TRP sets spinoff terms

Article Excerpt

TC ENERGY INC., $54.50, is a buy. The company (Toronto symbol TRP; Shares o/s: 1.0 billion; Market cap: $56.5 billion; TSINetwork Rating: Above Average; Dividend yield: 7.1%; www.tcenergy.com) has set the terms for the upcoming spinoff of its oil pipeline business (called South Bow Corp.): investors will receive 0.2 of a South Bow share for every TC share they hold. The new shares will trade on the Toronto and New York exchanges under the “SOBO” symbol. Assuming shareholders approve, the company expects to complete the transaction in the second half of 2024. After the spinoff, TC will focus on its gas pipelines and electrical power operations. The company promises that the combined dividend of the two firms (roughly 86% from TC and 14% from South Bow) will be no less than TC’s annual dividend rate just prior to the split. After the split, the new South Bow company plans to increase its dividend by 2% to 3% annually. The former parent company aims to raise its…