Narrative
Full Description
Project narrative
On April 28, 2020, financial close was reached on a deal in which a syndicate of 27 banks — including the Bank of China (BOC), China Construction Bank Corporation (CCB), and the Industrial and Commercial Bank of China (ICBC) — entered into a $6.600 billion CAD ($4.69645 billion USD) senior secured non-recourse project finance syndicated loan agreement with Coastal Gaslink Pipeline (CGL) Limited Partnership (Coastal GasLink LP) — a special purpose vehicle (SPV) and wholly-owned subsidiary of Canada's TC Energy Corporation — for the Coastal GasLink Pipeline Project. This loan consisted of two tranches: a $6.4 billion CAD ($4.55413 billion USD) term loan tranche with a maturity period of seven years and a final maturity date of April 28, 2027 and a $200 million CAD ($142.32 million USD) working capital (letter of credit) tranche with a maturity period of seven years and a final maturity date of April 28, 2027. BOC and CCB each contributed $240.00 million CAD ($170.78 million USD) and ICBC contributed $160.00 million CAD ($113.85 million USD) to the $6.4 billion CAD term loan tranche. Record ID#99407 captures BOC's contribution. Record ID#99408 captures CCB's contribution. Record ID#99409 captures ICBC's contribution. In addition to the Chinese state-owned banks, the following banks contributed the respective amounts to the $6.4 billion CAD term loan tranche: Royal Bank of Canada (RBC) ($275.00 million CAD; $195.69 million USD), Bank of Montreal ($275.00 million CAD), the Bank of Nova Scotia (Scotiabank) ($275.00 million CAD), Canadian Imperial Bank of Commerce (CIBC) ($275.00 million CAD), Toronto-Dominion Bank ($275.00 million CAD), National Bank of Canada ($315.00 million CAD; $224.15 million USD), Bank of America ($315.00 million CAD), Citibank ($315.00 million CAD), JPMorgan Chase Bank ($315.00 million CAD), Mizuho Bank ($315.00 million CAD), MUFG Bank, Ltd. ($315.00 million CAD), Sumitomo Mitsui Banking Corporation (SMBC) ($315.00 million CAD), Truist Bank ($315.00 million CAD), Export Development Canada (EDC) ($315.00 million CAD), CaixaBank ($240.00 million CAD), KfW IPEX-Bank GmbH ($240.00 million CAD), Kookmin Bank ($240.00 million CAD), ATB Financial ($160.00 million CAD), Landesbank Baden-Württemberg (LBBW) ($160.00 million CAD), United Overseas Bank Limited (UOB) ($160.00 million CAD), National Australia Bank Limited (NAB) ($117.50 million CAD; $83.61 million USD), Sumitomo Mitsui Trust Bank (SMTB) ($117.50 million CAD), Canadian Western Bank ($60.00 million CAD; $42.69 million USD), and Raymond James Financial Inc. ($55.00 million CAD; $39.14 million USD). Only five banks contributed to the $200 million CAD working capital tranche: RBC, Bank of Montreal, Scotiabank, CIBC, and Toronto-Dominion. Each contributed $40.00 million CAD ($28.46 million USD). RBC and MUFG served as administrative agents. The loan was the largest project finance facility and second largest syndicated facility in Canadian loan market history. On October 23, 2021, financial close was reached on a deal in which a syndicate of 12 banks — not including any of the Chinese state-owned lenders — entered into an accordion facility agreement to up-size the $6.6 billion CAD loan by $159.20 million CAD ($121.09 million USD) with a maturity period of five years and six months and a final maturity date of April 28, 2027 (putting it on the same terms as the rest of the loans). Each lender contributed $13.27 million CAD ($10.09 million USD). The lenders were Mizuho, RBC, Toronto-Dominion, Bank of Montreal, CIBC, Scotiabank, National Bank of Canada, JPMorgan, Bank of America, Truist, EDC, and MUFG. On July 28, 2022, financial close was reached on a deal in which a syndicate of 11 banks — not including any of the Chinese state-owned lenders — entered into a agreement to up-size the $6.8 billion CAD loan by $1.6695 billion CAD ($1.30129 million USD) (to approximately $8.4 billion CAD) with a maturity period of four years and nine months and a final maturity date of April 28, 2027 (putting it on the same terms as the rest of the loan). Each lender contributed $151.77 million CAD ($118.30 million USD). The lenders were Mizuho, RBC, Toronto-Dominion, Bank of Montreal, CIBC, Scotiabank, National Bank of Canada, Bank of America, Truist, EDC, and MUFG. In December 2019, TC Energy entered into an agreement to sell a 65% equity interest in the CGL Project to KKR and Alberta Investment Management Corporation (AIMCo) that would close concurrent with the entering of a secured project finance construction facility, leaving TC Energy with a 35% interest in CGL and a contract to construct and operate the pipeline. The $600 million CAD acquisition closed on May 26, 2020. Immediately falling the sale, Coastal Gas LP drew down $1.6 billion CAD under the syndicated loan, of which $1.5 billion CAD was paid