TC Energy divests 65% stake in Coastal GasLink pipeline to KKR and AIMCo

TC Energy Corporation has entered into an agreement to sell a 65% equity interest in the Coastal GasLink Pipeline Project to KKR and Alberta Investment Management Corporation (AIMCo) on behalf of certain AIMCo clients.

Concurrent with the completion of the sale, TC Energy expects that Coastal GasLink will enter into a secured project financing construction credit facility with a syndicate of banks to fund up to 80 percent of the project during construction. Both transactions are expected to close in the first half of 2020, subject to customary regulatory approvals and consents, including the consent of LNG Canada.

Coastal GasLink involves the construction of 670 kilometers (416 miles) of pipeline and associated facilities. Once completed, the pipeline will have an initial capacity of 2.1 billion cubic feet per day and connect abundant Western Canadian Sedimentary Basin natural gas supply from the Dawson Creek, B.C. area to the LNG Canada liquefaction and export facility being constructed in Kitimat, B.C. All necessary regulatory permits have been received for the project and construction activities have commenced.

Following the close of the transaction, TC Energy will hold a 35 percent limited partnership equity interest in Coastal GasLink and will be contracted by the limited partnership to construct and operate the pipeline. This transaction was contemplated in the company’s agreements with LNG Canada.

TC Energy will also be working with the 20 First Nations that have executed agreements with Coastal GasLink to provide them with an opportunity to invest in the project. As a result, in conjunction with this sale, the company will provide the First Nations with an option to acquire a 10% equity interest in Coastal GasLink on similar terms.

RBC Capital Markets is acting as exclusive financial advisor to TC Energy and as Global Lead Coordinating Arranger on the project finance construction facility.

HSBC Securities (Canada) Inc. and TD Securities Inc. are serving as financial advisors to KKR, and Osler, Hoskin & Harcourt LLP is acting as KKR’s legal counsel.