Power Assets Holdings Limited (PAH) and Cheung Kong Infrastructure Holdings Limited (CKI) have entered into an agreement with Husky Energy Inc., to acquire a 65% stake in a portfolio of Husky’s oil pipeline assets in Canada for CAD1.155 billion (US$892 million).
Including project debt, Husky will receive proceeds of CAD$1.7 billion (US$1.3 billion). Husky will retain the remaining 35% interest in the assets, and will continue to manage and operate the pipeline portfolio following the transaction. PAH and CKI will have a 48.75% and 16.25% share in the project respectively.
The portfolio includes approximately 1,900 kilometres of oil pipeline in the Lloydminster region, oil storage capacity of 4.1 million barrels at Hardisty and Lloydminster, as well as other ancillary assets. A long term 20-year off-take contract with Husky will be in place for this pipeline portfolio. The “take or pay” Husky pledge will contribute a majority of the revenue stream of these assets. In addition, the interests of PAH and CKI will be contractually protected by a priority distribution mechanism.
Mr. Charles Tsai, Chief Executive Officer of PAH, said
“This transaction represents the largest investment that PAH has made since the spinning off of HK Electric Investments two years ago. In line with our acquisition requirements, this deal provides us with an excellent opportunity to invest in a secure and profitable project that offers immediate cash flow.”
“It is also the second joint acquisition between PAH and CKI in the past 6 months following the completion of the Portugal Renewable Energy transaction in November 2015. Typical of the characteristics of other PAH/CKI joint projects, this Husky pipeline portfolio features stable and predictable recurring income,”