National Post (Latest Edition)
‘Expressions of interest’ already in for pipeline
Ottawa begins Trans Mountain marketing pitch
OTTAWA • The Canadian government has already sent out marketing materials for the Trans Mountain pipeline to several potential buyers with the goal of selling the project it only days ago agreed to buy, according to sources.
Greenhill & Co., a New York-based investment bank, was the exclusive financial adviser to the federal government on its $4.5-billion purchase of the pipeline and is working on a sale ahead of an expected shareholder vote on the issue in late July, the people said, asking not to be identified because the matter is private. The goal is to have a new buyer in place for the vote, and to potentially turn a profit, they said.
The government has reached out to several pipeline companies, pension funds, and asset managers about the sale, the people said. The deal would include the government’s guarantee to indemnify potential buyers against political delays, which was also offered to
if it were to push ahead with the pipeline project.
“We think that we paid a fair price for the assets, there was due diligence done on the project and the conclusion was that it’s commercially viable — we believe the private sector will come to the same conclusion,” Canadian Natural Resources Minister Jim Carr said in an interview Thursday. “There have been expressions of interest from a variety of places, but we’ ll see.”
A spokesman for the Canadian finance minister acknowledged a search for owners, but signalled there’d be no hurry to sell if they can’t get a good price.
“We are looking for new owners and we’re working with Kinder Morgan to find a new owner or owners, but we will proceed with that transaction when it’s in the best interest of Canadians and when we feel there’s an appropriate value,” said Daniel Lauzon, a spokesman for Finance Minister Bill Morneau.
A representative for Greenhill wasn’t immediately available for comment.
Carr said “conversations will happen relatively” soon toward a resale. “The first priority is to get construction rolling and that will happen very soon,” he said. The engineering team was hopeful that construction could be done by December 2020, but recent delays may have changed that, Carr said. “Projects that are approved in Canada, that are deemed to be in the national interest by the government in Canada, will proceed,” he said.
The federal government announced it would buy the Trans Mountain pipeline system and its planned expansion project Tuesday to ensure it gets built.
The move ended weeks of speculation sparked by Kinder Morgan’s threat to abandon a project facing “unquantifiable risk” as the British Columbia government vowed to use every tool to block it.
The sale would include the expansion, related pipeline and terminal assets as well as the management team that was tasked with building the pipeline, the people said.
Carr confirmed the management team and all of the workforce were included and said it’s “possible” that a buyer wouldn’t need pipeline experience.
Others have expressed doubt the federal government will be able to sell the project without taking a major loss.
“The taxpayer is going to end up losing billions of dollars here,” Jeff Rubin, senior fellow at the Waterloo-based Centre for International Governance Innovation, said by phone Tuesday after the purchase was announced. “The commercial viability of this project was very much in doubt in the private sector’s eye, and that’s unfortunately why we are now investors.”