TransCanada is reportedly contemplating a possible sale of its Columbia Midstream business in the US as it intends to raise funds for its planned capital expenditure on new projects in the current year.
The sale is expected to yield around $1bn to TransCanada, Reuters reported citing three unidentified sources.
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Columbia Midstream’s assets include four gathering systems, including Hickory Bend, Majorsville, Big Pine and East Washington in Ohio and Pennsylvania.
The business also operates the Gibraltar and Buffalo Creek System pipeline, which transports natural gas through Washington County, Pennsylvania.
The midstream unit generates $100m of earnings before interest, tax, depreciation and amortisation annually (EBITDA).
According to the aforementioned sources, the value of Columbia Midstream could be a multiple of ten times its EBITDA.
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By GlobalDataThe Reuters report stated that TransCanada is selling certain infrastructure assets to help finance the projects that are expected to generate higher returns.
TransCanada intends to spend $8bn on new projects this year, including the Coastal GasLink system and the Keystone XL pipeline.
However, the sources told the news agency that the sale of Columbia Midstream is not guaranteed.
The company has hired an unnamed investment bank to assist it in the sale process.
TransCanada is also seeking to offload a package of mineral rights in the Appalachian region of the eastern US. This sale could help the company raise further cash.
The proposed $8bn Keystone XL pipeline project, which will transport oil from Canada to the US, is involved in legal issues. In November, a US federal judge blocked the construction of the 1,905km pipeline.
The judge ruled that the US Government did not adequately follow environmental norms before approving the pipeline project.
However, US President Donald Trump granted a new presidential permit for the Keystone XL pipeline project last month to accelerate its development.
