NGI The Weekly Gas Market Report
TransCanada PipeLines Ltd. (TCPL) reported that it now expects proceeds from its non-core asset divestiture program to rise from the previous estimate of $3 billion to $3.45 billion. As a direct result of this, the company expects to record a positive $200 million after-tax adjustment to last year’s provision for discontinued operations in the third quarter of 2000.
The company also announced it expects to record gains on asset sales in continuing operations of $45 million after-tax in 2000, resulting in a total positive adjustment from its divestiture program of $245 million, or 52 cents per share in 2000. TCPL will announce its third quarter results on Oct. 31.
In December 1999, the company announced it had decided to pursue a narrower, more focused set of growth opportunities around its core businesses, opportunities it believed would ultimately maximize its shareholders’ value, and pay down debt. To do so, TCPL said it would sell $3 billion worth of non-core assets including its midstream businesses, international businesses, Express System crude oil pipeline, and Cancarb (see NGI, Dec. 13, 1999).
Due to losses associated with certain long term natural gas contracts entered into in previous years to support pipeline investments and specific business initiatives, TCPL said it will record a $120 million loss, but because of its asset sales, the company expects to record a total of $125 million after-tax gain in its 2000 accounts.
“With our recent sales of the Express System and Metrogas, we’ve now sold or have agreements to sell approximately $3 billion of assets under our divestiture program,” said Doug Baldwin, TransCanada’s CEO. “I’m proud to say the divestiture program is achieving our intended result of strengthening TransCanada’s balance sheet and providing the solid financial foundation for the company’s future growth.”
During this year, TCPL has already repurchased or retired about $1.75 billion of preferred shares and term debt. The company also announced plans to repurchase $200 million of Cumulative Redeemable First Preferred Shares Series S in early November.
Baldwin said TCPL would continue to take advantage of growth opportunities where the company has a competitive advantage. “For example, this year we announced the development of two new cogeneration power projects in Alberta, acquired the rights to 560 MW of capacity from an Alberta thermal generating power plant, and raised our ownership in the 560 MW Ocean State Power plant to 100%,” he said.
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