BlackRock and Morgan Stanley to Buy Portland Natural Gas Systems Limited

TC Energy Corporation of Calgary in Canada and its partner Northern New England Investment Company, Inc., a subsidiary of Energir L.P., have entered into a purchase and sale agreement to sell Portland Natural Gas Transmission System (PNGTS) to BlackRock, through a fund managed by its Diversified Infrastructure business, and investment funds managed by Morgan Stanley Infrastructure Partners for $1.14 billion.

The deal includes the assumption of $250 million of outstanding Senior Notes held at PNGTS and this transaction implies a valuation of approximately 11X times reported 2023 comparable EBITDA.

The cash proceeds will be split pro-rata according to the current PNGTS ownership interests (TC Energy) (61.7%) and Energir (38.3%) and will be paid at closing, subject to certain customary adjustments.

As part of the transaction, the Morgan Stanley will assume the outstanding Senior Notes held at PNGTS and currently consolidated on TC Energy’s balance sheet. The transaction is expected to close in mid-2024, subject to the receipt of regulatory approvals and customary closing conditions.

PNGTS is a 475-km FERC-regulated transporter of natural gas serving the upper New England and Atlantic Canada markets.

The pipeline receives natural gas from the Trans Quebec and Maritimes (TQM) Pipeline via the Canadian Mainline. TC Energy will provide customary transition services and will work jointly with the Buyer to ensure the safe and orderly transition of this critical natural gas system.

TC Energy’s focus for 2024 remains clear. The company will continue maximizing the value of its assets through safety and operational excellence, delivering its secured capital program on time and on budget, and enhancing its balance sheet strength and financial flexibility through asset divestitures and streamlining its business through efficiency efforts. TC Energy’s 2024 financial guidance and growth outlook through 2026 remain unchanged as a result of this announcement.

 Sale to Improve Balance Sheet

François Poirier, TC Energy’s President and CEO, said that the announcement represented continued progress toward achieving their 2024 strategic priority of enhancing the company’s balance sheet strength by delivering approximately $3 billion in asset divestitures.

“We are committed to reaching our 4.75 times debt-to-EBITDA upper limit by year-end and expect to have further asset divestiture announcements through the year. This sale of a non-core asset at a strong valuation is a unique opportunity to support our capital rotation and deleveraging priorities while continuing to meet the needs of the communities PNGTS serves,” he added.