TC Energy's logo is pictured on a smartphone in this illustration taken, December 4, 2021. REUTERS/Dado Ruvic/Illustration
TC Energy (TRP.TO)(TRP) shares climbed in after-hours trading as the company announced its board approved a plan to spin off its liquids pipeline business as the energy infrastructure giant sheds assets.
Calgary-based TC announced the plan to “separate into two industry-leading, investment-grade companies” in a news release accompanying second-quarter financial results on Thursday. The separation is expected to be achieved on a tax-free basis to shareholders, and is anticipated to be complete in the second half of 2024, the company said.
“Today’s announcement to separate our natural gas pipelines and power and energy solutions businesses from our liquids pipelines business will maximize the value of our assets,” TC CEO Franois Poirier stated in the release. “The separated industry-leading companies will have greater strategic focus to execute major projects, drive efficiencies and operational excellence, and enhanced flexibility to pursue disciplined growth.”
New York-listed shares rose 3.60 per cent to $37.08 in after-hours trading at 5:05 p.m. ET.
Last fall, TC said it would generate more than $5 billion by selling "non-core" assets through 2023 in a bid to cut debt and cope with the ballooning costs of the Coastal GasLink pipeline.
On Monday, the company announced a $5.2 billion deal to sell a 40 per cent stake in two massive U.S. gas transmission systems to New York City-based Global Infrastructure Partners. Analysts speculated that more deals would follow.
TC said on Thursday that the decision to spin off the liquids pipeline business followed a comprehensive two-year review to unlock more shareholder value.
After the separation, the company said TC will focus on natural gas infrastructure as well as nuclear, pumped hydro energy storage and new energy opportunities. The new liquids pipeline business will focus on enhancing the value of the company's existing 4,900 kilometres of crude oil pipelines.
The spun off business will be publicly traded, and headquartered in Calgary, with an office in Houston, TX.
TC management is set to host a quarterly conference call at 8:30 a.m. ET on Friday to discuss the company's latest financial results.
Jeff Lagerquist is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jefflagerquist.