July 13, 2018 4:45 pm
Updated: July 13, 2018 4:49 pm

Subtracting capital gains tax cuts Trans Mountain price for government: Kinder Morgan

Prime Minister Justin Trudeau faces the political firing squad in the House of Commons after announcing the federal government's multi-billion dollar purchase of Kinder Morgan's Trans Mountain pipeline expansion. David Akin reports.


Kinder Morgan Canada Ltd. says the actual price the federal government will pay for its Trans Mountain pipeline system and expansion project will be hundreds of millions of dollars less than the $4.5 billion it announced in May.

READ MORE: Ottawa inks deal to buy Trans Mountain pipeline project for $4.5B

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In a regulatory filing with the U.S. Securities and Exchange Commission, the company says it estimates it will have to pay at least $325 million in capital gains taxes to the Canadian government when the deal is concluded.

It says that reduces the “net price” to $4.175 billion.

The filing is designed to advise Kinder Morgan Canada shareholders in advance of their vote on the transaction in August. Houston-based parent company Kinder Morgan, Inc. owns about two-thirds of the shares.

READ MORE: Here is everything you need to know about Ottawa’s plan to (maybe) buy the Kinder Morgan pipeline

The document also recounts the negotiations that led to the deal, including an initial offer by the company to give the government a five per cent equity stake in return for financial guarantees and Ottawa’s counter suggestion it could buy 51 per cent of the pipeline assets.

READ MORE: Over 800 businesses slam Trudeau government’s purchase of Trans Mountain pipeline

The filing notes that once they decided on a 100 per cent sale, Kinder Morgan offered to sell for $6.5 billion and the government came back with a counter offer of $3.85 billion.

READ MORE: Study predicts Trans Mountain pipeline purchase will add to federal deficit

An attached report from adviser TD Securities concludes that the deal as negotiated is fair for shareholders.

Watch below: Global News’ continuing coverage of the Trans Mountain pipeline expansion.

© 2018 The Canadian Press

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