The Financial Post reports in its Friday edition that AltaGas is planning to spin out its Canadian utilities business in an IPO that could raise $1-billion.
The Post's Geoffrey Morgan writes that combined with the sale of its 35-per-cent interest in Northwest Hydro Facilities in June, the company is expected to yield $2.5-billion.
What is not clear is whether the company will get the valuation it wants, Raymond James analyst Chris Cox said in a note.
He estimated the IPO would raise $600-million to $725-million, but said he is "concerned the IPO will not garner the valuation that management may be expecting and would continue to advise caution on the name."
Still, Mr. Cox said the IPO was "appropriate, given our view that the company's balance sheet remains too levered."
AltaGas signalled that it would shift its focus to natural gas infrastructure and U.S. utilities and had reached a decision to offer the majority of its Canadian utilities business on the public markets.
The parent company intends to hold between 37 per cent and 45 per cent of the new company, to be called AltaGas Canada Inc., after the transaction.
AltaGas was saddled with debt after its recently completed $8.4-billion purchase of WGL Holdings.
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