TransCanada Continues Its U.S. Push

Article Excerpt

TRANSCANADA CORP. $39 (Toronto symbol TRP; Conservative Growth Portfolio, Utilities sector; SI Rating: Above average) has agreed to buy a natural gas pipeline system that transports gas from Northern Texas and the Gulf of Mexico to several Midwest states for $3.4 billion U.S. The deal also includes several gas storage facilities. This is a sizeable purchase for TransCanada, which earned $1.60 a share (total $782 million) in the first nine months of 2006. It has just $342 million ($0.70 a share) in cash, so it will have to borrow the money it needs. To help maintain its high credit rating and keep interest costs down, TransCanada will probably issue about $1 billion in new common shares. That would increase its number of shares outstanding by 5%. These new pipelines fit nicely with TransCanada’s existing U.S. operations, and should help cut its operating costs. The new gas storage facilities will triple the company’s capacity, making it the largest storage provider in North America. This business…

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