TransCanada Delivers Increased Earnings, Cash Flow; Board Raises Dividend
CALGARY, Alberta - January 28, 2003 - (TSE: TRP) (NYSE: TRP)
Year-end and Fourth Quarter 2002 Highlights:
(All financial figures are in Canadian dollars unless noted otherwise)
"Our focus in 2002 was on the diligent and disciplined implementation of the key strategies we established more than two years ago," said Hal Kvisle, TransCanada's chief executive officer. "As a result, we've delivered another year of consistently strong financial performance with increases in our income and cash flow. We are particularly proud of the level and quality of our 2002 funds from operations, which increased by 13 per cent relative to 2001.
"Enhancing shareholder value is always our primary goal in determining the best use of our discretionary cash flow. We are pleased that the increases in earnings and cash flow have enabled the Board to increase the dividend for the third consecutive year. This is a significant achievement and clearly shows that our focus on our two core businesses of natural gas transmission and power continues to work well."
TransCanada's financial position continued to improve during 2002 as it repaid debt maturities of $486 million, reduced notes payable by $46 million and increased shareholders' equity by $320 million. The company's liquidity position remains strong as it continues to generate substantial operating cash flow and, aside from ongoing maintenance requirements and the pending Bruce
Power transaction, has limited capital commitments going forward.
During the fourth quarter, TransCanada established a new $1.5 billion syndicated credit facility, replacing existing lines set to expire in mid-2003, and also filed universal shelf prospectuses with Canadian and U.S. securities regulators in the amount of $2 billion and US$1 billion respectively.
"Our balance sheet remains strong and, as demonstrated in the fourth quarter, we remain extremely well positioned to act on opportunities for growth in our core businesses of natural gas transmission and power generation," said Mr. Kvisle.
TransCanada's strategies for growth and value creation continue to be:
"We believe there will be significant opportunities to continue to grow our pipeline and power businesses over the next decade," said Mr. Kvisle. "However, we will not pursue growth for growth's sake. We will continue to carefully evaluate all opportunities with a focus on the acquisition and construction of highly efficient assets that enhance shareholder value. We will continue to fund our businesses in a manner that is consistent with our 'A' credit rating.
"Our goal is to be one of the most profitable, competitive, reliable providers of natural gas transportation and electric power in North America."
Fourth quarter 2002 highlights
In December 2002, TransCanada, as a member of a consortium, signed an agreement to purchase a 31.6 per cent interest in Bruce Power Limited Partnership (Bruce Power) and an approximate 33.3 per cent interest in Bruce Power Inc., the general partner of Bruce Power, for approximately $376 million. In addition to the purchase price, each consortium member will fund a one-third share ($75 million) of a $225 million accelerated deferred rent payment to Ontario Power Generation (OPG). Bruce Power is a tenant under a lease on the Bruce nuclear power facility in Ontario. The lease expires in 2018 with an option to extend the lease by up to 25 years.
The other two consortium members are Cameco Corporation and BPC Generation Infrastructure Trust, a trust established by the Ontario Municipal Employees Retirement System.
"Our investment in Bruce Power is a strong fit with TransCanada's strategy to grow its power business," said Mr. Kvisle. "As we have consistently stated, each investment we make in power must be supported by strong, stable and predictable cash flows with either substantially contracted revenue streams or be at the low cost end of the dispatch curve."
The Bruce Power facility will continue to be managed and operated by the existing management and staff of Bruce Power. Under the terms of the lease, spent fuel and decommissioning liabilities remain the responsibility of OPG. The transaction is expected to close in February 2003.
Also in December 2002, TransCanada entered into an equal partnership with OPG to assess the viability of developing a 550 megawatt (MW) natural gas-fuelled energy centre to meet the growing needs of Toronto's downtown core. The centre would be located on a portion of the site of OPG's former R.L. Hearn Generating Station in the Portlands area of Toronto's downtown waterfront.
In November 2002, TransCanada closed its acquisition of the 300 MW ManChief power plant in Brush, Colorado for $209 million. The entire output of the simple cycle, two turbine facility is sold under long-term tolling contracts that expire in 2012.
"TransCanada's strengths are its premium asset base, its financial capability and the experience and expertise of its people. We remain committed to building profitable, and sustainable businesses in pipe and power," said Mr. Kvisle. "The year 2002 saw TransCanada emerge as a leader in the North American natural gas pipeline and power industries. In 2003 we will maintain our focus on our core businesses and our emphasis on their continued growth without compromising our financial position."
TransCanada will hold a teleconference today at 1:00 p.m. (Mountain) / 3:00 p.m. (Eastern) to discuss the fourth quarter 2002 financial results and general developments and issues concerning the company. Analysts, members of the media and other interested parties wanting to participate in the call should dial 1-800-273-9672 (North America) or 416-695-5806 (Toronto area) at least 10 minutes prior to the start of the call. No pass code is required. A live audio web cast of the teleconference will also be available on TransCanada's web site at www.transcanada.com.
The conference will begin with a short address by members of TransCanada's executive management, followed by a question and answer period for investment analysts. A question and answer period for members of the media will immediately follow.
A replay of the teleconference will be available two hours after the conclusion of the call until midnight, February 4, 2003 by dialing 1-800-408-3053 or 416-695-5800 (Toronto area) and entering passcode 1340403. The web cast will be archived and available for replay.
TransCanada is a leading North American energy company. It is focused on natural gas transmission and power services with employees who are expert in these businesses. The company's network of approximately 38,000 kilometres of pipeline transports the majority of western Canada's natural gas production to the fastest growing markets in Canada and the United States. Upon closing the Bruce Power transaction, TransCanada will own or have interests in, control, manage or be constructing facilities for approximately 4,150 megawatts of power -- an amount of power that can meet the needs of more than four million average households. The company's common shares trade under the symbol TRP on the Toronto and New York stock exchanges. Visit us on the internet at www.transcanada.com for more information.
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