CALGARY, Alberta (Reuters) - TransCanada Corp (TRP.TO), Canada’s No. 2 pipeline operator, said on Tuesday it will sell its U.S. Northeast Power business and do a bought deal common share offering to help fund its acquisition of the Columbia Pipeline Group earlier this year.
The Calgary-based company bought Columbia for $10.3 billion, transforming TransCanada into one of North America’s largest natural gas transmission businesses and easing concerns over the its growth outlook, which had been hindered by regulatory challenges on crude oil pipelines.
“The actions announced today build on the transformational acquisition of Columbia... which provided us with a new platform for growth,” TransCanada chief executive Russ Girling said in a conference call.
TransCanada will sell four power assets to Helix Generation an affiliate of LS Power Equity Advisors for $2.2 billion. The TC Hydro business will be sold to Great River Hydro an affiliate of ArcLight Capital Partners for $1.065 billion.
Together the two sales are expected to realize approximately $3.7 billion, and will be used to repay a portion of the $6.9 billion loan used to help finance the Columbia deal.
TransCanada also said it expects to raise around C$3.2 billion ($2.39 billion) from the bought deal common share offering with a syndicate of underwriters led by BMO Capital Markets, TD Securities and RBC Capital Markets.
The underwriters have the option to purchase an extra 5.475 million common shares at C$58.50 each for up to 30 days after the closing of the offering.
The company has decided against selling any share of its natural gas pipeline portfolio in Mexico, where it owns two pipelines and is investing $3.8 billion in building four more.
TransCanada on Tuesday reported a quarterly loss in part because of a C$656 million after-tax goodwill impairment charge related to its U.S. Northeast Power business.
The company recorded a third-quarter net loss attributable to shareholders of C$135 million or 17 Canadian cents per share. That compared with a net income of C$402 million, or 57 Canadian cents, in the year-ago period.
Adjusted earnings, which exclude most one-time items, rose to C$622 million, or 78 Canadian cents per share, from C$440 million, or 62 Canadian cents, in the same period in 2015.
($1 = 1.3391 Canadian dollars)
Editing by Steve Orlosky and Grant McCool