Veresen Inc. (TSX: VSN) has entered into agreements to sell its power generation business for $1.18 billion, in three separate packages. Veresen’s power business is focused on four core areas: gas-fired, renewable (wind and run-of-river), district energy and waste heat.
Each of the agreements is subject to closing adjustments and conditions customary in transactions of this nature. Closing is expected to occur during the second quarter of 2017 subject to the receipt of all necessary approvals.
TD Securities Inc. acted as the sole financial advisor on this divestiture.
“The sale of our power business is an important milestone in the delivery of our long-term business strategy, and we are very pleased with the outcome,” said Don Althoff, President and CEO of Veresen. “The $1.4 billion of contracted capital projects in our core natural gas and NGL infrastructure business is now fully funded with no need to access the capital markets, ensuring that top line growth translates into per share metrics. Additionally, the divestiture strengthens our balance sheet, further underpinning our dividend and providing greater flexibility to fund the incremental growth projects we expect to secure over the next 12 to 18 months.”
Veresen anticipates the minimal amount of cash taxes arising from the sale of the power business will be recovered in the following year. The company expects to update its 2017 guidance for the divestiture of the power business upon the closing of the sale process.
photo credit: Karsten Wurth via unsplash