By Ketki Saxena
Investing.com -- TC Energy (TSX:TRP) Corp. announced it has entered into an agreement to divest a major share of its stakes in two significant pipelines - Columbia Gas Transmission LLC and Columbia Gulf Transmission LLC.
The deal sees them selling off 40 per cent of their ownership for $5.2 billion to private equity firm Global Infrastructure Partners.
This transaction is expected to yield around 10.5 times TC Energy’s earnings before interest, taxes, and amortization (EBITA) multiples as stated in Monday's press release by the company.
"Today’s announcement represents a major milestone in achieving our 2023 strategic priorities,” François Poirier, president and chief executive officer of TC Energy said in the press release.
The two pipelines play a crucial role supplying approximately one-fifth or 20 per cent of U.S.'s liquefied natural gas (LNG) exports across a network spanning over 24,140 kilometers within North America's natural gas grid. This partial sale aligns with the corporation's ongoing divestiture objectives.
Moving forward both Columbia Gas’ and Columbia Gas' assets will be managed collaboratively between TC Energy and Global Infrastructure Partners ensuring their future maintenance, safety measures and sanctioned growth plans are executed effectively.
“To date we have advanced our deleveraging goals by delivering on our $5+ billion asset divestiture program ahead of schedule while maximizing value from our assets," noted Poirier. in the press release.
In line with global sustainability efforts against climate change impact; TC energy has pledged towards cutting down its greenhouse emissions by up-to one-third or precisely-30 per cent come year-end-2030 aiming further at achieving net-zero emissions status by 2050.
"This and future partnerships across our portfolio will strengthen our ability to enable the energy transition while enhancing balance sheet strength.”
The deal is expected to close in Q4-this fiscal year.