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Kinder Morgan seeks $1.75-billion IPO to fund Trans Mountain

Replacement pipe is stored near crude oil storage tanks at Kinder Morgan's Trans Mountain Pipeline terminal in Kamloops, British Columbia, Canada November 15, 2016.

CHRIS HELGREN/REUTERS

Kinder Morgan Inc.'s Canadian unit is seeking to raise $1.75-billion in an initial public offering to help fund its contentious Trans Mountain pipeline expansion as the project inches closer to construction.

Houston-based Kinder Morgan plans to offer the restricted voting shares at between $19 and $22 apiece while retaining an ownership stake of up to 77 per cent, according to an updated prospectus filed Wednesday.

The offering is led by Toronto-Dominion Bank and Royal Bank of Canada and is expected to be completed by the end of May. It will list on the Toronto Stock Exchange.

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It comes amid fresh uncertainty for major energy projects in British Columbia. Tuesday's provincial election reduced the governing Liberal Party to minority status with 43 seats, and gave the Green Party unprecedented sway with three seats in the legislature.

Both the Greens and provincial New Democratic Party, which took 41 seats, oppose the Trans Mountain project, although it remains unclear whether and how they might actually block it.

Ottawa approved the $7.4-billion pipeline expansion last fall. It would boost capacity on the Edmonton-to-Burnaby, B.C., network to 890,000 barrels a day, from 300,000 barrels currently. The project is billed as a key outlet for Canada's oil industry, which has been plagued by tight export capacity for years as production boomed. Kinder Morgan aims to start construction later this year, despite numerous court challenges and entrenched opposition from First Nations and local governments along the coast.

The company had previously sought a partner for the project. Its Canadian assets also include storage terminals and such pipelines as its Cochin conduit in Alberta and the system that delivers jet fuel to the Vancouver International Airport.

It is targeting an annualized dividend of 65 cents per restricted voting share, according to the filing.

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About the Author

Jeff Lewis is a reporter specializing in energy coverage for The Globe and Mail’s Report on Business, based in Calgary. Previously, he was a reporter with the Financial Post, writing news and features about Canada’s oil industry. His work has taken him to Norway and the Canadian Arctic. More

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