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TC Energy | South Bow Spinoff


TC Energy intends to spin off our Liquids Pipelines business and separate into two independent, investment-grade, publicly listed companies: TC Energy Corporation and South Bow Corporation. For the proposed separation to become effective, it must be approved by our shareholders.

Following a two-year strategic review, the spinoff will enable South Bow to pursue its growth objectives, unlock value for shareholders and provide greater flexibility to execute tailored strategies with its distinct customer sets. 

As the world renews its focus on energy security, our Liquids Pipelines business has experienced increased customer demand, presenting immediate opportunities that require more financial flexibility to maintain its notable competitive advantages. To protect the leadership position currently held by the Liquids Pipelines business, it must have the flexibility to prudently invest today and deliver on incremental customer demand.

As a separate entity, South Bow will have the autonomy to access capital for opportunistic growth and execute its focused strategy. As strategic investments must be contemplated years in advance, South Bow must have the flexibility to strengthen its industry-leading corridor before re-contracting for the long term. Separating in 2024 gives South Bow the time to identify and advance the accretive opportunities that will make it the most successful in the long run. 

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Value Proposition


TC Energy and South Bow offer distinct value propositions to investors. As stand-alone entities, each will have the ability to pursue and achieve greater success by executing tailored strategies to fully capture the incremental value of their unique opportunity sets.

TC Energy


  • Natural gas and energy solutions company
  • Low-risk, diversified
  • Opportunity-rich, with a long-term view
  • Positioned to meet demand for reliable, lower-carbon energy sources

South Bow


  • A critical oil infrastructure company
  • Unrivalled market position
  • Connecting resilient, safe and secure supply to the strongest demand markets
  • Long-term growth and incremental value creation opportunities

South Bow will be a low-risk, liquids transportation and storage business focused on enhancing the value of its unrivalled asset base. As a standalone entity with a distinct capital allocation strategy, South Bow will have greater flexibility to invest in strategic opportunities to expand, extend and unlock the full potential of its competitive corridor connecting WCSB crude oil to the U.S. Midwest and Gulf Coast.

South Bow is expected to obtain an investment-grade credit rating. As a result, it will have the agility needed to quickly respond to market shifts, while delivering value to shareholders in the form of a compelling dividend and enhanced capital allocation optionality.

TC Energy will maintain its regulated, low-risk and utility-like portfolio of natural gas and power businesses with a balance of income and growth that continues to deliver strong shareholder returns. Focused on long-term energy fundamentals and capital discipline, TC Energy's established and highly differentiated natural gas and energy solutions portfolio is expected to offer competitive services that meet growing energy demand, generate sustainable cash flow and provide a runway to capitalize on large-scale opportunities as they arise.

The naming of South Bow

The name South Bow symbolizes the historical roots of the company established near the Bow River in Canada and acknowledges the pipeline system's strategic corridor, which enables the company to deliver a premier resource southward to the strongest refining markets in both the U.S. Midwest and Gulf Coast.

Comprehensive review of alternatives overseen by Board

Independent and unique growth opportunities for both entities

Shareholder dividend kept whole 1

Incremental shareholder value achieved through two distinct strategies

Independent Fairness Opinion provided

Generally tax-free2 for resident shareholders holding TC Energy common shares as capital property

1 Dividends are at the discretion of the respective Board of Directors.
2 Review the Material Income Tax Considerations sections of the Management Information Circular for more detail.

Letter to shareholders


Dear Shareholder:
On behalf of the Board of Directors of TC Energy Corporation, we are pleased to invite you to our Annual and Special Meeting of common shareholders on June 4, 2024, at 8 a.m. (MDT). The meeting will be held virtually, using a live audio webcast available at http://web.lumiagm.com/423961867, password "tc2024" (case sensitive). At the meeting, you will be asked to consider matters related to our usual annual business, as well as the important proposal to spin off our Liquids Pipelines business.

The virtual-only meeting format provides all shareholders an equal opportunity to participate at the meeting regardless of their geographic location or any particular constraints or circumstances they may face relating to attendance at an in-person event. It also is a more cost-efficient and environmentally friendly way to engage with shareholders. At this virtual meeting, shareholders who attend online will have the opportunity to participate, ask questions and vote in real-time, provided they comply with the applicable procedures set out in the accompanying management information circular.

 

Creation of South Bow

As announced on July 27, 2023, the Board of Directors approved the proposed plan to separate TC Energy into two independent, investment-grade, publicly listed companies:

  1. TC Energy Corporation: A low-risk, diversified, growth-oriented natural gas infrastructure and energy solutions company, uniquely positioned to meet growing industry and consumer demand for reliable, lower-carbon energy and lower emitting energy sources, including natural gas.
  2. South Bow Corporation: A critical infrastructure company, with an unrivalled market position to connect resilient, safe and secure liquids supply to the highest demand markets with incremental growth and value creation opportunities.

TC Energy's Board of Directors and management team are confident the proposed separation will enhance long-term value for TC Energy shareholders by creating two highly focused, premium energy infrastructure companies. Each company will be structured to reflect distinct value propositions and the ability to pursue and achieve greater success than a combined entity by executing tailored strategies targeted to distinct customer sets. As the world renews its focus on energy security, TC Energy's Liquids Pipelines business has experienced increased customer demand – presenting immediate opportunities that require more financial flexibility to maintain its notable competitive advantage. Spinning off the Liquids Pipelines business will allow the new entity to better focus and fully capture the incremental value that exists within the company's unique opportunity set.

