TC Energy (NYSE:TRP) is down 2.8% post-market. Thursday, a syndicate of underwriters agreed to buy 28.4 million common shares on a purchased transaction basis at C$46350 per share, with an underwriter’s option to buy up to an additional 2.844 million shares. The money will be used to construct the Southeast Gateway Pipeline, a US$4.5 billion, 1.3 billion cubic feet per day, and a 715-kilometre offshore natural gas pipeline in southeast Mexico, according to TC Energy (NYSE:TRP).
The Offering is expected to generate C$1.8 billion in gross proceeds for the corporation. Power Hedge argues in a SeekingAlpha research that TC Energy (NYSE:TRP) “enjoys extraordinarily consistent cash flows independent of macroeconomic conditions, giving it a utility-like quality.”
The agreement was made public on Thursday. According to the Announcement, TC has agreed with a syndicate of underwriters led by RBC Capital Markets and Scotiabank under which the underwriters have agreed to purchase 28,400,000 common shares of TC Energy (the Common Shares) on a bought deal basis for $63.50 per Common Share for gross proceeds of approximately $1.8 billion (the Offering). The underwriters and their affiliates will sell the Common Shares to the general public in Canada and the United States.
TC Energy (NYSE:TRP) has given the underwriters an over-allotment option to buy up to an extra 2,840,000 Common Shares at the Offering Price at any time up to 30 days after the Offering closes (the Over-Allotment Option). If the Over-Allotment Option is fully triggered, the gross proceeds from the Offering will be around $2.0 billion.
The net proceeds of the Offering, with other financing sources and cash on hand, will be used to fund costs related to the construction of the Southeast Gateway Pipeline, a US$4.5 billion, 1.3 billion cubic feet per day, 715-kilometre offshore natural gas pipeline in Mexico’s southeast region. In the meantime, the net proceeds of the Offering may be utilized to reduce debt or invested in short-term liquid investments.
The Offering is scheduled to be concluded on or around August 10, 2022. The Offering is subject to and conditioned on receiving all required approvals, including approval from the Toronto Stock Exchange and the New York Stock Exchange.
The Offering’s joint lead book runners were RBC Capital Markets and Scotiabank. The Company’s legal counsel included Mayer Brown LLP and Blake, Cassels & Graydon LLP. The underwriters’ legal counsel included Weiss, Rifkind, Wharton & Garrison LLP, Paul, and Norton Rose Fulbright Canada LLP.
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