PARTNERS' EQUITY

9 Months Ended

Sep. 30, 2018

PARTNERS' EQUITY

PARTNERS' EQUITY

NOTE 8  PARTNERS’ EQUITY

ATM equity issuance program (ATM program)

During the nine months ended September 30, 2018, we issued 0.7 million common units under our ATM program (none during the three months ended September 30, 2018) generating net proceeds of approximately $39 million, plus $1 million contributed by the General Partner to maintain its effective two percent general partner interest. The commissions to our sales agents in the nine months ended September 30, 2018 were nil. The net proceeds were used for general partnership purposes.

Class B units issued to TransCanada

The Class B Units issued on April 1, 2015 to finance a portion of the 2015 GTN Acquisition represent a limited partner interest in us and entitle TransCanada to an annual distribution based on 30 percent of GTN’s annual distributions as follows: (i) 100 percent of distributions above $20 million through March 31, 2020; and (ii) 25 percent of distributions above $20 million thereafter (Class B Distribution). Additionally, the Class B Distribution will be further reduced by 35 percent, which is equivalent to the percentage by which distributions payable to the common units were reduced in 2018 (Class B Reduction). The Class B Reduction was implemented during the first quarter of 2018 following the Partnership’s common unit distribution reduction of 35 percent. The Class B Reduction will continue to apply for any particular calendar year until distributions payable in respect of common units for such calendar year equal or exceed $3.94 per common unit. Refer also to Note 19 for further information on the Partnership’s distribution reduction.

For the year ending December 31, 2018, the Class B units’ equity account will be increased by the Class B Distribution, less the Class B Reduction, until such amount is declared for distribution and paid in the first quarter of 2019. During the nine months ended September 30, 2018, the Class B Distribution was $11 million (30 percent of GTN’s total distributable cash flow, which was $31 million less the $20 million annual threshold). After the estimated Class B Reduction for 2018 was applied, the Class B units’ equity account was increased by $4 million.

For the year ended December 31, 2017, the Class B distribution was $15 million and was declared and paid in the first quarter of 2018.