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TC PipeLines, LP Raises Distribution and Announces 2013 Second Quarter Financial Results

TC PipeLines, LP Raises Distribution and Announces 2013 Second Quarter 
Financial Results 
HOUSTON, TEXAS -- (Marketwired) -- 07/24/13 -- TC PipeLines, LP
(NYSE:TCP) (the Partnership) today announced that the board of
directors of TC PipeLines GP, Inc., its general partner (the General
Partner), declared the Partnership's second quarter 2013 cash
distribution of $0.81 per common unit, a three cent (3.8 percent)
increase over the distribution paid in first quarter 2013. The
distribution is payable on August 14, 2013 to unitholders of record
as of the close of business on August 5, 2013. 
"The July 1, 2013 acquisition of additional 45 percent interests in
each of GTN and Bison was well received by the market as evidenced by
our successful financing activities and recent unit price
performance," said Steve Becker, president of TC PipeLines, GP, Inc.
"The increase in our cash distribution reflects the anticipated
enhancement to our portfolio from the additional interests in these
solid, cash flow generating assets."  
The Partnership also reported second quarter 2013 Partnership cash
flows of $42 million and net income of $23 million. 
"The Partnership continued to perform as expected in the second
quarter reflecting the long-term contracted nature of our portfolio
of essential energy infrastructure assets," continued Becker. "With
our strong balance sheet, we believe the Partnership is well
positioned to deliver long-term value and solid results in the
future." 
Second Quarter 2013 Highlights (All financial figures are unaudited) 


 
--  Raised second quarter 2013 cash distribution to $0.81 per common unit
    marking the 14th consecutive year of increasing distributions for the
    Partnership. 
--  Partnership cash flows of $42 million. 
--  Paid cash distributions of $43 million or $0.78 per common unit. 
--  Net income of $23 million. 
--  Acquired additional 45 percent interests in each of Gas Transmission
    Northwest LLC (GTN) and Bison Pipeline LLC (Bison) on July 1. 
--  Issued 8.855 million common units in a public offering for net proceeds
    of $373 million. 
--  Raised $500 million in bank term debt with the Partnership's existing
    syndicate of lenders. 

 
The Partnership's financial highlights for the second quarter of 2013
compared to the second quarter of 2012 were: 


 
                                   Three months ended      Six months ended 
(unaudited)                                  June 30,              June 30, 
(millions of dollars except per                                             
 common unit amounts)                 2013       2012       2013       2012 
----------------------------------------------------------------------------
Partnership cash flows(a)               42         52         86        102 
Cash distributions paid                (43)       (42)       (85)       (84)
Cash distributions declared per                                             
 common unit                      $   0.81   $   0.78   $   1.59   $   1.55 
Net income                              23         33         52         72 
Net income per common unit(b)     $   0.40   $   0.60   $   0.92   $   1.31 
Weighted average common units                                               
 outstanding (millions)               57.4       53.5       55.4       53.5 
Common units outstanding at end                                             
 of period (millions)                 62.3       53.5       62.3       53.5 
                                                                            
(a) Partnership cash flows is a non-GAAP financial measure. Refer to the    
    description of Partnership Cash Flows in the section of this release    
    entitled "Partnership Cash Flows" and the Supplemental Schedule Non-GAAP
    Measures for further detail.                                            
(b) Net income per common unit is computed by dividing net income, after    
    deduction of the General Partner's allocation, by the weighted average  
    number of common units outstanding. The General Partner's allocation is 
    computed based upon the General Partner's effective two percent general 
    partner interest plus an amount equal to incentive distributions. On May
    22, 2013, the Partnership issued 8.855 million common units in a public 
    offering.                                                               

