Mr. Francois Poirier reports

TC ENERGY TO UNLOCK VALUE BY CREATING TWO PREMIUM ENERGY INFRASTRUCTURE COMPANIES WITH INTENTION TO SPIN OFF LIQUIDS PIPELINES BUSINESS

TC Energy Corp.'s board of directors has approved plans for TC Energy to separate into two independent, investment-grade, publicly listed companies through the spinoff of TC Energy's liquids pipeline business. The decision comes as a result of a two-year strategic review and is anticipated to be completed on a tax-free basis in the second half of 2024.

The spinoff will unlock shareholder value by providing both companies with the flexibility to pursue their own growth objectives through disciplined capital allocation, enhancing efficiencies and driving operational excellence. Once completed, the spinoff will result in two high-quality, focused, energy industry leaders that are committed to providing safe and reliable service to their customers and the communities in which they operate.

• TC Energy posttransaction: a diversified, industry-leading natural gas and energy solutions company, uniquely positioned to meet growing industry and consumer demand for reliable, lower-carbon energy, by leveraging complementary business sets;
• Liquids pipeline company: a critical infrastructure company with highly strategic assets that connect resilient and secure supply to the highest-demand markets, while delivering incremental growth and value creation opportunities.

"This transformative announcement sets us up to deliver superior shareholder value for the next decade and beyond. Fundamentals have always driven our strategic direction, and as a result, we have grown into a premier energy company with incumbency across a wide range of energy infrastructure platforms. As we have become the partner of choice for a magnitude of accretive, high-quality opportunities, we have determined that as two separate companies, we can better execute on these distinct opportunity sets to unlock shareholder value," said Francois Poirier, TC Energy's president and chief executive officer.

Following the transaction, TC Energy will focus on natural gas infrastructure, supported by strong, long-term fundamentals, and power and energy solutions, driven by nuclear, pumped hydro energy storage and new energy opportunities while continuing its history of maximizing asset value and operational performance.

"TC Energy's expansive strategic asset base highlights our competitive advantage in capturing opportunities and translating them into enduring value for our shareholders. We will be an increasingly utility-weighted business with a stable balance sheet, a higher expected comparable [earnings before interest, taxes, depreciation and amortization] compound annual growth rate of 7 per cent, and a solid 3- to 5-per-cent annual dividend growth outlook," continued Mr. Poirier. "Our spinoff announcement supports our 2023 priorities by maximizing the value of our assets. This week, we also accelerated our deleveraging goal by entering into definitive agreements to raise $5.2-billion in total cash proceeds ahead of our year-end target with the announced sale of a 40-per-cent equity interest in the Columbia Gas and Columbia Gulf systems. Further, we are safely delivering our major projects such as Coastal GasLink and Southeast Gateway on the planned cost and schedule."

The new liquids pipeline company will focus on enhancing the value of its unrivalled asset base by increasing capacity on underutilized portions of the system and increasing connectivity to additional receipt and delivery points. As a low-risk business with 96-per-cent-investment-grade customers and 88 per cent of comparable EBITDA contracted, the liquids pipeline company retains the TC Energy premium value proposition and expands upon it with the flexibility to focus on its competitive advantages.

"This team has created one of the most competitive liquids systems in North America, with the most direct, cost-effective and highest-quality paths to key demand markets. It is a highly contracted business with stable, robust cash flows supported by long-term customers. Following the spinoff, they will have increased financial flexibility to leverage their well-established expertise and competitive footprint to originate accretive, disciplined growth opportunities. As its own entity, the liquids pipelines company's comparable EBITDA is expected to grow at a 2- to 3-per-cent compound annual growth rate through 2026 with a commensurate dividend growth outlook, delivering sustainable shareholder value," added Mr. Poirier.

Experienced leadership at the helm

Mr. Poirier will remain as president and chief executive officer of TC Energy with the continued guidance of Siim A. Vanaselja, chair of TC Energy's board. Effective immediately, Stanley (Stan) G. Chapman III is promoted to executive vice-president and chief operating officer, natural gas pipelines, to integrate its geographically dispersed natural gas business units into a single, unified natural gas pipeline business. This integration will strengthen the business model through alignment and simplification, leading to safety, operational, commercial, asset management and project execution excellence.

The new liquids pipeline company will be led by Bevin Wirzba as president and CEO, and will be supported by a proven leadership team with deep capabilities and skill sets directly related to the portfolio. The company will be headquartered in Calgary, Alta., with an office in Houston, Tex. A highly respected board chair has been identified and will be announced along with additional members of the new liquids leadership team and board of directors in the coming months.

Please see TC Energy's website for the biographies of its leadership team and board of directors.

Creating two high-quality, focused, energy industry leaders

TC Energy posttransaction: energy infrastructure company with strong alignment across its natural gas pipeline and power and energy solution business units:

• Safely operates one of North America's largest natural gas energy infrastructure networks spanning 93,700 kilometres (58,200 miles), connecting the lowest-cost basins to key demand and export markets;
• Strategic outlook is grounded in fundamentals supporting synergistic attributes of natural gas and energy solution businesses;
• Delivers approximately 30 per cent of total natural gas supply for liquefied natural gas export from the United States and will provide Canada's first direct connection to LNG markets with the completion of Coastal GasLink;
• Over 30 years in the power business focused on customer-driven decarbonization solutions with the capacity to provide 4,600 megawatts of electricity;
• Commitment to strong balance sheet fundamentals and continuing to advance deleveraging goals to further enhance shareholder value;
• 96 per cent of business rate regulated and/or long-term contracted offers premium value proposition;
• Disciplined sanctioned net capital spending of between $6-billion to $7-billion annually post-2024;
• Over 60 per cent of $30-billion-plus secured capital program directly enables global climate goals;
• 2022 comparable EBITDA of $8.5-billion expected to grow at 7-per-cent compounded annual growth rate through 2026;
• Sustainable annual dividend growth rate of 3 to 5 per cent supported by conservative payout ratios and one of North America's largest regulated natural gas businesses.

