TC Energy sells stake in pipeline system to Indigenous-led partnership for C$1bn

TC Energy Corporation (TSX, NYSE: TRP) has announced a transformative sale, divesting a 5.34% equity stake in its NGTL System and Foothills Pipeline assets to an Indigenous-owned investment partnership for a whopping C$1 billion. This landmark deal, supported by the Alberta Indigenous Opportunities Corporation (AIOC), signifies a monumental shift in the involvement of Indigenous Communities in the Canadian energy sector.

A historic investment in critical infrastructure

The agreement values the partnership assets at an approximate enterprise value of C$1.65 billion, inclusive of debt. This strategic move allows up to 72 Indigenous Communities from Alberta, British Columbia, and Saskatchewan to become equity owners in a critical 25,000-kilometre network of natural gas infrastructure spanning Western Canada. The investment is poised to provide these communities with long-term revenue sources and bolster their economic sovereignty.

François Poirier, President and Chief Executive Officer of TC Energy, highlighted the transformative nature of the deal, expressing pride in the innovative approach taken by the Alberta Indigenous Opportunities Corporation to foster Indigenous economic opportunities. Poirier sees this as a path to a more prosperous and equitable nation.

Empowering Indigenous Communities through innovative financial structures

The equity purchase is facilitated by a substantial C$1 billion equity loan guarantee from the AIOC, paving the way for Indigenous Communities to partake in this significant investment. The Communities are set to finalize their involvement through definitive agreements, making them co-investors in the NGTL and Foothills assets.

The Premier of Alberta, Honourable Danielle Smith, lauded the AIOC’s role in making impactful strides for Indigenous economic participation. Similarly, Honourable Rick Wilson, Alberta’s Minister of Indigenous Relations, emphasized the groundbreaking nature of this partnership, which showcases Alberta’s leadership in economic reconciliation with Indigenous Peoples.

Chana Martineau, CEO of the Alberta Indigenous Opportunities Corporation, expressed gratitude for the collaborative effort that made this agreement possible. She highlighted the deal as a profound step toward economic reconciliation, offering sustainable growth and prosperity for the involved Communities.

Strengthening partnerships and enhancing Indigenous voices

The agreement also strengthens the partnership between TC Energy and Indigenous communities by involving members in the governance and future strategic planning. Chief Isaac Twinn, Chairman of the Consortium Committee and Chief of the Sawridge First Nation, acknowledged the improved deal terms and the expected benefits for the Indigenous investors.

Furthermore, to underscore the ongoing commitment to inclusivity and dialogue, a member from the participating Communities will be invited to join TC Energy’s Indigenous Advisory Council. Raylene Whitford, Chair of the Council, stressed the importance of this integration, which she believes will advance economic opportunities for Indigenous participation and further the industry’s journey towards reconciliation.

Future outlook and transaction details

The sale is a critical part of TC Energy’s strategy to enhance the reliability of energy transportation across North America, connecting a significant portion of natural gas production from the Western Canadian Sedimentary Basin to markets. The transaction is slated for completion in the third quarter of 2024, pending approval from the participating Communities.

CIBC Capital Markets and TD Securities served as financial advisors, with Osler, Hoskin & Harcourt LLP and Borden Ladner Gervais LLP providing legal counsel.