28 LEXPERT
|
2016
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WWW.LEXPERT.CA
PHOTO:
SHUTTERSTOCK
Bought Deal
Breakdown
TransCanada lined up
an enormous amount
of funding to purchase
Columbia Pipeline
INTERVIEW By David Dias
LEXPERT: e Columbia acquisition was announced in March and
the bought deal closed in April, so that's not a lot of time to pull
something like this off. Are the banks lined up well in advance?
Johnston, Bentley, Archer (Deal Team): TransCanada had to ensure
that it had financing arrangements in place such that, if all condi-
tions to the transaction were satisfied, it would be able to fully fund
the purchase price of approximately US$10.3 billion. Similarly,
Columbia needed to be comfortable that TransCanada had made
adequate arrangements so as to ensure certainty of financing before
it agreed to enter into and announce the transaction with Trans-
Canada. ese separate but similar requirements necessarily meant
that work on the entirety of the transaction financing structure
commenced well in advance of the Columbia acquisition being an-
nounced on March 17, 2016. ... And because of the need to ensure
confidentiality regarding all discussions pertaining to the acquisi-
tion and related financing, it was important that all required work
be undertaken by a tight, focused, experienced transaction team
comprising TransCanada and its legal and financial advisors and
the financing parties and their legal advisors.
So, having regard to such a significant financing requirement,
as well as TransCanada's existing capital structure, TransCanada
sought to develop a financing plan that was executable in the capital
markets, that fully funded the deal at the most effective total cost of
FINANCING
Before the deal team at TransCanada Corp.
could execute on its historic US$10.3-billion
acquisition of Columbia Pipeline Group Inc.,
it had to achieve another monumental feat —
the completion of what was then the largest
bought-deal financing in Canadian history,
involving more than a dozen financial institu-
tions. Here, the transactional team gives us
a rundown of the preparation involved, chal-
lenges overcome and lessons learned.
