GRID_STYLE

Post/Page

Weather Location

{fbt_classic_header}

Kinder Morgan is looking to get out of Canada for as much as $2.4 billion

Kinder Morgan is looking to get out of Canada for as much as $2.4 billion

September 14, 2018 7:51 pm Kinder Morgan is looking to get out of Canada for as much as $2.…

Kinder Morgan is looking to get out of Canada for as much as $2.4 billion

September 14, 2018 7:51 pm Kinder Morgan is looking to get out of Canada for as much as $2.4 billion
A sign left by Greenpeace activists is seen hanging on the staircase to a oil storage container at the Kinder Morgan facility in Burrard Inlet in Burnaby, B.C. Wednesday, Oct. 16, 2013. ;

A sign left by Greenpeace activists is seen hanging on the staircase to a oil storage container at the Kinder Morgan facility in Burrard Inlet in Burnaby, B.C. Wednesday, Oct. 16, 2013.

THE CANADIAN PRESS/Jonathan Hayward

X

- A A + Listen

Kinder Morgan Inc has hired investment bank TD Securities to facilitate a potential sale of its Canadian business, which could fetch as much as C$2.4 billion ($1.8 billion), people familiar with the situation told Reuters this week.

Should the move succeed, it would mark the exit of the U.S. pipeline giant from Canada, having closed its sale of the Trans Mountain pipeline to the Canadian government for about C$4.5 billion at the end of last month.

Coverage of Kinder Morgan on Globalnews.ca:

Grand Chief Stewart Phillip on Kinder Morgan pipeline ruling

Grand Chief Stewart Phillip on Kinder Morgan pipeline ruling 04:06
Grand Chief Stewart Phillip on Kinder Morgan pipeline ruling
City of Burnaby on how citizens can peacefully protest Kinder Morgan pipeline 02:44
City of Burnaby on how citizens can peacefully protest Kinder Morgan pipeline
Kinder Morgan protesters remain defiant despite court order 01:28
Kinder Morgan protesters remain defiant despite court order
NDP leader Jagmeet Singh on Kinder Morgan pipeline expansion 00:37
NDP leader Jagmeet Singh on Kinder Morgan pipeline expansion
B.C. NDP popularity drops in recent polls as Kinder Morgan construction nears 03:56
B.C. NDP popularity drops in recent polls as Kinder Morgan construction nears

After the Reuters report on the hiring of the bank, shares in Kinder Morgan Canada Ltd, which completed its initial public offering just last year, turned positive and jumped 3.7 percent to a three-month high. They ended up 2.1 percent in a flat market. Shares in Houston-based Kinder Morgan closed down 1.3 percent.

Spokeswomen for TD and Kinder Morgan declined to comment on the hiring of the investment bank and the valuation. Sources declined to be identified as the process is private.

Pipeline companies in Canada have faced opposition from environmental groups and First Nations groups in recent times in getting approval for new projects. Last month, a Canadian court overturned approval of the Trans Mountain expansion, saying that Ottawa failed to adequately consider aboriginal concerns.

Story continues below

READ MORE: Burnaby spends a bundle in fight against Trans Mountain pipeline expansion

On the flip side though, this makes established pipelines highly prized assets by those operating in the country.

At a conference earlier this month in New York, Kinder Morgan Chief Executive Steven Kean indicated his willingness to sell the rest of the Canadian business, noting that the original purpose of these assets was to support the Trans Mountain project.

Kinder Morgan bought Terasen Inc in 2005, a deal in which it acquired the Trans Mountain pipeline and dramatically broadened its footprint in Canada.

A photo of a Kinder Morgan facility in the east Edmonton area taken on Aug. 30, 2018.

A photo of a Kinder Morgan facility in the east Edmonton area taken on Aug. 30, 2018.

Charles Taylor/ Global News

Kinder Morgan’s remaining Canadian business includes the Edmonton, Alberta and Vancouver Wharves terminal businesses, as well as the Canadian portion of the Cochin pipeline. The unit has earnings before interest, tax, depreciation and amortization (EBITDA) of about C$200 million, Kean said at the time.

The assets, which could be sold separately or in one swoop, are expected to go for a multiple of 10 to 12 times EBITDA, the sources said, taking the total deal value to C$2.4 billion.

The bidding for the business is expected to come from midstream companies, private equity firms and infrastructure funds, the sources added.

READ MORE: ‘A national shame’ â€" B.C. business groups slam ruling quashing Trans Mountain pipeline

Kinder Morgan would likely keep the assets if it does not get a good price as they generate solid cash fl ows, the sources added.

In a note following the Reuters report, RBC analyst Robert Kwan said “we would view a sale process as positive for Kinder Morgan Canada’s share price.”

In 2016, Williams Cos Inc, another U.S. pipeline company, sold its Canadian business.

Enbridge Inc said in July it would sell its Canadian natural gas gathering and processing business to Brookfield Infrastructure Partners LP and its institutional partners for about C$4.31 billion. In February, Canadian oil sands producer MEG Energy agreed to sell some pipeline and storage assets in Alberta to Wolf Midstream Inc for C$1.61 billion.

© 2018 Thomson Reuters

Report an error

Editor's Picks

Education

One university's secret list to judge applicants by their high schools - not just their marks

Canada

Toronto terrorist leader is locked up, but was still on social media

Environment

Hurricane Florence is 'very dangerous,' but don't expect everyone to evacuate

Science

Are marijuana strains what they say on the label? Often they're not, DNA testing shows

Canada

Canada could be a leader in the global cannabis market â€" if the rules loosen up: experts

Canada

Got milk (farmers)? Here's how many could be at risk if NAFTA boosts U.S. dairy market access

Education

Why we shouldn't glorify the 'starving student' stereotype

Oakalla prison

How a bloody riot and massive prison break brought down Oakalla, B.C.'s most notorious jail

FLYERS

More Weekly Flyers

Global News Source: Google News Canada | Netizen 24 Canada

No comments