for approximately $150 million. The deal includesinterest in a 700-kilometer pipeline, interest in another200-kilometer pipeline under construction, a marketing company anda company offering bundled energy services.

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

The Mexican asset sale has completed the company’s planneddivestiture program, according to CEO Doug Baldwin. However, headded that as TransCanada nears “the end of our divestiture ofnon-core businesses, the company will be reviewing the provisionfor discontinued operations taken last year to determine if anyadjustment is required in the fourth quarter.” Last weekTransCanada also sold assets in Venezuela.

Gas de France said that the four companies would strengthen whatit called a “priority development area.” The Frenchstate-controlled company already has a 25% share of the Mexicandistribution market. “This new acquisition is in line with the GDFdevelopment 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 a700-kilometer pipeline network in the Yucatan peninsula. It hasbeen in operation since October 1999 and is used primarily tosupply power stations.

TransCanada also sold 100% interest in TransCanada del Bajio,which is building a 200-kilometer pipeline network in the Bajioregion, an industrial area northwest of Mexico City. The pipelinegrid is expected to be operational in the first half of next year.Also sold was a 50% interest in TransNatural, a gas marketingcompany 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 toindustrial natural gas customers in Mexico.

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

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 toChile; Paiton power plant in Indonesia; a few minor interests inLatin America; and the Harmattan gas gathering and processingfacility in Canada.

Last month, TransCanada acquired about 3.9 million or more than97% of its outstanding 5.5% cumulative redeemable first preferredshares Series S through a substantial issuer bid. It plans toacquire the remaining shares in the near future.

Carolyn Davis, Houston

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