Stock Watch – TransCanada will use the proceeds from the deal to back its capital growth plan.
Canadian energy infrastructure company TransCanada Corporation (TSE:TRP, Mkt cap 35.41B, P/E 20.69, Div/yield 0.48/3.84, EPS 2.42, Shares 707.60M) has wrapped up the sale of its unit Cancarb Ltd and an associated waste-heat recovery power facility in a transaction that fetched $190 million in gross proceeds, the company said in a statement.
The assets were sold to Tokai Carbon Co Ltd, a company based in Japan that produces and sells a wide range of carbon products. TransCanada expects to register a $95 million net gain from the divestment, which will be reflected in its second quarter results.
TransCanada agreed to sell the Alberta-based subsidiary in January, saying the disposal would allow it to make use of current market conditions and better adjust its asset base to its strategy, which is centered around large-scale pipeline and power generation across Canada, the United States and Mexico.
The company said it would use the proceeds from the deal to back its capital growth plan, which requires $38 billion in investments for projects set for completion by the end of the decade.
Cancarb became an asset of TransCanada in 1981. The company is a major producer of “thermal carbon black,” a material derived from heated natural gas used in a broad range of products such as high-grade rubber, insulation and ceramics. The 41-megawatt power plant, which captures waste heat from the manufacturing process to produce power that is then distributed via the local electrical grid, was added in 2001.
TransCanada built new infrastructure projects in 2013 valued at $6.1B. It has $38 billion of additional projects secured by long-term contracts scheduled for completion by 2018.
TransCanada recently raised its quarterly dividend by 4.3%, to $0.48 a share from $0.46. The new annual rate of $1.92 yields 3.8%. The company has raised its dividend annually for the past 14 years.
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