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 to sellnearly $3.4 billion of its non-core assets as part of a divestitureprogram, as it moves to strengthen its financial position and focus onits core operations of gas transmission, power generation andmarketing, where it feels it has a competitive advantage (see DailyGPI, Dec. 9, 1999).

The Mexican asset sale completed the company’s divestitureprogram, according to CEO Doug Baldwin. However, he added that asTransCanada nears “the end of our divestiture of non-corebusinesses, the company will be reviewing the provision fordiscontinued 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.

Earlier this month, TransCanada acquired about 3.9 million ormore than 97% of its outstanding 5.5% cumulative redeemable firstpreferred shares Series S through a substantial issuer bid. Itplans to acquire the remaining shares in the near future.

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