SUBSEQUENT EVENTS

9 Months Ended

Sep. 30, 2020

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS

Management of the Partnership has reviewed subsequent events through November 9, 2020, the date the consolidated financial statements were issued, and concluded there were no events or transactions during this period that would require recognition or disclosure in the consolidated financial statements other than what is disclosed here and/or those already disclosed in the preceding notes.

Distributions

On October 21, 2020, the board of directors of the General Partner (TC PipeLines Board) declared the Partnership’s third quarter 2020 cash distribution in the amount of $0.65 per common unit payable on November 13, 2020 to unitholders of record as of November 2, 2020. The declared distribution totaled $47 million and is payable in the following manner: $46 million to common unitholders (including $4 million to the General Partner as a holder of 5,797,106 common units and $7 million to another subsidiary of TC Energy as holder of 11,287,725 common units) and $1 million to the General Partner for its two percent general partner interest. The General Partner did not receive any distributions in respect of its IDRs for the third quarter of 2020.

Northern Border declared its September 2020 distribution of $18 million on October 9 2020, of which the Partnership received its 50 percent share or $9 million on October 30, 2020.

Iroquois declared its third quarter 2020 distribution of $21 million on November 2, 2020, of which the Partnership will receive its 49.34 percent share or $10 million on December 23, 2020.

PNGTS declared its third quarter 2020 distribution of $14 million on October 26, 2020, of which $5 million was paid to its non-controlling interest owner on October 30, 2020.

Great Lakes' Contract with TC Energy's Canadian Mainline

As noted in our 2019 Annual Report, a significant portion of Great Lakes’ total contract portfolio is contracted by its affiliates including its long-term transportation agreement with TC Energy’s Canadian Mainline that commenced on November 1, 2017 for a ten-year period that allows TC Energy to transport up to 0.711 billion cubic feet (equivalent to about 722,000 Dth/day) of natural gas per day on the Great Lakes system. This contract contained a volume reduction option up to full contract quantity until November 1, 2020. During the quarter, the Canadian Mainline requested an extension on the volume reduction option deadline and Great Lakes extended the option expiry to November 16, 2020.

TC Energy's offer to acquire the Partnership's publicly-held outstanding common units:

On October 5, 2020, the Partnership announced receipt of a non-binding offer from TC Energy to acquire all of its outstanding common units not beneficially owned by TC Energy or its affiliates in exchange for common shares of TC Energy. Under the proposal, the Partnership's common unitholders would receive 0.65 common shares of TC Energy for each issued and outstanding publicly-held Partnership common unit (TCP common unit), representing an implied value of $27.31 per TCP common unit based on the closing price of TC Energy common shares on the New York Stock Exchange (NYSE) on October 2, 2020 (TC Energy Proposal). This reflects a 7.5 percent premium to the exchange ratio implied by the 20-day volume weighted average prices of the Partnership's common units and TC Energy’s common shares on the NYSE as of October 2, 2020.

The offer has been made to the TC PipeLines Board. As the general partner of the Partnership is an indirect wholly-owned subsidiary of TC Energy, a conflicts committee composed of independent directors of the TC PipeLines Board (the Conflicts Committee) was formed to consider the offer pursuant to the Fourth Amended and Restated Agreement of Limited Partnership of the Partnership (Partnership Agreement).

The transaction is subject to the review and favorable recommendation by the Conflicts Committee of the TC PipeLines Board and approvals by the TC PipeLines Board, the Board of Directors of TC Energy, and the holders of a majority of the outstanding common units of the Partnership. It is also subject to the negotiation and execution of an agreement and plan of merger, which would provide the definitive terms of the transaction, including the exchange ratio, and customary regulatory approvals. Any definitive agreement is expected to contain customary closing conditions. There can be no assurance that any such approvals will be forthcoming, that a definitive agreement will be executed or that any transaction will be consummated.