By Chester Dawson

CALGARY, Alberta -- TransCanada Corp. said it swung to a net loss in the third quarter largely because of a write-off on its Northeast U.S. renewable power generation business, which it has agreed to sell to help fund a major gas pipeline system deal.

The company posted a net loss Tuesday of 135 million Canadian dollars ($101 million), or 17 Canadian cents a share, for the three months ended Sept. 30 compared with a profit of C$402 million, or C$0.53 a share, in the year-earlier period. TransCanada attributed the loss to a C$656 million write-down related to the sale of the U.S. hydroelectric, thermal and wind-powerassets.

Adjusted to exclude that impairment and other one-time items, TransCanada said third-quarter net income rose to C$622 million, or C$0.78 per share, compared with C$440 million, or C$0.62 a share, in the same period in 2015. Revenue climbed 19% to C$3.63 billion.

Those gains resulted largely from incremental earnings growth related to the deal for Columbia Pipeline Group Inc., which closed July 1, and higher rates from its ANR natural-gas pipeline network connecting the U.S. Midwest with the Gulf of Mexico, it said.

In March, the company agreed to pay $10.2 billion for Houston-based Columbia, which owns 15,000 miles of gas pipelines from New York to the Gulf of Mexico, as well as one of the country's largest underground storage systems and other infrastructure.

TransCanada said it would raise $3.7 billion from selling the renewable energy assets in the U.S. Northeast primarily from two transactions -- a $2.2 billion deal for the thermal and wind businesses with an affiliate of LS Power Equity Advisors and a separate $1.1 billion deal with ArcLight Capital Partners LLC for the hydroelectric business.

The Calgary-based pipeline operator said those proceeds would help finance its acquisition of Columbia and allow it to retain ownership of gas pipelines in Mexico, in which it had previously planned to sell minority stakes to raise capital.

"The sale of our merchant U.S. Northeast Power business to fund a portion of our acquisition of Columbia will further enhance the stability and predictability of our earnings and cash flow streams and support a strong and growing dividend," said Chief Executive Russ Girling in a statement.

TransCanada also plans to raise C$3.2 billion in new equity through a so-called bought deal, in which a banking syndicate will buy the entire offering for resale to investors. The company said it would sell 54.8 millionshares at an agreed price of C$58.50 per share.

In another move related to the Columbia acquisition, TransCanada said it would purchase all shares outstanding of master limited partnership Columbia Pipeline Partners LLC for $915 million, or $17 a unit. In October, the Canadian company offered $848 million, or $15.75 a unit, for that affiliate. That effectively increases TransCanada's ownership of Columbia assets to 100% from 91.6%, it said.

The deal making prompted the company to move up the release of its earnings one day earlier than previously planned.

Write to Chester Dawson at

(END) Dow Jones Newswires

November 01, 2016 19:27 ET (23:27 GMT)

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