TC Energy has agreed to sell a stake of 5.34% in the NGTL System and the Foothills Pipeline assets in Canada to an Indigenous-owned investment partnership for C$1bn ($720m).
The equity interest purchase agreement signed by the parties gives an implied enterprise value of approximately C$1.65bn ($1.2bn) for the assets. This includes the proportionate share of the assets’ collective debt.
TC Energy president and CEO François Poirier said: “Indigenous ownership is the path to a more prosperous nation. As owners, Indigenous Communities will have resources to invest for the future and greater economic sovereignty.
“The Alberta Indigenous Opportunities Corporation is leading the world with its innovative approach to supporting Indigenous economic opportunity.”
The NGTL System is a natural gas gathering and transportation system for the Western Canadian Sedimentary Basin (WCSB). It links most of the produced natural gas in western Canada to both domestic and export markets.
Extending around 24,386km, NGTL has been built to connect the increasing gas production from northeast British Columbia and Alberta.
The Foothills System, encompassing 1,237km of pipelines through its Foothills B.C. and Saskatchewan segments, transports Albertan natural gas to the US border for export.
Supported by the Alberta Indigenous Opportunities (AIOC), the transaction was negotiated by a committee representing Indigenous Communities from Alberta, British Columbia, and Saskatchewan.
To support the acquisition, the AIOC has provided a C$1bn ($720m) equity loan guarantee to the new Indigenous-owned investment entity.
Upon completion, the agreement will enable 72 Indigenous Communities near the pipeline routes to become equity owners in the 25,000km network of natural gas infrastructure across Western Canada.
TC Energy Indigenous advisory council chair Raylene Whitford said: “Today’s announcement is about advancing economic opportunities for Indigenous participation through equity ownership – something that Indigenous communities have been asking for.
“The NGTL and Foothills assets have a longstanding presence in our communities – from our relatives who helped construct it, to our youth who are training to operate it.
“This equity partnership agreement represents a significant evolution in TC Energy’s relationship with Indigenous Peoples and marks substantial progress on the industry’s broader journey toward advancing reconciliation.”
The deal is set to close in Q3 2024, pending approvals from Band Council and Settlement Resolutions of the participating communities and securing financing.
CIBC Capital Markets and Osler, Hoskin & Harcourt were engaged as financial and legal advisers to TC Energy. TD Securities and Borden Ladner Gervais advised the Indigenous-owned investment partnership financially and legally.
