CALGARY, Alberta—TransCanada Corp. has agreed to sell thermal carbon black maker Cancarb Ltd. and its related power generation facility to Tokai Carbon Co. Ltd. for $190 million.
The transaction is expected to close late in this year's first quarter, subject to various approvals.
According to TransCanada, the divestiture of Cancarb and its waste heat recovery power plant, located in Medicine Hat, Alberta, allows it to capitalize on current market conditions and better align its asset base with the company's strategic direction, focused on large-scale pipeline and power generation projects in Canada, the U.S. and Mexico.
Cancarb, acquired by TransCanada in 1981, is a producer of thermal carbon black, a specialized form of carbon black derived from super-heated natural gas that is used in a wide range of industrial and automotive products, including high-grade rubber, insulation and ceramics.
The adjoining 41-megawatt power plant that was added in 2001 captures large volumes of waste heat from the manufacturing process to produce electricity that is sold into Medicine Hat's electrical grid, helping to reduce greenhouse gas emissions.TransCanada regularly evaluates it portfolio of assets, according to Russ Girling, TransCanada president and chief executive officer. "The proceeds from this sale will help fund TransCanada's unprecedented capital growth plan that includes $38 billion in new projects to be completed by the end of the decade," he said.
Girling said that low natural gas prices, "combined with Cancarb's strong performance and global market share for thermal carbon black, made it an attractive investment for prospective buyers. Decisions like this are intended to build a stronger company for everyone, and we are committed to ensuring Cancarb's employees are treated fairly during the transition to new ownership."
Tokyo-based Tokai Carbon Co. Ltd. is an international supplier of furnace carbon black and other carbon ceramic-related products.
TransCanada previously attempted to sell Cancarb in 2000 to Sid Richardson Carbon Co.; however Sid Richardson bowed out of the agreement in 2001, citing changing economic conditions.
Toward the end of 2001, TransCanada pulled Cancarb from the market because it had sold about other assets earlier in the year and no longer needed to address its balance sheet, the firm said at the time.
With more than 60 years' experience, TransCanada operates a network of natural gas pipelines that extends more than 42,500 miles, tapping into virtually all major gas supply basins in North America.
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