AltaGas announced the closing of a CAD460mn ($334mn) equity financing following the issuance of 11,615,000 common shares, including the full exercise of the over-allotment option. The offering, led by a syndicate comprised of CIBC Capital Markets, TD Securities, RBC Capital Markets and Scotiabank, was completed at a price of CAD39.65 ($28.77) per share. The proceeds will primarily be used to reduce net leverage and support the company’s future growth projects.
MVP retention at the heart of the strategy
This financing follows AltaGas’ decision to retain its ownership in the Mountain Valley Pipeline (MVP), including the MVP Mainline, MVP Boost and MVP Southgate segments. The company chose not to proceed with a sale despite receiving expressions of interest during a formal sales process. The decision is based on stronger-than-expected performance of the MVP Boost expansion, continued progress on Southgate, and robust operational results from the mainline system.
AltaGas anticipates a significant increase in project-level EBITDA from MVP by the second half of 2028 as the expansion projects come online. The company believes retaining these assets will generate greater long-term value than divestiture, even based on recent high valuation multiples observed in the gas transportation infrastructure sector.
Improved credit outlooks
Following the transaction, credit rating agencies revised their assessment of the company’s financial position. S&P Global Ratings changed its outlook from “Negative” to “Positive” while affirming its BBB- rating, citing an expected improvement in the funds-from-operations to debt ratio over the next 24 months. Fitch Ratings moved its outlook from “Negative” to “Stable”, maintaining its BBB rating, citing anticipated leverage reduction, stable utility cash flows, strong demand for liquefied petroleum gas exports, and AltaGas’ retained 10% ownership in MVP.
Expected financial impact on results
AltaGas projects that retaining MVP will result in $0.02 higher normalised earnings per share (EPS) in 2026, $0.03 in 2027 and $0.05 from 2028 onwards compared to a divestiture scenario. These expectations are based on anticipated future cash flows from the expansion projects and increased capitalisation from the equity raise. Management states these elements will strengthen the company’s capacity to fund future investments and support its ongoing organic growth strategy.
