This excerpt taken from the TCLP 8-K filed Dec 20, 2006.
TC PipeLines, LP acquires Tuscarora Gas Transmission Company
Calgary, Alberta December 19, 2006 (Nasdaq: TCLP) TC PipeLines, LP (the Partnership) today announced it has closed its acquisition of Sierra Pacific Resources 50 per cent interest in Tuscarora Gas Transmission Company (Tuscarora) for approximately US$100 million. The Partnership has also indirectly assumed US$37 million of Tuscarora debt. TC PipeLines, LP now owns or controls 99 per cent of Tuscarora. TransCanada Corporation (TransCanada), the parent company of the Partnerships general partner, TC PipeLines GP, Inc., indirectly holds a 1 per cent ownership interest.
Tuscarora is a high quality asset with a strong long-term contract profile, rate stability and a history of steady organic growth, said Russ Girling, president and chief executive officer of TC PipeLines GP, Inc., general partner of TC PipeLines, LP. These attributes, combined with the Partnerships existing ownership of Tuscarora and the pipelines physical connection to TransCanadas system, make Tuscarora an excellent investment for TC PipeLines LP, and our unit holders.
The Partnership also announced the closing of a US$410 million senior credit facility. Borrowings under the credit facility will bear interest based, at the Partnerships election, on the London interbank offered rate (LIBOR) or the prime rate plus, in either case, an applicable margin. The effective interest rate as at the closing of the credit facility on December 12, 2006 was 6.07 per cent. This represents a decrease in the interest rate from the previous rate of 6.325 per cent. The facility was used to refinance an existing bridge facility and to finance the acquisition of the additional ownership interest in Tuscarora. The Partnership has the right to make optional repayments on the facility. The facility has a five-year term subject to two one-year extensions.
Tuscarora owns a 240-mile, 20-inch diameter, United States interstate pipeline system with a subscribed capacity of approximately 180 MMcf/d. The Tuscarora pipeline system originates at an interconnection point with existing facilities of TransCanadas Gas Transmission Northwest System near Malin, Oregon and runs southeast through northeastern California and northwestern Nevada, terminating near Wadsworth, Nevada.
Tuscarora has firm transportation contracts for over 95 per cent of its available contracted capacity. A subsidiary of Sierra Pacific Resources holds contracts representing 69 per cent of the total available capacity, the majority of which expires on October 31, 2017.
A TransCanada subsidiary will become the operator of Tuscarora, which is currently operated by an affiliate of Sierra Pacific Resources. TransCanada has provided gas control services for the Tuscarora pipeline system since late 2002.
The Tuscarora acquisition follows the Partnerships acquisition in April 2006 of an additional 20 per cent of Northern Border Pipeline Company, an interstate pipeline that transports natural gas from the Montana-Saskatchewan border to markets in the U.S. midwest. Northern Border Pipeline is a leading transporter of natural gas imported from Canada into the U.S.
TC PipeLines, LP is a publicly traded limited partnership. It owns a 50 per cent interest in Northern Border Pipeline Company, a Texas general partnership, and a 99 per cent interest in Tuscarora Gas Transmission Company, a Nevada general partnership. Northern Border Pipeline owns a 1,249-mile United States interstate pipeline system that transports natural gas from the Montana-Saskatchewan border to markets in the midwestern United States. Tuscarora owns a 240-mile United States interstate pipeline system that transports natural gas from Oregon where it interconnects to TransCanadas Gas Transmission Northwest System. TC PipeLines, LP is managed by its general partner, TC PipeLines GP, Inc., an indirect wholly owned subsidiary of TransCanada Corporation. TC PipeLines GP, Inc., also holds common units of the Partnership. Common units of TC PipeLines, LP are quoted on the NASDAQ Stock Market and trade under the symbol TCLP.