Page 13 - GLNG Week 21
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TC Energy completes sale of Coastal GasLink stake
PIPELINES & TRANSPORT
Around 35% of the pipe for Coastal GasLink had been stockpiled as of early May.
CANADA’S TC Energy has completed the sale of a 65% stake in the Coastal GasLink pipeline, which it is building in British Columbia. The pipeline, which has encountered opposition from the hereditary chiefs of a local First Nation that sparked broader protests across Canada ear- lier this year, will connect shale fields in north- east BC to the LNG Canada project, which is also under construction.
The buyer is a joint venture between private equity firm KKR & Co. and Alberta Investment Management Corp. (AIMCo.). TC Energy remains responsible for constructing and oper- ating the CAD6.6bn ($4.8bn) pipeline.
TC Energy said at the beginning of this month, in its first-quarter earnings, that it had continued to advance construction on the pro- ject, as well as funding plans for it, during the quarter.
As part of this, on April 28, a credit agreement was executed with a syndicate of banks extending non-recourse project-level financing to fund the majority of the construction costs of the pipeline. TC Energy noted that the credit facilities under
this agreement would be available to be drawn once certain conditions had been met, includ- ing the closing of the transaction with KKR and AIMCo. Draws on these facilities will reduce the partner contributions required to fund the pro- ject, the company added.
TC Energy also said in its first-quarter results that it would provide an option for 20 First Nations along the pipeline’s route to acquire a 10% equity stake in Coastal GasLink. Any such transaction would be based on terms similar to those it has agreed with KKR and AIMCo.
As of early May, around 75% of clearing along the pipeline’s route had been completed and roughly 35% of pipe had been stockpiled. This marked the completion of major work for the winter season, with crews waiting to remobilise following Canada’s spring breakup.
TC Energy noted previously that while measures to contain the coronavirus (COVID- 19) could have an impact on the schedule for Coastal GasLink, the extent of this remains uncertain for now.
LNGL sells Magnolia LNG to different buyer
INVESTMENT
A deal struck by Australia-based LNG Ltd (LNGL) to sell its proposed Magnolia LNG pro- ject on the US Gulf Coast has fallen through less than two weeks after being announced. How- ever, a day after terminating the previous agree- ment, LNGL sold the project to another buyer, Magnolia LNG Holdings.
This new transaction, for a price of $2mn, was signed and closed on May 26. The deal was announced by PricewaterhouseCoopers, which is acting as administrator for LNGL as the com- pany goes through the Australian equivalent of bankruptcy proceedings.
Details of the owners or companies affiliated with Magnolia have not been disclosed.
The closing of the deal comes after two failed transactions involving LNGL. (See GLNG Week 19) First, the company had been due to be taken over by Singapore-based LNG9, but the buyer withdrew in mid-April following the collapse of financing for the proposed takeover. Then LNGL announced on May 12 that it had agreed to sell the subsidiaries that own and operate Magnolia LNG, including Pecan, LNG Management Ser- vices and LNG Technology, to Global Energy Megatrend (GEM) for $2.25mn.
In this week’s statement, LNGL said it had terminated that deal on May 25 owing to GEM’s failure to close the transaction within the timeframe required under their agreement. It entered into the new deal with Magnolia shortly thereafter.
LNGL said that in addition to the cash pur- chase price, it would receive an unsecured, non-interest bearing promissory note issued by Magnolia. The value of the note is estimated to be around AUD2.0mn ($1.3mn), subject to cer- tain liabilities that Magnolia has assumed. The note will be payable if the Magnolia LNG project reaches financial close and a notice to proceed has been issued for the initiation of construction, LNG added.
The two companies have also agreed to work together on a potential recapitalisation proposal for LNGL.
The Australian company noted that while its patented optimised single mixed refriger- ant (OSMR) liquefaction process technology would be sold as part of the Magnolia transac- tion, its proposed Bear Head LNG project in Canada would retain a perpetual licence to use that technology.
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