In order to make payments for a major U.S acquisition, TransCanada Corp. has set it sails to make multibillion-dollar moves in the corporate world. TransCanada secured 10% of the divided gains every year. TransCanada is one of the largest pipeline companies in Canada.
TransCanada announced on late Tuesday that it will be buying stock worth of $3.5 billion, this will be a second humungous deal made in 2016. With sale of Northeast power generation operations, it expects to harvest $3.7 billion (USD). The finances gathered from the sale and issuance of shares will be used in paying back the bridge loan taken around 1 July, to buy Columbia pipeline Group Inc. worth $10.2 billion. This particular, deal gave TransCanada an already established asset that came of as an aid for them to grow.
TransCanada expects to have better cash flows and predictability of earnings with the sale of U.S. Northeast merchant business. Hence, proving it with more stability, said Russ Girling, a chief executive officer, on a conference call.
Despite the fact that TransCanada is getting credible bids plans to keep holdings in the Mexican business, but the chief of the company did not accept any as yet. Although, initially they had decided to sell shares in the company but later decided to keep a holding and instead increase the short and long term shareholders, while still maintaining the ownership interest in the company. He further said that they would rather explore the capital market, he was of the view that this would help them to grow their current portfolio while maintaining their focus on expected benefits that they analyzed to reap.
While TransCanada has solidified their hold on Columbia, they have also decided to buy other units of the Columbia Pipeline Partners LP worth $915 million, this is amount 8% higher than what TransCanada initially offered. The deal is expected to close in 2017, first quarter, and it is predicted that it will boost TransCanada’s stake in the assets by 100% from 91.6%.
The financial moves made by TransCanada will assist the company in attaining the annual dividend increases, from 8 percent to 10 percent, by 2020.
In TransCanada has offered $54.8 million worth of shares at $58.50 per share (Canadian Dollar). Underwriters controlled by Bank of Montreal, Toronto-Dominion Bank, and Royal Bank of Canada have over given and overallotment option to add 10 percent proceeds. The company made records in March raising it to $4.4 billion.