AltaGas to divest $560m worth midstream and power assets

AltaGas, a North American energy infrastructure company based in Calgary, has signed multiple deals to divest certain non-core midstream and power assets in Canada and power assets in the US for a total of around $560 million.

The company will spend the proceeds from the sale for the repayment of a major portion of the bridge facility associated with its C$8.4 billion ($6.48 billion) acquisition of US-based energy infrastructure company WGL.

As part of the divestiture program, AltaGas will sell some of its non-core gas midstream and power assets in Canada to Birch Hill Equity Partners Management. Its commercial and industrial customer portfolio in Canada will also be sold to Birch Hill as part of a $165 million worth transaction.

Birch Hill will also be acquiring AltaGas’ 43.7 million shares in Tidewater Midstream and Infrastructure as part of the $165 million transaction.

The transaction between AltaGas and Birch Hill is expected to be closed by year-end subject to customary closing conditions and regulatory approvals.

AltaGas to divest $560m worth midstream and power assets. Image courtesy of AltaGas Ltd.

In another deal, AltaGas will sell its Californian gas-fired power assets to Middle River Power III, a subsidiary of Avenue Capital, for nearly $300 million. The transaction includes the Tracy, Hanford and Henrietta gas-fired power plants with a combined power generation capacity of 523MW.

The deal with Middle River Power III is expected to be closed in the fourth quarter of this year should it receive an FERC approval and also meet other customary closing conditions.

David Cornhill – Chairman and interim co-CEO of AltaGas said: “We expect to have further announcements in the near future on our asset monetizations, which will continue to reshape AltaGas to focus on Gas and U.S. Utilities, while keeping a strong footing in the Power market with a focus on capital light, innovative solutions.

“We remain focused on reshaping AltaGas, directing our capital in high growth areas which will result in strong risk-adjusted returns.”