UPDATE 1-TransCanada says current structure critical to its strategy

Fri Sep 19, 2014 9:58am EDT
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(Adds details, background, analyst comment, share price move)

By Euan Rocha

TORONTO, Sept 19 (Reuters) - Canadian pipeline operator TransCanada Corp said on Friday its current corporate structure, asset base and financial strength are critical to its ability to maneuver and deliver on its growth strategy.

The statement followed a Reuters report on Thursday that a number of U.S. hedge funds were reviewing the pipeline operator as a potential break-up candidate.

Calgary-based TransCanada did not comment on the report or provide any details on any discussions it might have had with activist investors, but it acknowledged there was significant trading activity in its common shares.

TransCanada shares jumped as much as 6.3 percent on the Toronto Stock Exchange on Thursday following the Reuters report before ending the day up 3.3 percent at C$60.81 and lifting the S&P/TSX Composite Index into positive territory on the day.

In June, Citigroup analyst Faisel Khan laid out the case for a break-up, by arguing that measures such as spinning off the company's power business and placing the remainder of its U.S. natural gas pipeline assets into a master limited partnership could lift TransCanada's share price to C$76.

TransCanada said on Friday it remains committed to vending the remainder of its U.S. natural gas pipeline assets into its master limited partnership, TC PipeLines LP over the coming years, but that its current structure is critical to its ability to deliver on its massive capital program.

The company said it "understands the value placed on sustainable growth in cash flow, earnings and dividends," and that it is committed to enhancing shareholder value and is continuously evaluating its approach to capital allocation.   Continued...