GTN is a 1,353-mile pipeline system designed to transport western Canada Sedimentary basin and Rocky Mountain-sourced natural gas to the markets in Washington, Oregon and California in the US, under long-term contracts.
Scheduled to be completed in April, the transaction includes $253m in cash, the assumption of $98m in proportional GTN debt and the issuance of $95m of new Class B units to TransCanada.
TransCanada president and CEO Russ Girling, said: "This agreement is part of TransCanada’s long-term strategy to drop down our remaining U.S. natural gas pipeline assets to the Partnership on a more sizable and systematic basis.
"Asset sales to the Partnership will provide us with significant cash proceeds to help fund our capital program and provide visible long term growth for TC PipeLines."
TransCanada is also planning to divest its remaining interest in US natural gas pipelines which include 44.5% in Iroquois; 61.7% in Portland; 100% in ANR; and 53.6% in Great Lakes, to TC PipeLines.
These assets are estimated to generate approximately $450m of earnings before interest, taxes, depreciation, and amortization (EBITDA) in 2016.
Girling said: "TransCanada’s drop down strategy provides an efficient funding vehicle that benefits our shareholders, and at the same time, allows the Partnership to achieve high-quality growth and continue to diversify its asset base."
TransCanada, through its subsidiaries, owns 28% stake in TC PipeLines, which aims to acquire, own and participate in the management of US natural gas pipelines and related assets.
