TC Energy Corp. agreed to sell a 65% equity stake in the Coastal GasLink natural gas pipeline project to KKR & Co. Inc. and Alberta Investment Management Corp.
The company expects an after-tax gain of roughly C$600 million from the transaction, according to a Dec. 26 news release. TC Energy stands to receive upfront proceeds that include reimbursement of KKR and Alberta Investment Management's share of the project costs incurred as of the deal closing and payment streams through the project's construction and operation.
TC Energy also intends to strike a deal to secure funding for the project that will cover up to 80% of the construction. The total construction cost is estimated at C$6.6 billion, according to a separate news release.
"The partial monetization of Coastal GasLink advances our ongoing efforts to prudently fund our C$30 billion secured capital program while maximizing value for our shareholders," TC Energy President and CEO Russ Girling said in the release.
Both transactions are expected to close by the end of the first half of 2020, subject to customary regulatory approvals and consents, including that of LNG Canada Development Inc. Upon completion of the transaction, TC Energy will hold a 35% limited partnership interest in the project, holding contracts for its construction and operations.
The Coastal GasLink project includes 416 miles of natural gas pipeline and associated facilities. The pipeline will have an initial capacity of 2.1 Bcf/d and will connect gas supply from the Western Canadian Sedimentary Basin to the LNG Canada liquefaction and export facility under construction in Kitimat, British Columbia.
RBC Capital Markets is acting as exclusive financial adviser to TC Energy and as global lead coordinating arranger on the project finance construction facility.