TC PipeLines LP
) entered into a deal with North American energy company,
) to raise its stake in each of Gas Transmission Northwest LLC
(GTN) and Bison Pipeline LLC (Bison) by 45%. TC PipeLines will
dish out gross proceeds of $1.05 billion including assumption of
$146 million of debt.
Western Canadian and Rocky Mountain natural gas is transported
through the GTN pipeline system for big utilities, producers and
marketers in Washington, Oregon, Nevada and California. The Bison
pipeline carries Rocky Mountain natural gas to Midwest markets.
This deal will increase TC PipeLines' stake to 70% from the
pre-existing 25% in the GTN and Bison pipeline system.
Additionally, the acquisition is expected to be accretive to TC
PipeLines and lower its relative exposure to the Great Lakes
which is presently experiencing earnings and cash flow
Management at TC PipeLines intends to suggest the board of
directors to increase the next quarterly distribution by 3.8%
after the close of this transaction slated in Jul 2013. The
closure is pending regulatory approvals and customary closing
conditions. To maintain its financial position, TC PipeLines
plans to fund this deal through a combination of debt and equity.
Simultaneously, TC PipeLines announced a public offering of
7,700,000 common units to fund the transaction. The partnership
also plans to offer a 30-day option to the underwriters to
purchase 1,155,000 additional units.
TC PipeLines currently retains a Zacks Rank #3 (Hold). This
implies that it is expected to perform in line with the broader
U.S. equity market over the next one to three months.
Meanwhile, there are certain other oil and gas production
pipeline master limited partnerships in the energy sector that
are expected to perform better in the coming one to three months.
Magellan Midstream Partners LP
Summit Midstream Partners LP
). Both these stocks currently sport a Zacks Rank #2 (Buy).
MAGELLAN MDSTRM (MMP): Free Stock Analysis
SUMMIT MIDSTRM (SMLP): Free Stock Analysis
TC PIPELINES (TCP): Free Stock Analysis
TRANSCDA CORP (TRP): Free Stock Analysis
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