NOTE 6 ACQUISITIONS

2013 Acquisition

On July 1, 2013, the Partnership acquired an additional 45 percent membership interest in each of GTN and Bison from subsidiaries of TransCanada. GTN and Bison are both Delaware limited liability companies regulated by FERC, and they are operated by subsidiaries of TransCanada. The GTN pipeline system extends from an interconnection near Kingsgate, British Columbia, Canada at the Canadian border to a point near Malin, Oregon at the California border. The Bison pipeline system extends from the Powder River Basin near Gillette, Wyoming to Northern Border's pipeline system in Morton County, North Dakota.

The total purchase price of the 2013 Acquisition was $1,050 million plus purchase price adjustments. The purchase price consisted of (i) $750 million for the GTN membership interest (less $146 million, which reflected 45 percent of GTN's outstanding debt at the time of the 2013 Acquisition), (ii) $300 million for the membership interest in Bison, (iii) $17 million in working capital adjustments and (iv) Carty Lateral consideration of $25 million (see below).

The resulting $921 million (after working capital adjustments) paid by the Partnership was financed through a combination of (i) a public offering of 8,855,000 common units at $43.85 per common unit resulting in net proceeds of $373 million (refer to note 9), (ii) borrowing of $500 million in term loans (refer to note 7), (iii) a capital contribution from the General Partner of $8 million which was required to maintain the General Partner's effective two percent general partner interest in the Partnership (refer to note 9), and (iv) a draw on the Partnership's existing $500 million Senior Credit Facility and cash on hand.

Pursuant to the acquisition agreement between the Partnership and TransCanada relating to the Partnership's acquisition of an additional 45 percent membership interest in GTN, the Partnership agreed to make an additional payment of $25 million to TransCanada if Portland General Electric Company executes a firm transportation service agreement by December 31, 2014 containing agreed terms and relating to transportation on GTN's proposed Carty Lateral. On December 11, 2013, Portland General Electric Company executed this firm transportation service agreement relating to transportation on GTN's proposed Carty Lateral. As a result, the Partnership will pay an additional $25 million by April 11, 2014. This amount was included in accounts payable to affiliates as of December 31, 2013.

The 2013 Acquisition was accounted for as a transaction between entities under common control, similar to a pooling of interests, whereby the assets and liabilities of GTN and Bison were recorded at TransCanada's carrying value and the Partnership's historical financial information was recast to consolidate GTN and Bison for all periods presented.

The purchase price was recorded as follows:

(millions of dollars)


Current assets	67
Property, plant and equipment, net	1,792
Other assets	1
Current liabilities	(20	)
Other liabilities	(21	)
Long-term debt	(325	)

	1,494
Non-controlling interest	(448	)
Carrying value of pre-existing 25% interest in each of GTN and Bison	(374	)

Carrying value of acquired 45% interest in each of GTN and Bison	672
Excess purchase price over net assets acquired (includes Carty Lateral consideration)	274

Total cash consideration including $25 million Carty Lateral consideration payable	946

As the fair market value for the additional 45 percent interests in each of GTN and Bison was greater than the acquired net assets of GTN and Bison by $262 million and $12 million, respectively, the total excess purchase price of $274 million was recorded in Partners' Equity, including the Carty Lateral consideration. The retrospective consolidation of GTN and Bison increased net income attributable to common units by $26 million for the year ended December 31, 2013 and by $55 million and $59 million for the years ended December 31, 2012 and 2011, respectively. These amounts are however, excluded from equity attributable to controlling interests.

2011 Acquisition

On May 3, 2011, the Partnership acquired a 25 percent membership interest in each of GTN and Bison from subsidiaries of TransCanada (the 2011 Acquisition).

The total purchase price of the 2011 Acquisition was $605 million. The purchase price consisted of (i) $405 million for the GTN membership interest (less $81 million, which reflected 25 percent of GTN's outstanding debt at the time of the 2011 Acquisition), (ii) $200 million for the membership interest in Bison (less a $9 million future capital commitment to complete the Bison pipeline) (iii) $23 million at closing and (iv) $1 million in working capital adjustments paid in the fourth quarter of 2011. The resulting $539 million paid by the Partnership was financed through a combination of (i) an issuance of 7,245,000 common units offered to the public at $47.58 per common unit resulting in net proceeds of $331 million, (ii) a draw of $61 million on the Partnership's committed $400 million bridge loan facility, (iii) a draw of $125 million on the Partnership's then existing $250 million senior revolving credit facility, (iv) a capital contribution from the General Partner of $7 million, which was required to maintain the General Partner's effective two percent general partner interest in the Partnership, and (v) approximately $15 million of cash on hand.

The 2011 Acquisition was accounted for as a transaction between entities under common control, whereby the equity investments in both GTN and Bison were recorded at TransCanada's carrying values, and the total excess purchase price paid of $131 million was recorded as a reduction to Partners' Equity in 2011.

On July 22, 2013, a subsidiary of TransCanada paid $1 million to the Partnership in relation to the 2011 Acquisition of a 25 percent interest in Bison as a post-closing construction expenditures adjustment.

Yuma Lateral Asset Acquisition

Pursuant to an amendment to the acquisition agreement between the Partnership and TransCanada relating to the Partnership's acquisition of North Baja, the partnership agreed to make an additional payment of up to $2 million to TransCanada in the event that TransCanada secured additional contracts for transportation service before December 31, 2010. TransCanada secured an additional contract in July 2010 and, as a result, the Partnership paid $2 million to TransCanada on March 25, 2011 when the facilities associated with the contract were completed.