The lack of interest by investors in ESG-unfriendly sectors seems to have pushed TC toward its split. Although chief executive officer François Poirier insists investors are not shying away from the pipeline industry, he conceded, “It’s just that there’s been so much growth on the gas and low-carbon side of the business.”
The company has been under scrutiny by analysts and credit-rating services for its significant debt load and cost overruns on the Coastal GasLink project in British Columbia. In a bid to reduce the debt load, on July 24, the company announced plans toin its Columbia Gas Transmission and Columbia Gulf Transmission systems in the United States for $5.2-billion, a relatively low valuation that screams desperation.
But a portion of TC’s long-term debt is also to be transferred to the newly formed liquids pipelines company on a cost-effective basis. Analysts have questioned how exactly this helps with the debt situation. The company’s oil business is marked by a bitter, decades-long and high-profile saga that spanned two prime ministers and two U.S. presidents. The ultimate cancellation of the 1,900-km-long Keystone XL pipeline project – which was set to carry 830,000 barrels of oil sands crude a day from Alberta to Nebraska – turned out to be a major setback for TC’s future ambitions.