to TC Energy {see pg.38 of ID#189269}}. On March 9, 2022, TC Energy signed an option agreement to sell a 10% equity interest in CoastalLink LP to two entities representing 16 First Nations communities, exercisable after commercial in-service of the project. The proceeds of this loan were to be used by the borrower to finance an estimated 80% of the construction cost of the Coastal GasLink Pipeline (CGL) Project. The CGL Project sought to construct and operate a 670-kilometer (416 miles) long pipeline capable of initially transporting 2.1 billion cubic feet of natural gas daily from Dawson Creek in the Western Canadian Sedimentary Basin to the under-construction liquefied natural gas (LNG) export terminal in Kitimat, British Columbia and associated infrastructure. Associated infrastructure included the Wilde Lake Compressor Station and the Kitimat Meter Station. With Kitimat to host Canada's first West Coast LNG export facility, the CGL was seen as critical infrastructure. In 2012, LNG Canada Development Inc. selected TC Energy to design, build, own, and operate the CGL. In 2014, BC Environmental Assessment Office (EAO) issued an Environmental Assessment Certificate (EAC) for the project. In 2017, Coastal GasLink filed amendment applications for alternate routing with the Environmental Assessment Office and the B.C. Oil & Gas Commission (OGC). In May 2018, the EAO issued an amendment for the proposed alternate routing. In October 2018, a positive final investment decision was made on the project. In May 2019, the OGC issued an amendment to the Pipeline Permit for the proposed alternate routing. The prime contractors for the project were the Macro Spiecapag Joint Venture, SA Energy Group, Pacific Atlantic Pipeline Construction Inc., AECON Group Inc., Surerus Murphy Joint Venture, Ledcor - Haisla Limited Partnership (LHLP), Nadleh Whut'en - Macro Joint Venture, and O.J. Pipeline Canada. Construction began on or around September 3, 2019. The project was expected to enter into service in 2023. On December 29, 2020, the British Columbia Provincial Health Officer issued an order limiting the presence of construction personnel in the Northern Health Authority region of province as part of its COVID-19 pandemic response, affecting the construction of CGL. Due to scope increases, weather, the COVID-19 pandemic, capital costs increased from the original estimate to $11.2 billion CAD; to meet these costs, TC Energy contributed additional equity and the credit facilities for the project were expanded. As of July 2023, 97% of the project had been installed. This project has been subject to extreme controversy. The CGL Project and similar pipeline projects was criticized for impeding Canada's climate goals. Its role in transporting gas fracked from the Montney Shale Formation received criticism due to pollution and spills risks. The route of the pipeline runs through, among other groups, the lands of the First Nation Wet'suwet'en people. Hereditary chiefs alleged that the project had violated its EAC by blocking indigenous people from accessing traplines to missing deadlines to conserve caribou and dangerous plants. In June 2020, the EAO found that TC had cleared a significant portion of protected wetlands without proper planning or surveying that serve as home for species at risk and served as a place of cultural significance for the Wet'suwet'en. In February 2020, the hereditary chiefs of the Wet'suwet'en nation field an application with the Supreme Court of Canada for judicial review of EAO to extend its EAC, alleging that it should have not been granted due to non-compliance with conditions and that Canada's National Inquiry on Missing and Murdered Women found that natural resources projects have been linked to increased violence against Indigenous women and children. In 2015, TC Energy had moved its pipeline route 5 kilometers north to avoid structures erected by the Unist'ot'en nation along the Morice River, although still passed through its territory. Indigenous sovereignty over land was a point of contention against the pipeline. As part of the resistance against the CGL, indigenous peoples and other opponents of the pipelines launched nationwide and localized protests, blockades, and sit-ins through 2019 to 2021 to obstruct the project and to raise awareness, resulting in police raids to allow construction to proceed, arresting dozens of people. Hereditary chiefs submitted to the United Nations alleging Canada's violation of the UN Declaration on the Rights of Indigenous Peoples (UNDRIP) based on these acts. In September 2023, the Government of British Columbia fined Coast GasLink $346,000 CAD ($256,810 USD) for non-compliance with environmental regulations, namely insufficient erosion and sediment control measures and providing false information about maintenance inspection records, identified in 2022.