Liquids pipelines company: one of the most competitive liquids connectivity platforms between key supply and demand markets, with incremental organic growth opportunities:

• Safely and reliably operates 4,900 kilometres (3,045 miles) of crude oil pipeline infrastructure supplying crude to over 14,000 barrels per day of refining and export capacity and transporting 16 per cent of crude exported from the Western Canadian sedimentary basin;
• Delivers stable WCSB supply to the most resilient refining markets in PADD 2 and 3, with export connectivity in the Gulf coast;
• Unmatched footprint includes intra-Alberta assets (Grand Rapids and White Spruce), as well as the Keystone system and Marketlink that connects Alberta and domestic U.S. crude oil supplies to U.S. refining markets in Illinois, Okla., and the U.S. Gulf coast, including storage facilities at Hardisty, Alta.; Cushing, Okla.; and Houston, Tex.
• Maintains a strong commitment to environmental, social and governance and sustainability priorities, including decarbonization, and supports WCSB oil and its producers' goal to reduce emissions to net zero by 2050;
• Differentiated through an industry-leading, highly competitive service offering with one of the lowest-cost, fastest and highest-quality preservation paths delivering supply to critical demand markets;
• Low-risk cash flow profile with minimal volumetric and commodity price risk, 88 per cent of comparable EBITDA contracted, and 96 per cent of volumes underpinned by investment-grade or equivalent counterparties;
• Utilize cash flow and increased financial flexibility to originate organic growth opportunities to expand and enhance delivery into existing markets while accelerating deleveraging;
• 2022 comparable EBITDA of $1.4-billion expected to grow at a 2- to 3-per-cent compound annual growth rate through 2026;
• Sustainable annual dividend growth of 2 to 3 per cent expected to be commensurate with comparable EBITDA growth outlook, while adhering to conservative dividend payout ratios.

TC Energy intends that the initial combined dividends of the two companies will be equivalent to TC Energy's annual dividend immediately prior to the completion of the transaction, and that over time, the combined value of the two companies' dividends is expected to remain consistent. Dividends will be at the discretion of the respective boards of directors of each company following the transaction.

Management intends to capitalize the liquids pipeline company with a financial structure that aligns with its asset base, business model and growth plans. Following the transaction, management anticipates that TC Energy will retain its current credit ratings and that the liquids pipeline company will have investment-grade credit ratings. TC Energy plans to transition an approximately proportionate share of its long-term debt to the liquids pipeline company on a cost-effective basis.

Transaction details, approvals and business continuity

Under the proposed transaction, TC Energy shareholders will retain their current ownership in TC Energy's common shares and receive a pro rata allocation of common shares in the new liquids pipeline company. The transaction is expected to be tax-free for TC Energy's Canadian and U.S. shareholders. The determination of the number of common shares in the new liquids pipeline company to be distributed to TC Energy shareholders will be determined prior to the closing of the proposed transaction.

TC Energy expects to seek shareholder approval of the transaction at a meeting of shareholders in mid-2024. The transaction will be implemented through a court-approved plan of arrangement under the Canada Business Corporations Act. In addition to TC Energy shareholder and court approvals, the transaction is subject to receipt of favourable tax rulings from Canadian and U.S. tax authorities, receipt of necessary regulatory approvals, and satisfaction of other customary closing conditions. TC Energy expects that the transaction will be completed in the second half of 2024.

TC Energy will ensure business continuity and reliable services to its valued customers throughout the separation. A separation management office will be established guiding the successful co-ordination and governance, including the development of a separation agreement and a transition service agreement between the two entities once the transaction is complete.

For additional detail on the transaction, investor presentation materials and more, please visit the company's website.

There can be no assurance that the transaction will ultimately occur or, if it does occur, what its structure, terms or timing will be.

Advisers

RBC Capital Markets and JP Morgan Securities Canada are acting as financial advisers to TC Energy. Evercore is acting as financial adviser to the TC Energy board of directors. Blake, Cassels & Graydon LLP and White & Case LLP are acting as legal advisers. TC Energy has also engaged Bain & Company to advise on the separation process.

Conference call and webcast

TC Energy will hold a teleconference and webcast on Friday, July 28, 2023, to discuss today's announcement along with its second quarter financial results.

Mr. Poirier; Joel Hunter, executive vice-president and chief financial officer; Bevin Wirzba, executive vice-president and group executive, Canadian natural gas pipelines and liquids pipelines, and president, Coastal GasLink; and Stanley (Stan) G. Chapman III, executive vice-president and chief operating officer, natural gas pipelines, will discuss the financial results and company developments at 6:30 a.m. MDT/8:30 a.m. EDT.

Members of the investment community and other interested parties are invited to participate by calling 1-800-319-4610. No passcode is required. Please dial in 15 minutes prior to the start of the call. A live webcast of the teleconference will be available on TC Energy's website.

About TC Energy Corp.

It is a team of 7,000-plus energy problem solvers, working to move, generate and store the energy North America relies on. Today, it is taking action to make that energy more sustainable and more secure. It is innovating and modernizing to reduce emissions from its business. It is delivering new energy solutions from natural gas and renewables to carbon capture and hydrogen to help other businesses and industries decarbonize too. Along the way, it invests in communities and partners with its neighbours, customers and governments to build the energy system of the future.

TC Energy's common shares trade on the Toronto (TSX) and New York (NYSE) stock exchanges under the symbol TRP.

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