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An Indigenous consortium is trying to buy a 5.3% stake in the NGTL and Foothills pipelines
Bloomberg News
A $1 billion bond deal to finance an investment group’s purchase of gas pipelines fell apart due to a financial-modelling mistake, according to analysts at Bank of Nova Scotia.
Aspen Investments LP sold the bond last week, with the proceeds earmarked to buy an interest in TC Energy Corp.’s network of natural gas infrastructure in western Canada. But the bond sale failed to close and the minority-stake transaction is now delayed due to a “structuring issue,” the pipeline company said Tuesday, without providing details.
The collapse of the bond sale marks the first syndicated Canadian-dollar bond deal to be cancelled, according to Bloomberg records.
“The size and scope of the issue are unclear, though we understand there was an error in the financial model to do with future capital requirements” for the underlying assets, Scotiabank analysts Robert Hope and Jessica Hoyle wrote in a note. They said they still expect the sale will eventually get done, though perhaps not until next year.
The assets are TC Energy’s NGTL and Foothills pipelines, which span about 25,000 kilometres in Canada’s western provinces. An Indigenous consortium is trying to buy a 5.3 per cent stake in them, with the Alberta government backstopping the transaction.
Hope and Hoyle are equity analysts covering TC Energy; Scotiabank wasn’t part of the syndicate on the bond deal.
The bond was marketed to a select group of investors in a syndicate led by Canadian Imperial Bank of Commerce and Toronto-Dominion Bank, Bloomberg previously reported. CIBC declined to comment while a representative from TD didn’t respond to inquiries.
“The company is focused on developing a transaction that delivers meaningful distributions to Indigenous communities while upholding the fundamental value of the NGTL System and the Foothills Pipeline assets,” TC Energy said in its statement, adding that it will give more updates as they become available.
With assistance from Daniel Covello
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