 
Recent Developments 
GTN and Bison Additional Membership Interests Acquisition - On July
1, 2013, the Partnership acquired additional 45 percent membership
interests in each of GTN and Bison (the "Acquisition") from
subsidiaries of TransCanada. The total purchase price of the
Acquisition, subject to certain post-closing adjustments, was $1,050
million plus closing adjustments for working capital of $17 million
(the "Purchase Price").  
The Purchase Price consisted of (i) $750 million for the GTN
membership interest (less $146 million, which reflected 45 percent of
GTN's outstanding debt at the time of the Acquisition), (ii) $300
million for the membership interest in Bison and (iii) closing
working capital adjustments. The resulting $921 million paid by the
Partnership was financed through a combination of (i) a public
offering of 8,855,000 common units at $43.85 per common unit
resulting in net proceeds of $373 million, (ii) borrowing of $500
million in bank term loans, (iii) a capital contribution from the
General Partner of $8 million which was required to maintain the
General Partner's effective two percent general partner interest in
the Partnership, and (iv) a draw on the Partnership's existing $500
million senior revolving credit facility and cash on hand.  
Term Loan Facility - On July 2, 2013, the Partnership borrowed $500
million under a new term loan facility with a syndicate of lenders,
which matures on July 1, 2018. The outstanding principal bears
interest based on the London interbank offered rate plus an
applicable margin. 
Equity Offering - On May 22, 2013, the Partnership completed a public
offering of 8,855,000 common units at $43.85 per common unit for
gross proceeds of $388 million and net proceeds of $373 million after
unit issuance costs. The General Partner maintained its effective two
percent general partner interest in the Partnership by contributing
$8 million to the Partnership in connection with the offering.  
Cash Distributions - On July 23, 2013, the board of directors of our
General Partner declared the Partnership's second quarter 2013 cash
distribution in the amount of $0.81 per common unit payable on August
14, 2013 to unitholders of record as of August 5, 2013. 
Liquidity and Capital Resources 
Partnership Cash Flows  
Partnership cash flows decreased by $10 million to $42 million in the
second quarter of 2013 compared to $52 million in the same period of
2012. This decrease was primarily due to lower cash distributions
from Great Lakes of $6 million and Northern Border of $4 million as
compared to the same period of 2012.  
The Partnership paid distributions of $43 million in the second
quarter of 2013, an increase of $1 million compared to the same
period in 2012. 
The Partnership uses the non-GAAP financial measures "Partnership
cash flows" and "Partnership cash flows before General Partner
distributions" as they provide measures of cash generated during the
period to evaluate our cash distribution capability. Management also
uses these measures as a basis for recommendations to our General
Partner's board of directors regarding the distribution to be
declared each quarter. Partnership cash flow information is presented
to enhance investors' understanding of the way that management
analyzes the Partnership's financial performance. 
Partnership cash flows include cash distributions from the
Partnership's equity investments, Great Lakes, Northern Border, GTN
and Bison, plus operating cash flows from the Partnership's
wholly-owned subsidiaries, North Baja and Tuscarora, net of
Partnership costs and distributions declared to the General Partner.  
Partnership cash flows and Partnership cash flows before General
Partner distributions are provided as a supplement to GAAP financial
results and are not meant to be considered in isolation or as
substitutes for financial results prepared in accordance with GAAP. 
Contractual Obligations 
At June 30, 2013, there was no outstanding balance on the
Partnership's $500 million senior revolving credit facility. The zero
balance was a result of a repayment of the revolving facility with
the proceeds from the Partnership's equity offering. Upon close of
