TransCanada Raising About $7B As it Digests and Pays Off Columbia Pipeline Purchase

TransCanada  is clawing itself out of the $13 billion hole it created when it completed the acquisition of Columbia Pipeline Group Inc. in July. 

The Calgary, Alberta-based energy infrastructure company announced a spree of transactions Tuesday afternoon, including the sale of $3.7 billion worth of power generation assets in the northeastern United States and a $3.2 billion bought-deal financing agreement. 

It also said Tuesday, Nov. 1, that its wholly owned Columbia Pipeline Group subsidiary is buying all the outstanding common units of its master limited partnership Columbia Pipeline Partners ( (CPPL) ) for $17 per unit, or $915 million, in cash. 

Jefferies' Peter Bowden advised Columbia Pipeline Partners' conflicts committee on the transaction, while Morgan Stanley's Aaron Papps advised TransCanada, The Deal has learned. 

Vinson & Elkins' Gillian Hobson, Mike Rosenwasser, Shaun Mathew, Michael Blankenship, Alex Rose, Justin Hunter, Jing Tong, Michael Marek, Emily Clary, Shauna DiGiovanni, Sheldon Nagesh and Brittany Smith provided legal counsel to TransCanada on the deal. 

Akin Gump Strauss Hauer & Feld John Goodgame, Christopher Arntzen, Heather Ashour and Alison Chen and Potter Anderson & Corroon LLP were counsel to Columbia Pipeline Partners' conflicts committee.

TransCanada in late September said Columbia Pipeline Group offered to acquire what it doesn't own of Columbia Pipeline Partners for $15.75 per unit in cash, or $848 million.

The increased price tag may come as a relief to analysts who at the time of the initial offer were disappointed in the 11.3% premium it represented over CPPL's average 30-day closing price as of Sept. 23.

But TransCanada's commitment to revitalizing its balance sheet didn't end there Tuesday, as the company also said it has launched a $3.2 billion offering.

TD Securities, BMO Capital Markets and RBC Capital Markets are leading a syndicate of underwriters that have agreed to acquire 54.75 million common shares of TransCanada and sell the shares to the public at $58.50 per share. 

TransCanada has granted the underwriters the option of purchasing an additional 10%, or 5.475 million shares, at $58.50 per share at any time up to 30 days after the offering's close. 

LS Power Group, a New York-based energy infrastructure investment firm, said Tuesday that its affiliate Helix Generation LLC will pick up about 3,950 megawatts of generation resources in the northeastern United States from TransCanada Corporation for $2.2 billion in cash. 

Meanwhile, TransCanada announced that ArcLight Capital Partners-backed Great River Hydro had agreed to acquire TC Hydro, the seller's New England-based hydroelectric power portfolio, for $1.065 billion. 

The remaining $435 million portion of the $3.7 billion asset divestiture will come from TransCanada's power marketing business, the sale of which has yet to be realized, the company said Tuesday. 

TransCanada said it will use the proceeds from these sales and the future divestiture of its power marketing business to repay a portion of its $6.9 billion senior unsecured asset bridge term loan credit facilities, which were used to partially finance the Columbia Pipeline Group acquisition. 

The company expects to close the asset sales in the first half of 2017.