Chief Roy Fox, Makiinima, of the Kainai First Nation speaks during a press conference at TC Energy Tower in Calgary on July 30.Gavin John/The Globe and Mail
TC Energy Corp. TRP-T will sell a minority stake in its massive Nova Gas Transmission Ltd. and Foothills natural gas pipeline systems for $1-billion to a consortium of dozens of Indigenous communities, as part of a plan to reduce its debt and fund investments.
The Calgary-based company said Tuesday that the deal represents Canada’s largest equity interest purchase agreement with an Indigenous-owned investment partnership. Backed by the Alberta Indigenous Opportunities Corp. (AIOC), a provincial Crown corporation, the consortium includes 72 Indigenous communities in Alberta, British Columbia and Saskatchewan.
Natural gas infrastructure included in the deal spans 25,000-kilometres of pipeline systems across Western Canada, connecting about 80 per cent of natural gas production from the Western Canadian Sedimentary Basin to domestic and export markets. The communities will pick up a minority interest of 5.34 per cent in the systems under the deal, which TC Energy expects to close in the third quarter of 2024.
The AIOC will provide participating communities with a $1-billion equity loan guarantee to support the investment. Details of the deal are not set in stone, however, as each of the 72 communities is yet to independently determine whether or not they will participate. TC Energy says the sale will go ahead no matter which ones take part.
Blood Tribe Chief Roy Fox acknowledged that the path to the deal wasn’t always smooth. It took months of hard work by the negotiating committee which was determined to make the partnership work, he said.
“Yes, they had arguments. Yes, I had arguments with some of them. But that’s part of what it is that we do in ensuring that a very beneficial outcome happens when you have trust, determination and the sincerity to make a go of it,” Mr. Fox told media at a Tuesday press conference.
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“We don’t always see eye-to-eye with other governments and their leaders, but that’s good. It makes us try harder.”
Lee Thom, a councillor with Kikino Métis Settlement, told media the deal would have a positive generational impact for years to come.
“Official, beneficial ownership is the only way, and it’s the new way. We are united today, and we are united moving forward,” Mr. Thom said.
TC Energy is aiming to sell off $3-billion worth of assets this year in a bid to pay down an unsustainable debt load. In June, shareholders voted to spin off the company’s liquids pipeline business into another company, creating a new energy infrastructure firm called South Bow Corp.
François Poirier, TC Energy’s chief executive officer, acknowledged Tuesday that the company is facing debt pressures. But he said it has for years been looking for a way for Indigenous rights holders to become part-owners of the company’s assets, so pursuing the NGTL deal was a perfect opportunity.
“It’s nice when you can kill two birds with one stone,” Mr. Poirier said. “We have $100-billion of assets. We could have picked any number of assets to reduce debt. This is far more meaningful.”
And as partners, he said the company would also be able to share information about future projects with the Indigenous consortium so its members can get an early look in and give TC Energy advice on how to do things right.
“Indigenous ownership in Canada’s resource economy should be commonplace. It is the best way for industries across the nation to continue to operate and grow.”
The deal did not surprise industry watchers, as TC Energy last year applied for regulatory approval for a potential minority interest sale of its NGTL system. The company also met with Indigenous groups in Vancouver before Christmas and in Edmonton earlier this year about a potential deal in which they would acquire a stake in the natural gas pipeline network.
Robert Kwan, the head of global power, utilities and infrastructure research at RBC Dominion Securities Inc., said Tuesday that getting the deal over the goal line should positively impact investor sentiment.
The move is a key step in TC Energy achieving its $3-billion asset sale target for 2024, and “we positively view the company partnering with Indigenous communities,” Mr. Kwan wrote in a research note.
The sale of a stake in NGTL is also favourable because of the asset’s utility-like regulatory framework and valuation “that would be well in excess of where the company’s shares currently trade,” though he added that “our enthusiasm is tempered given this is only a sale of a 5.34 per cent stake.”