AltaGas Ltd. agreed to divest noncore natural gas midstream and power assets in Canada and the U.S. for about C$560 million, which would be used to pay down a significant part of the bridge facility related to its recently closed acquisition of WGL Holdings Inc.
The transactions are part of AltaGas' strategic shift in focus to gas and U.S. utilities, according to a Sept. 10 news release. The deals raise AltaGas' announced or completed asset sales to about C$1.5 billion to date, on track with its funding strategy for the WGL merger that involves at least C$2 billion in asset sales by the fourth quarter.
In one of the sales, AltaGas is selling non-core, smaller scale gas midstream and power assets, as well as its commercial and industrial customer portfolio in Canada, to Birch Hill Equity Partners Management Inc. as general partner of Birch Hill Equity Partners Fund V, for about C$165 million, according to AltaGas. The assets include 43.7 million shares of Tidewater Midstream and Infrastructure Ltd., a Calgary, Alberta-based midstream company focused on NGL sales and transportation. Under the share purchase agreement, Birch Hill would pay C$1.45 per share, or about C$63.4 million. The shares represent about 13.3% of Tidewater's outstanding common shares. As Birch Hill already holds 29.8 million, or about 9.1%, of Tidewater shares, the deal would raise Birch Hills' ownership of Tidewater to about 22.3%. The share purchase is scheduled to close Sept. 28.
In another sale, the Avenue Capital Group LLC subsidiary Middle River Power III agreed to acquire AltaGas' gas-fired power assets in California for about C$400 million, according to AltaGas. The assets include the Tracy Combined Cycle Power Plant, Henrietta Peaker Project and Hanford Energy Park Peaker, which have a combined capacity of 523 MW.
Both sales are subject to U.S. and Canadian regulatory approvals and other customary closing conditions, and are scheduled to close by the end of the year. The California asset sale has an effective date of Sept. 1. Scotiabank served as financial adviser to AltaGas for the California asset sale.