the Acquisition, the revolving facility was redrawn to $360 million.
The Partnership was in compliance with the covenants of the credit
agreement at June 30, 2013. 
Net Income 
For the three months ended June 30, 2013, net income decreased by $10
million to $23 million compared to $33 million in the second quarter
of 2012. This decrease was primarily due to lower equity earnings
from Great Lakes and increased general and administrative expenses.  
Equity earnings from Great Lakes were nil in the second quarter of
2013, a decrease of $8 million compared to the same period in 2012.
The decrease was due to lower revenue resulting from contracted
capacity at lower rates and volumes in the second quarter of 2013
compared to the same period in 2012.  
General and administrative expenses were $4 million in the second
quarter of 2013, an increase of $2 million compared to the same
period in 2012. This increase was due to expenses incurred in
relation to the acquisition of additional interests in GTN and Bison. 
Conference Call 
Analysts, members of the media, investors and other interested
parties are invited to participate in a teleconference by calling
866.223.7781 today, Wednesday, July 24, 2013 at 10 a.m. central
daylight time (CDT)/11 a.m. eastern daylight time (EDT). Steve
Becker, President of the General Partner, will discuss the
Partnership's financial results and latest developments. Please dial
in 10 minutes prior to the start of the call. No pass code is
required. Interested parties can also listen to a live webcast and
replay of the conference call by accessing the Investor Center
portion of the Partnership's website at www.tcpipelineslp.com. Slides
with information that may be discussed during the webcast will be
posted on the Investor Center of the Partnership's website under
"Events and Presentations" prior to the webcast. 
A replay of the teleconference will also be available two hours after
the conclusion of the call and until 11 p.m. (CDT) and midnight (EDT)
on July 31, 2013, by calling 800.408.3053, then entering pass code
1767681. 
TC PipeLines, LP is a Delaware master limited partnership with
interests in six federally regulated U.S. interstate natural gas
pipelines which serve markets in western and mid-western United
States and Eastern Canada. The Partnership is managed by its general
partner, TC PipeLines GP, Inc., a subsidiary of TransCanada
Corporation (NYSE:TRP). For more information about TC PipeLines, LP,
visit the Partnership's website at www.tcpipelineslp.com. 
Forward-Looking Statements 
Certain non-historical statements in this release relating to future
plans, projections, events or conditions, including our belief that
the Partnership is well positioned to deliver long-term value and
solid results in the future, are intended to be "forward-looking
statements" within the meaning of Section 27A of the Securities Act
of 1933 and Section 21E of the Securities Exchange Act of 1934. These
statements are based on current expectations and, therefore, subject
to a variety of risks and uncertainties that could cause actual
results to differ materially from the projections, anticipated
results or other expectations expressed in this release, including,
without limitation, competitive conditions in the natural gas
industry, increases in operating and compliance costs, the outcome of
rate proceedings, our ability to identify and complete expansion and
growth opportunities, operating hazards beyond our control,
availability of capital and market demand that the Partnership
expects or believes will or may occur in the future. These and other
factors that could cause future results to differ materially from
those anticipated are discussed in Item 1A in our Annual Report on
Form 10-K for the year-ended December 31, 2012 filed with the
Securities and Exchange Commission (the "SEC"), as updated and
supplemented by subsequent filings with the SEC. All forward-looking
statements are made only as of the date made and except as required
by applicable law, we undertake no obligation to update any
forward-looking statements to reflect new information, subsequent
events or other changes. 
TC PipeLines, LP 
Financial Summary 
Consolidated Statement of Income 


