TransCanada Corporation to Sell Two U.S. Power Plants
CALGARY, Alberta – March 29, 2004 – (TSX: TRP) (NYSE: TRP) – TransCanada Corporation today announced it has entered into an agreement to sell the ManChief and Curtis Palmer power facilities for US$402.6 million (CDN$531.4 million) to TransCanada Power, L.P. (the Partnership). TransCanada expects to recognize a gain on the sale of these assets of approximately $10 million after tax. The sales are subject to certain post closing adjustments, approval by Partnership unitholders and applicable regulatory approvals. TransCanada expects to complete the sales of these assets on or about May 5, 2004.
“This sale is consistent with our portfolio management strategy to divest mature assets and redeploy capital to allow TransCanada to pursue growth opportunities,” said Hal Kvisle, TransCanada’s chief executive officer. “Proceeds from the sale will contribute to our on-going objective of maintaining our strong financial position.”
The ManChief Power Plant is a 300 megawatt (MW) natural-gas-fired facility located near Brush, Colorado, approximately 145 kilometres northeast of Denver. Electricity from the plant is sold to Public Service Company of Colorado under power sales contracts that expire in 2012. TransCanada acquired the ManChief Power Plant in November 2002.
The Curtis Palmer plant is a hydroelectric facility with a total generating capacity of approximately 60 MW and is located near Corinth, New York, approximately 65 kilometres north of Albany. The entire output from the facility is sold to Niagara Mohawk Power Corporation under a power purchase agreement with a remaining term of approximately 23 years. TransCanada acquired the Curtis Palmer facility in July 2001.
A wholly owned subsidiary of TransCanada Corporation manages the Partnership and the operation of the assets owned by the Partnership, and currently owns 35.6 per cent of the Partnership.
In a separate news release today, the Partnership announced financing details of the transaction, including the offering of Subscription Receipts and a bridge loan facility. In addition, there will be a concurrent offering of 540,000 Subscription Receipts, which will be purchased by TransCanada for an aggregate purchase price of approximately $20 million. Subsequent to the transaction TransCanada’s ownership interest in the Partnership will be reduced to approximately 30.5 per cent.
The Partnership’s unitholders will be asked at a special meeting to be held on April 29, 2004 to remove the Partnership’s obligation to redeem all units not owned by TransCanada in 2017.
As a result of the removal of the redemption obligation and the reduction in ownership interest, upon closing TransCanada expects to recognize a gain of approximately $165 million after tax. This amount primarily reflects the recognition of unamortized gains on previous Partnership transactions.
TransCanada is a leading North American energy company. TransCanada is focused on natural gas transmission and power services with employees who are expert in these businesses. TransCanada’s network of approximately 39,000 kilometres (24,200 miles) of pipeline transports the majority of Western Canada’s natural gas production to the fastest growing markets in Canada and the United States. TransCanada owns, controls or is constructing nearly 4,700 megawatts of power – an equal amount of power can meet the needs of about 4.7 million average households. TransCanada’s common shares trade under the symbol TRP on the Toronto and New York stock exchanges.
All dollar amounts in CDN$ unless otherwise indicated. U.S. dollar amounts translated using exchange rate of US$1 = CDN$1.32.
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