TRANSCANADA AGREES TO PURCHASE PGT

TransCanada PipeLines Ltd., Calgary, has signed a letter of intent that could lead to acquisition of all the shares of Pacific Gas Transmission Co. (PGT), San Francisco. The transaction includes a 49% interest in Alberta Natural Gas Co. Ltd. (ANG) held by PGT, a wholly owned subsidiary of Pacific Gas and Electric Co. (PG&E), San Francisco. PGT operates a pipeline that moves as much as 1 bcfd of Alberta gas to California. The parties will continue discussions to determine if TransCanada will

Sept. 16, 1991

2 min read

TransCanada PipeLines Ltd., Calgary, has signed a letter of intent that could lead to acquisition of all the shares of Pacific Gas Transmission Co. (PGT), San Francisco.

The transaction includes a 49% interest in Alberta Natural Gas Co. Ltd. (ANG) held by PGT, a wholly owned subsidiary of Pacific Gas and Electric Co. (PG&E), San Francisco. PGT operates a pipeline that moves as much as 1 bcfd of Alberta gas to California.

The parties will continue discussions to determine if TransCanada will also purchase PG&E's wholly owned Alberta & Southern Gas Co. Ltd. (A&S).

The total purchase price is estimated at $330-400 million (Canadian), depending on a number of factors. They include the closing date and progress on PGT's expansion program.

The price includes an amount for PGT's interest in ANG, which with contingency payments is about equal to the current market value of the ANG shares. The amount won't exceed $14 (Canadian)/share.

Closing of the transaction, expected in first quarter 1992, is subject to signing of a definitive purchase agreement and receipt of regulatory approvals.

TransCanada said it is committed to completion of the $1.7 billion (U.S.) expansion of the PGT-PG&E system.

The PG&E expansion received approval from the California Public Utilities Commission last December.

PGT's expansion received approval from the Federal Energy Regulatory Commission last month. The FERC approval conditions construction on the resolution of downstream arrangements on PG&E's existing and expansion facilities.

To date, PG&E and PGT have spent a total of more than $75 million in preparing for full scale construction to begin in 1992.