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SUBSEQUENT EVENTS
6 Months Ended
Jun. 30, 2013
SUBSEQUENT EVENTS  
SUBSEQUENT EVENTS

NOTE 13                  SUBSEQUENT EVENTS

 

On July 1, 2013, the Partnership acquired additional 45 percent membership interests in each of GTN and Bison (the 2013 Acquisition) from subsidiaries of TransCanada. The total purchase price of the 2013 Acquisition, subject to certain post-closing adjustments, was $1,050 million plus closing adjustments for working capital of $17 million. 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 and (iii) closing working capital adjustments.

 

The resulting $921 million (after closing 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 6), (ii) borrowing of $500 million in term loans, (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 6), and (iv) a draw on the Partnership’s existing $500 million Senior Credit Facility and cash on hand.

 

The proceeds from the public equity offering were used to repay the outstanding balance under the Senior Credit Facility. On July 2, 2013, the Senior Credit Facility was redrawn in the amount of $360 million to finance a portion of the purchase price of the 2013 Acquisition.

 

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, the Partnership will pay an additional $25 million.

 

The 2013 Acquisition will be 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 will be recorded at TransCanada’s carrying value and the Partnership’s historical financial information will be recast to include GTN and Bison for all periods presented. The difference between the fair market value paid for the additional 45 percent interests in each of GTN and Bison and the acquired net assets of GTN and Bison will be recorded in Partners’ Equity. The Partnership will consolidate its investments in GTN and Bison effective July 1, 2013.

 

On July 1, 2013, the Partnership entered into a term loan agreement with a syndicate of lenders for a $500 million term loan credit facility (Term Loan Facility). On July 2, 2013, the Partnership borrowed $500 million under the Term Loan Facility to pay a portion of the Purchase Price of the 2013 Acquisition. The Term Loan Facility has a term of five years, and all amounts outstanding will be due and payable on July 1, 2018. Borrowings under the Term Loan Facility will bear interest based, at the Partnership’s election, on the LIBOR or the base rate plus, in either case, an applicable margin. The base rate will equal the highest of (i) SunTrust Bank’s prime rate, (ii) 0.50% above the federal funds rate and (iii) 1.00% above one-month LIBOR. The applicable margin for the term loans is based on the Partnership’s senior debt rating and ranges between 1.125% and 2.00% for LIBOR borrowings and 0.125% and 1.000% for base rate borrowings.

 

On July 23, 2013, the board of directors of our General Partner declared the Partnership’s second quarter 2013 cash distribution in the amount of $0.81 per common unit payable on August 14, 2013 to unitholders of record as of August 5, 2013.

 

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

 

Great Lakes declared its second quarter 2013 distribution of $7 million on July 18, 2013, of which the Partnership will receive its 46.45 percent share or $3 million on August 1, 2013.

 

Northern Border declared its second quarter 2013 distribution of $44 million on July 18, 2013, of which the Partnership will receive its 50 percent share or $22 million on August 1, 2013.

 

GTN declared its second quarter 2013 distribution of $27 million on July 18, 2013, of which the Partnership will receive its 70 percent share or $19 million on August 1, 2013.

 

Bison declared its second quarter 2013 distribution of $16 million on July 18, 2013, of which the Partnership will receive its 70 percent share or $11 million on August 1, 2013.