Alberta Regulator to Review Challenge to Kinder Morgan IPO

(Bloomberg) -- The Alberta Securities Commission is reviewing an environmental group’s request to halt a $1.28 billion share sale that Kinder Morgan Inc. plans to help finance the expansion of its Trans Mountain pipeline.

Earlier this month, Greenpeace Canada sent a letter to the Alberta commission, along with the Ontario Securities Commission and Canadian Securities Association, saying Kinder Morgan may have used outdated oil projections in its IPO prospectus. The Alberta commission acknowledged receiving the challenge and will give it "the consideration we deem appropriate," according to an emailed statement from spokeswoman Alison Trollope.

Outdated projections "could potentially mislead investors by portraying an overly optimistic view of the international oil market," the letter said. Greenpeace also argued Kinder Morgan failed to make adequate climate-change disclosures.

The Alberta commission has regulatory authority over the IPO. Kinder Morgan did not immediately respond to request for comment.

Houston-based Kinder Morgan is seeking to raise about C$1.75 billion ($1.28 billion) through the IPO of some its Canadian assets, including the Trans Mountain project. The company plans to offer the shares in Kinder Morgan Canada Ltd. at C$19 to C$22 apiece and list the company in Toronto.

Dual Track

Kinder Morgan had been running a dual-track process, exploring both an IPO and a joint venture to finance the Trans Mountain expansion. In a regulatory filing earlier this month, the company said it was no longer looking into a joint venture.

The pipeline project, which won approval from the federal government and British Columbia, may face more opposition after the ruling Liberal Party in B.C. was reduced to a minority government in recent elections.

The Trans Mountain Expansion Project is expected to provide western Canadian crude producers with an additional 590,000 barrels a day of shipping capacity from Alberta’s oil sands to Canada’s Pacific Coast, where it could be shipped to the western U.S. Construction is due to start in September, and the project is scheduled to be completed by December 2019.

The existing pipeline’s capacity has been oversubscribed since 2010, and upon completion of the expansion, 80 percent of the enlarged line’s capacity will be under long-term contracts, Kinder Morgan has said.

In addition to the Trans Mountain pipeline system, the Kinder Morgan Canada offering would include Kinder Morgan’s Puget Sound, Jet Fuel, and Canadian Cochin pipeline systems, as well as its Vancouver Wharves Terminal and various facilities in Edmonton.

--With assistance from Natalie Obiko Pearson and Kevin Orland

To contact the reporter on this story: Meenal Vamburkar in New York at mvamburkar@bloomberg.net.

To contact the editors responsible for this story: Reg Gale at rgale5@bloomberg.net, Susan Warren, Jeffrey Taylor

Copyright 2017 Bloomberg News.

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