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Construction workers lower a section of the Keystone XL crude oil pipeline at the U.S.-Canada border north of Glasgow, Mont. on April 13, 2020.The Associated Press

TC Energy Corp. TC Energy Corp. has launched a financing program to support the construction of the Keystone XL pipeline that will allow the company to sell as much as $1-billion worth of shares into the market on a continuing basis.

The at-the-market (ATM) share issuance program, the largest Canadian ATM to date, was announced in March and came into effect this week. TC is using the ATM to manage its balance sheet and help fund its US$2.7-billion contribution to the long-delayed pipeline, which would carry crude from Alberta’s oil sands to the U.S. Gulf Coast. The program will last 25 months and allows TC to sell shares at its discretion.

“While not a component of the company’s base funding plan, [the ATM] provides additional financial flexibility in support of TC Energy’s consolidated credit metrics and capital program, including the Keystone XL Pipeline Project,” the company said in a news release.

ATM financing differs from traditional equity raises such as bought deals, where shares are sold in a block at a fixed price. With ATMs, shares are sold on a continuing basis at prevailing market prices. As TC said in its news release, the program “may be activated if and as deemed appropriate.”

Toronto-Dominion Bank, Bank of Montreal, Bank of Nova Scotia and Barclays will oversee the distribution of shares in both Canada and the United States, where TC stock trades on the Toronto Stock Exchange and New York Stock Exchange, respectively.

ATMs have exploded in popularity in recent years, particularly in the U.S., as a way to raise equity capital without the support of institutional investors willing to buy large blocks or shares. ATMs once had a bad reputation as a financing tool of last resort for early stage companies, which would lead to continuing dilution. Over the past few years, however, they have become a more mainstream capital management tool used by established companies.

Fortis Inc., for example, launched a $500-million ATM program in 2018, followed by Algonquin Power & Utilities Corp. with a $250-million program in 2019 and a $500-million one this year.

Last summer, regulators made it easier for companies to launch ATM programs in Canada by removing limits tied to market capitalization and daily trading volume and eliminating the need to seek advance permission from regulators.

Alongside funding from TC, the Alberta government is contributing US$1.1-billion in equity to Keystone XL and is backstopping US$4.2-billion in project-related debt. In November, TC struck a deal with Natural Law Energy that would see the First Nations-owned company invest as much as $1-billion in the project. The deal has not been finalized, and Natural Law still needs to arrange financing.

TC continues to build the pipeline on both sides of the border in the face of significant uncertainty. It is still the subject of numerous legal disputes in the U.S., and president-elect Joe Biden promised during the election campaign that he would tear up a key presidential permit for the project.

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