TransCanada shares were lower nearly 5% on Wednesday as the company said that it has agreed to dispose of some U.S. northeast power assets, realizing $3.7 billion in monetization but ultimately resulting in a $1.1 billion net loss.
First U.S. power and energy infrastructure owner LS Power Equity Advisors said that it has agreed to buy approximately 3,950 MW of generation resources in the Northeastern U.S. from TransCanada Corporation for $2.2 billion in cash. The deal is expected to close in Q1 of 2017.
TransCanada said it is also selling TC Hydro to Great River Hydro an affiliate of ArcLight Capital Partners, for US$1.07 billion.
The remainder of the $3.7 billion monetization is expected to come from TransCanada’s power marketing business, which is expected to be realized going forward. The two sale transactions are expected to close in the first half of 2017 subject to certain regulatory and other approvals.
The company said the deals are expected to result in an approximate $1.1 billion after-tax net loss, comprised of a $656 million after-tax goodwill impairment charge recorded at Sept. 30, an approximate $863 million after-tax net loss on the sale of the thermal and wind package to be recorded in the fourth quarter of 2016 and an approximate $443 million after-tax gain on the sale of the hydro assets upon close of that transaction in 2017.