In recent weeks, some financial analysts and a small group of investors have been critical of TransCanada’s current corporate structure and business strategy. Sandell Asset Management argues that the company may be worth more to shareholders by breaking up its pipeline and power generation businesses into separate entities and that management should take other steps to enhance the value of the company.
We appreciate constructive input from our shareholders, and we regularly engage in open dialogue with them to discuss all aspects of our operations and strategy. After careful review of the proposals put forward by these investors, however, our executive leadership team and the Board of Directors believes they are based on flawed analysis and do not provide the best long-term value for our shareholders.
Over the past 60 years, TransCanada has established itself as one of North America’s leading energy infrastructure companies, with a blue-chip portfolio of assets that has consistently delivered attractive and sustainable growth in earnings, cash flow and dividends. Our diversified operations have enabled TransCanada to maintain stability and financial flexibility to weather a broad range of market and economic conditions over the last decade. This success speaks for itself in the form of consistent increases to our dividend and a 15 per cent annualized total shareholder return since 2000.
Looking forward, we are embarking on a period of unprecedented growth that endeavours to transform the company and generate significant benefit for our shareholders. Our capital program now includes $46 billion in new pipeline and power generation projects, all of which are underpinned by long-term contracts or cost-of-service agreements that will provide predictable cash flow for years to come. $13 billion of these growth opportunities are small to medium-sized projects that are expected to begin operation before the end of 2018, subject to regulatory approvals. Bringing our capital plan to life is expected to grow our company to $90 billion in assets by 2020, and is anticipated to more than double our expected earnings before interest, taxes, depreciation and amortization (EBITDA) to $10 billion from $4.8 billion last year. It will also enable us to double the growth rate of our dividend, which we expect will rise from the current four per cent compound annual growth rate over the last four years to more than eight per cent over the next four years and to 10 per cent or more after 2018*.
A key element of funding this future growth is our plan to continue selling the remaining portfolio of U.S. natural gas pipeline assets into our master limited partnership, TC PipeLines, LP, in order to generate significant cash to pursue our new capital projects. Last month, the corporation sold its remaining 30 per cent interest in the Bison Pipeline to TC PipeLines, LP. That was followed by the announcement earlier this week of our offer to sell the remaining 30 per cent interest in Gas Transmission Northwest to TC PipeLines, LP. The offer is subject to the approval of the board of the general partner of TC PipeLines, LP and is expected to close in the first quarter of 2015.
I firmly believe that our current strategy of maximizing the performance of our assets while pursuing a strong list of low-risk, commercially-secured growth opportunities in areas where we have an established presence and hold a true competitive advantage best positions us to deliver long-term value to our shareholders.
As always, we will continue to evaluate opportunities to optimize the value of our asset base and pursue partnerships to underpin key future growth projects. I would like to thank our shareholders for placing their confidence in TransCanada. Our Investor Relations team welcomes your input and questions and we invite you to learn more about our current strategy and exciting growth plans by viewing the materials from our annual Investor Day held in Toronto this week.
* FORWARD LOOKING INFORMATION
This publication contains certain information that is forward-looking and is subject to important risks and uncertainties (such statements are usually accompanied by words such as “anticipate”, “expect”, “believe”, “may”, “will”, “should”, “estimate”, “intend” or other similar words). Forward-looking statements in this document are intended to provide TransCanada security holders and potential investors with information regarding TransCanada and its subsidiaries, including management’s assessment of TransCanada’s and its subsidiaries’ future plans and financial outlook. All forward-looking statements reflect TransCanada’s beliefs and assumptions based on information available at the time the statements were made and as such are not guarantees of future performance. Readers are cautioned not to place undue reliance on this forward-looking information, which is given as of the date it is expressed in this news release, and not to use future-oriented information or financial outlooks for anything other than their intended purpose. TransCanada undertakes no obligation to update or revise any forward-looking information except as required by law. For additional information on the assumptions made, and the risks and uncertainties which could cause actual results to differ from the anticipated results, refer to the Quarterly Report to Shareholders dated November 3, 2014 and 2013 Annual Report filed under TransCanada’s profile on SEDAR at www.sedar.com and with the U.S. Securities and Exchange Commission at www.sec.gov.