TransCanada to Invest in Bruce Power
CALGARY, Alberta - Dec. 23, 2002 - (TSX: TRP) (NYSE: TRP) - TransCanada PipeLines Limited today announced that it has reached an agreement under which affiliates of TransCanada will acquire a 31.6 per cent interest in Bruce Power Limited Partnership (Bruce Power) and an approximate 33.3 per cent interest in Bruce Power Inc., the general partner of Bruce Power for approximately $376 million. TransCanada will also fund a one-third share ($75 million) of a $225 million accelerated deferred rent payment to Ontario Power Generation (OPG).
Currently, British Energy plc and Cameco Corporation (Cameco) indirectly hold the interests in Bruce Power together with the Power Workers' Union and The Society of Energy Professionals (the Unions). The interests in Bruce Power Inc. are currently held by Cameco and indirectly by British Energy plc.
TransCanada will execute the agreement as part of a consortium (the Consortium) that includes Cameco and BPC Generation Infrastructure Trust (BPC), a trust established by the Ontario Municipal Employees Retirement System. Under the agreement, the Consortium will acquire British Energy (Canada) Ltd.'s 79.8 per cent interest in Bruce Power as well as its 50 per cent interest in the Huron Wind L.P. power facility. British Energy (Canada) Ltd. is an indirectly wholly owned subsidiary of British Energy plc. Bruce Power is the tenant under a lease with OPG on the Bruce nuclear power facility. The lease expires in 2018 with an option to extend the lease by up to 25 years.
The agreement is expected to close in February 2003, pending any required consent of British Energy plc shareholders as well as CNSC and other regulatory consents. Upon closing, affiliates of TransCanada, Cameco and BPC will each own 31.6 per cent of Bruce Power and approximately 33.3 per cent of Bruce Power Inc. In addition to the Consortium's interest in Bruce Power, upon closing the Unions will exercise their existing rights to increase their combined ownership in Bruce Power from 2.6 per cent to 5.2 per cent.
The Bruce Power facility will continue to be managed and operated by the management and staff of Bruce Power. Under the terms of the lease, spent fuel and decommissioning liabilities remain the responsibility of OPG.
"TransCanada's investment in Bruce Power's low cost, base load power generation is a strong fit with our strategy to grow our power business in key North American markets," said Hal Kvisle, TransCanada's chief executive officer. "Ontario is one of the largest power markets in North America and it is core to our natural gas and power businesses."
Located between Port Elgin and Kincardine, Ontario, the Bruce Power facility is made up of two nuclear plants-- Bruce B and Bruce A. Bruce B consists of four reactors, currently generating a total of 3140 megawatts (MW). Bruce A consists of four-769 MW reactors, which are currently not operating. Two of the Bruce A units (3 and 4) are expected to be restarted and online by the summer of 2003, subject to receipt of all necessary regulatory approvals. Located adjacent to the Bruce Power site, the nine-megawatt Huron Wind L.P. wind farm was officially opened on November 29, 2002.
The restart of Bruce A units 3 and 4 is expected to deliver an additional approximate 1500 MW of electricity into the Ontario market and result in Bruce Power having an approximate 20 per cent share of that market. Currently, the majority of the output from Bruce B is sold under three to five year contracts.
With Bruce B and the pending restart of Bruce A units 3 and 4, the total amount of power TransCanada owns or has interests in, controls or has under construction will increase by approximately 1500 MW to more than 4150 MW.
"TransCanada's investment in Bruce Power is consistent with our objective of building a balanced portfolio of low-cost power generation assets," said Mr. Kvisle. "We know the Ontario market well. TransCanada has been a significant energy provider in the province for more than 40 years and an active participant in its power market for more than ten years. We have developed a solid appreciation for the reliability and cost-efficiency of Bruce Power-- one of the lowest cost, most reliable sources of power anywhere in North America."
Mr. Kvisle said TransCanada conducted extensive due diligence on the Bruce facility and the Bruce Power organization to be satisfied the Bruce Power team is fully capable of operating the facility to world-class standards. "TransCanada is not getting into the business of operating nuclear facilities -- rather, we are investing with strong partners in an excellent facility operated by a proven and capable team," he said. "We are confident the Bruce Power management and operating team will continue to run the facility safely and efficiently."
Mr Kvisle said TransCanada's investment in Bruce Power is a solid fit with the company's strategy of maintaining and utilizing its financial strength. "We will not compromise our strong financial position and we will continue to fund our business in a manner that is consistent with our "A" credit rating," he said.
"Over the past two years, TransCanada has consistently applied diligence and discipline to the management and growth of its power and natural gas transmission businesses. We will continue to evaluate opportunities in these businesses with a focus on the acquisition of highly efficient assets that enhance shareholder value."
Analyst/Media Teleconference Dial-in and Web cast Information
TransCanada will hold a teleconference today at 9:00 a.m. (Mountain)/11:00 a.m. (Eastern) to discuss this announcement. Analysts, members of the media and other interested parties wanting to participate in the call should dial 1-800-273-9672 or 416-695-5806 (Toronto area) at least 10 minutes prior to the start of the call. No pass code is required. A live audio and slide presentation Web cast of the teleconference will also be available on TransCanada's Web site at www.transcanada.com.
The conference will begin with a brief address by members of TransCanada's executive management, followed by a question and answer period for investment analysts. A question and answer period for members of the media will immediately follow. A replay of the teleconference will be available two hours after the conclusion of the call until midnight December 30, 2002 by dialing 1-800-408-3053 or 416-695-5800 (Toronto area) and entering pass code 1337341. The Web cast will be archived and available for replay.
Hal Kvisle In-Person Media Interview Information
TransCanada will also host a brief in-person media interview session with Hal Kvisle today at 11:00 a.m. (Mountain). The session will be held on the second floor of the TransCanada Tower at 450 - 1st Street S.W. Calgary (enter through the main lobby and proceed to the second floor via the escalator or parking elevator).
TransCanada is a leading North American energy company. It is focused on natural gas transmission and power services with employees who are expert in these businesses. The company's network of approximately 38,000 kilometres of pipeline transports the majority of western Canada's natural gas production to the fastest growing markets in Canada and the United States. Upon closing the Bruce Power transaction, TransCanada will own or have interests in, control, manage or be constructing facilities for approximately 4150 megawatts of power -- an amount of power that can meet the needs of about four million average households. The company's common shares trade under the symbol TRP on the Toronto and New York stock exchanges. Visit us on the internet at www.transcanada.com for more information.
Note: All financial figures are in Canadian dollars unless otherwise indicated.
Forward Looking Information
Certain information in this news release is forward-looking and is subject to important risks and uncertainties. The results or events predicted in this information may differ from actual results or events. Factors which could cause actual results or events to differ materially from current expectations include, among other things, the ability of TransCanada to successfully implement its strategic initiatives and whether such strategic initiatives will yield the expected benefits, the availability and price of energy commodities, regulatory decisions, competitive factors in the pipeline and power industry sectors, and the current economic conditions in North America. For additional information on these and other factors, see the reports filed by TransCanada with Canadian securities regulators and with the United States Securities and Exchange Commission. TransCanada disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
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