TransCanada PipeLines Limited announced late Tuesday that it plans to divest its natural gas marketing business in order to focus on its core natural gas transmission and power businesses in Canada and the northern tier of the United States. The news came almost a year-and-a-half after the company embarked upon a $3.45 billion divestiture program as part of a strategic restructuring (see Daily GPI, Dec. 9, 1999; Oct. 13, 2000).

“Many pipeline and power companies have chosen to become merchant participants, with returns from trading and commercial activity exceeding returns from capital investments,” said Hal Kvisle, TransCanada’s CEO. “TransCanada has chosen to focus on infrastructure projects with stable returns from significant capital investments in its regulated and non-regulated businesses. While both approaches have their advantages, we will focus our strengths in the pipeline and power businesses.”

Kvisle said TransCanada needs predictable cash flows in order to maintain its balance sheet, credit rating and attractive dividends expected by investors. “In contrast, a gas marketing business requires significant equity capital, a tolerance for volatility and high transactional volumes, as well as a willingness to absorb both positive and negative financial performance.”

TransCanada considered options for continuing its gas marketing business, including refocusing and downsizing the business. The company, however, concluded the business would be more valuable if it was divested as a going concern to a more appropriate owner. TransCanada intends to begin the divestiture process within the next couple of months, it said.

The company said there are approximately 150 employees directly associated with the marketing business. “We recognize our employees bring the most value to the gas marketing business, so we will negotiate with prospective buyers to maximize opportunities for these employees,” said Mr. Kvisle. “We will work with all affected employees to ease their transition through this process.”

TransCanada’s year long divestiture during 2000 included its international and Canadian midstream operations, as well as the Express Pipeline crude oil transmission system and Cancarb, its carbon thermal black manufacturing business.

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