TC PipeLines LP
) announced the closure of its previously announced public
offering of 8,855,000 common units at $43.85 a piece, including
1,155,000 units fully exercised by the underwriters.
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TC PipeLines plans to use the proceeds from this offering,
expected at approximately $338 million, to part finance its
previously declared acquisition of a 45% additional interest
(from the existing 25%) in two major U.S. gas pipelines - Gas
Transmission Northwest LLC and Bison Pipeline LLC - from parent
Calgary, Alberta-based TC PipeLines maintains interests in six
pipeline systems: the Northern Border Pipeline Company, Great
Lakes Gas Transmission, L.P, the Tuscarora Gas Transmission
Company, the North Baja Pipeline, LLC, Bison Pipeline, LLC, and
Gas Transmission Northwest, LLC.
Growth prospects for the partnership have improved considerably
following the North Baja Pipeline acquisition and the subsequent
capping of general partner IDRs at 25% (which allows limited
partners to benefit from the partnership's growth). We also like
TC PipeLines' steady cash-flow generating pipeline assets, which
provide stability and financial capacity to deliver cash
distributions in a disciplined manner.
However, TC PipeLines reported weaker-than-expected first-quarter
2013 results on the back of lower transportation rates in the
Great Lakes along with low income from other pipeline systems.
Earnings per unit came in at 52 cents, missing the Zacks
Consensus Estimate by 13 cents. Comparing year over year,
earnings fell 26.8% from a profit of 71 cents.
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.
Enbridge Energy Management LLC
Kinder Morgan Management LLC
). Both these stocks currently sport a Zacks Rank #2 (Buy).