- Coastal GasLink will ink a deal for project financing construction credit facility with banks
- TC Energy will record an after-tax gain amounting to $600 million after the transaction
TC Energy Corporation, a leading energy infrastructure firm in North America, recently announced that it has inked an agreement for selling 65% of equity interest in the Coastal GasLink Pipeline Project to Alberta Investment Management Corporation (AIMCo) and KKR.
The completion of the sale shall be followed by Coastal GasLink entering into a secure project financing construction credit facility, for up to 80% project funding, with a syndicate of banks during the construction period.
Apparently, it is estimated that both the transactions shall be wound up by the first half of 2020 after receiving customary regulatory consents and approvals as well as the consent from LNG Canada.
TC Energy Chief Executive Officer and President, Russ Girling commented that Coastal GasLink’s partial monetization enhances the company’s current efforts to fund its secured capital program worth $30 billion while it also maximizes the value for its shareholders.
Girling continued that the Coastal GasLink is looking forward to forming a long-term relationship with both AIMCo and KKR as it proceeds with this important energy project. The company is committed to the Project and aims to continue constructing, delivering and operating the pipeline on behalf of the partnership.
As per the terms of sale, TC Energy is expected to receive upfront proceeds which include both the reimbursement of KKR as well as the proportionate share of the costs incurred by AIMCo. The company will be recording an after-tax gain that shall amount to nearly $600 million after the transaction is closed. This includes a needed revaluation of the residual ownership interests in terms of fair market value, recognition of tax benefits that were initially not recorded and the gain on sale.
Reportedly, TC Energy will be holding a limited partnership equity interest of 35% in Coastal GasLink as well as being contracted to construct and operate the pipeline by the limited partnership.