PARTNERS' EQUITY

12 Months Ended

Dec. 31, 2020

Partners' Capital Notes [Abstract]

PARTNERS' EQUITY

PARTNERS’ EQUITY

At December 31, 2020, the Partnership had 71,306,396 common units outstanding, of which 54,221,565 were held by non-affiliates and 17,084,831 common units were held by subsidiaries of TC Energy, including 5,797,106 common units held by our General Partner. Additionally, TC Energy, through our General Partner, owns 100 percent of our IDRs and a two percent general partner interest in the Partnership. TC Energy also holds 100 percent of our 1,900,000 outstanding Class B units.

At-the-Market Equity Issuance Program (ATM Program)

In 2018, the Partnership issued 0.7 million common units under its previous At-the-Market Equity Issuance Program (ATM Program), which allowed the Partnership from time to time to offer and sell, through sales agents, common units representing limited partner interests. In 2018, the Partnership's ATM Program generated net proceeds of approximately $39 million, plus an additional $1 million from the General Partner to maintain its two percent interest. The commissions to our sales agents were immaterial. The net proceeds were used to repay a portion of the borrowings under the Senior Credit Facility and for general partnership purposes.

In August 2019, the ATM Program expired with no common unit issuances in 2019.

Issuance of Class B units

The Class B Units issued on April 1, 2015 to finance a portion of the Partnership’s acquisition of the remaining 30 percent interest of GTN from TC Energy represent a limited partner interest in us and entitles TC Energy 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, which equates to 43.75 percent of distributions above $20 million for the year ended December 31, 2020. The Class B units contain no mandatory or optional redemption features and are also non-convertible, non-exchangeable, non-voting and rank equally with common units upon liquidation.

Additionally, the Class B Distribution was reduced by 35 percent, which is equivalent to the percentage by which distributions payable to the common units were reduced in 2018. The Class B Reduction was implemented during the first quarter of 2018 following the Partnership’s common unit distribution reduction of 35 percent from its fourth quarter 2017 distribution level of $1.00 per common unit. 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.

The Class B units’ equity account is increased by the “Class B Distribution,” less the “Class B Reduction,” if any, and until such amount is declared for distribution and paid in the first quarter of the subsequent year. For the year ended December 31, 2020, there was no Class B Distribution as the thresholds noted above were not exceeded. For the years ended December 31, 2019 and 2018, the Class B units’ equity account was increased by $8 million and $13 million, respectively. (Refer to Notes 13 and 14).