 
                                   Three months ended      Six months ended 
(unaudited)                                  June 30,              June 30, 
(millions of dollars except per                                             
 common unit amounts)                 2013       2012       2013       2012 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
Equity earnings from                                                        
 unconsolidated affiliates              22         31         48         69 
Transmission revenues                   16         16         33         32 
Operating expenses                      (3)        (4)        (7)        (8)
General and administrative              (4)        (2)        (6)        (4)
Depreciation                            (3)        (3)        (6)        (6)
Financial charges and other             (5)        (5)       (10)       (11)
                                --------------------------------------------
Net income                              23         33         52         72 
                                --------------------------------------------
                                --------------------------------------------
                                                                            
Net income allocation                                                       
Common units                            23         32         51         70 
General Partner                          -          1          1          2 
                                --------------------------------------------
                                        23         33         52         72 
                                --------------------------------------------
                                --------------------------------------------
                                                                            
Net income per common unit-                                                 
 basic and diluted                $   0.40   $   0.60   $   0.92   $   1.31 
                                --------------------------------------------
                                --------------------------------------------
                                                                            
Weighted average common units                                               
 outstanding                                                                
(millions) - basic and diluted        57.4       53.5       55.4       53.5 
                                --------------------------------------------
                                --------------------------------------------
                                                                            
Common units outstanding, end of                                            
 period                                                                     
(millions)                            62.3       53.5       62.3       53.5 
                                --------------------------------------------
                                --------------------------------------------

 
TC PipeLines, LP 
Financial Summary 
Consolidated Condensed Balance Sheet 


 
(unaudited)                                                                 
                                                       June 30, December 31,
(millions of dollars)                                      2013         2012
----------------------------------------------------------------------------
ASSETS                                                                      
Current assets                                               74           12
Investment in unconsolidated affiliates                   1,545        1,563
Other assets                                                416          423
                                                   -------------------------
                                                          2,035        1,998
                                                   -------------------------
                                                   -------------------------
                                                                            
----------------------------------------------------------------------------
LIABILITIES AND PARTNERS' EQUITY                                            
Current liabilities                                           8            8
Other liabilities                                             2            1
Long-term debt, including current portion                   376          688
Partners' equity                                          1,649        1,301
                                                   -------------------------
                                                          2,035        1,998
                                                   -------------------------
                                                   -------------------------

 
TC PipeLines, LP 
Supplemental Schedule 
Non-GAAP Measures  
Reconciliation of Net Income to Partnership Cash Flows 


 
                                   Three months ended      Six months ended 
(unaudited)                                  June 30,              June 30, 
(millions of dollars except per                                             
 common unit amounts)                 2013       2012       2013       2012 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Net income                              23         33         52         72 
Add:                                                                        
Cash distributions from Great                                               
 Lakes (a)                               6         12         12         23 
Cash distributions from Northern                                            
 Border (a)                             22         26         44         51 
Cash distributions from GTN (a)          8          8         14         13 
Cash distributions from Bison                                               
 (a)                                     3          4          7          8 
Cash flows provided by Other                                                
 Pipes' operating activities            13         11         27         25 
                                --------------------------------------------
                                        52         61        104        120 
                                                                            
Less:                                                                       
Equity earnings from                                                        
 unconsolidated affiliates             (22)       (31)       (48)       (69)
Other Pipes' net income                (10)       (10)       (20)       (19)
                                --------------------------------------------
                                       (32)       (41)       (68)       (88)
                                --------------------------------------------
                                                                            
Partnership cash flows before                                               
 General Partner distributions          43         53         88        104 
General Partner distributions                                               
 (b)                                    (1)        (1)        (2)        (2)
                                                                            
Partnership cash flows                  42         52         86        102 
                                --------------------------------------------
                                                                            
Cash distributions declared            (52)       (43)       (94)       (85)
Cash distributions declared per                                             
 common unit (c)                  $   0.81   $   0.78   $   1.59   $   1.55 
                                                                            
Cash distributions paid                (43)       (42)       (85)       (84)
Cash distributions paid per                                                 
 common unit (c)                  $   0.78   $   0.77   $   1.56   $   1.54 
                                --------------------------------------------
                                --------------------------------------------
(a) In accordance with the cash distribution policies of the respective     
    entities, cash distributions from Great Lakes, Northern Border, GTN and 
    Bison are based on their respective prior quarter financial results.    
(b) General Partner distributions represent the cash distributions declared 
    to the General Partner with respect to its effective two percent General
    Partner interest plus an amount equal to incentive distributions.       
(c) Cash distributions declared per common unit and cash distributions paid 
    per common unit are computed by dividing cash distributions, after the  
    deduction of the General Partner's allocation, by the number of common  
    units outstanding.                                                      

Contacts:
TC PipeLines, LP
Media Inquiries:
Shawn Howard/Grady Semmens
403.920.7859
investor_relations@tcpipelineslp.com 
TC PipeLines, LP
Unitholder and Analyst Inquiries:
Rhonda Amundson
877.290.2772
investor_relations@tcpipelineslp.com
www.tcpipelineslp.com