South Bow will be a low-risk, liquids transportation and storage business focused on enhancing the value of its unrivalled asset base. As a standalone entity with a distinct capital allocation strategy, South Bow will have greater flexibility to invest in strategic opportunities to expand, extend and unlock the full potential of its competitive corridor connecting WCSB crude oil to the U.S. Midwest and Gulf Coast. South Bow is expected to obtain an investment-grade rating. As a result, it will have the agility needed to quickly respond to market shifts, while delivering value back to shareholders in the form of a compelling dividend and enhanced capital allocation optionality.

TC Energy will maintain its regulated, low-risk and utility-like portfolio of natural gas and power businesses with a balance of income and growth that continues to deliver strong shareholder returns. Focused on long-term energy fundamentals and capital discipline, TC Energy's established and highly differentiated natural gas and energy solutions portfolio is expected to offer competitive services that meet growing energy demand; generate sustainable cash flow; and provide runway to capitalize on large-scale opportunities as they arise. Guided by its conservative risk preferences, TC Energy will continue to make strategic investments to enhance its industry-leading position while enabling it to effectively navigate a shifting energy landscape.

Throughout its more than 70 years of success, TC Energy has established a strong track record of delivering results by maximizing the value of its assets. This continues today. The separation is expected to enhance the strategic and financial focus of each company and improve TC Energy's and South Bow's abilities to pursue independent and disciplined growth opportunities to better serve key demand markets. As two distinct infrastructure companies, the long-term shareholder value we expect to generate exceeds what is replicable as a single entity.

 

Board Updates

Delivering on his commitment to align with TC Energy's revised governance guidelines regarding board commitments as outlined in the 2023 management information circular, Mr. Vanaselja stepped down as Board chair of TC Energy effective December 31, 2023 and Mr. John E. Lowe was appointed as his successor effective January 1, 2024. Mr. Vanaselja continues to serve as a valued member of the Board.

Your vote is important to us. For the proposed separation to become effective, it must be approved by our shareholders. The attached management information circular includes important information about the meeting and how to vote. Please take some time to read the document and remember to vote. You can find more information about TC Energy in our 2023 Annual Report and on our website.

If you have questions about any of the information contained within the attached management information circular please contact our Investor Relations team by telephone at 403-920-7911 or 1-800-361-6522 or by email at investor_relations@qhxnjn.com. For assistance in completing your proxy form or voting instruction form, please contact our shareholder advisor and proxy solicitation agent, Morrow Sodali, by telephone at 1-888-999-2944 or by email at assistance@morrowsodali.com.

Thank you for your continued confidence in TC Energy. We appreciate your support and look forward to your participation in the meeting on June 4, 2024.
Sincerely,

John E. Lowe
Chair of the Board of Directors

Francois L. Poirier
President & Chief Executive Officer

John Lowe and François Poirier
 

Management Information Circular spinoff highlights


Read the 2024 Management Information Circular
  • Summary of Spinoff – The purpose of the spinoff and related transactions is to separate TC Energy into two independent, investment-grade, publicly listed companies: (a) TC Energy, a low-risk, diversified, growth-oriented natural gas infrastructure and energy solutions company; and (b) South Bow, a critical energy infrastructure company, with an unrivalled market position to connect resilient, safe and secure liquids supply to the highest demand markets with incremental growth and value creation opportunities. The Spinoff will be completed by way of a Plan of Arrangement (Arrangement) under the Canada Business Corporations Act. Learn more.

  • Distribution of Shares – TC Energy shareholders will receive one newly issued common share of TC Energy and 0.2 of a common share in a new public company called "South Bow Corporation" in exchange for each common share of TC Energy held. Learn more.

  • Recommendation of Board – The Board has recommended that shareholders vote for the Arrangement Resolution and for the South Bow Shareholder Rights Plan Resolution. Learn more.

  • Fairness Opinion – The Board has received the Fairness Opinion to the effect that, as of the date of such opinion and based upon and subject to the various factors, assumptions, qualifications and limitations set forth therein, the consideration to be received by shareholders pursuant to the Arrangement is fair, from a financial point of view, to TC Energy shareholders. Learn more.

2024 Annual and Special Meeting of Shareholders


You are invited to our 2024 Annual and Special Meeting of common shareholders:

WHEN

Tuesday, June 4, 2024 at 8 a.m. Mountain Daylight Time (MDT)

WHERE

Virtual-only meeting via live audio webcast online at http://web.lumiagm.com/423961867
Password: "tc2024" (case sensitive)

South Bow Leadership


SOUTH BOW LEADERSHIP

Bevin Wirzba, President and CEO

Bevin Wirzba
President and Chief Executive Officer

Van Dafoe, Chief Financial Officer

Van Dafoe
Senior Vice-President and Chief Financial Officer

Richard Prior, Senior Vice-President and Chief Operating Officer

Richard Prior
Senior Vice-President and Chief Operating Officer

Lori Muratta, Senior Vice-President and General Counsel

Lori Muratta
Senior Vice-President and General Counsel


SOUTH BOW BOARD OF DIRECTORS

Hal Kvisle

Chansoo Joung

George Lewis

Leonard Mallett

Bob Phillips

Sonya Reed

Shannon Ryhorchuk

Mary Pat Salomone

Frances Vallejo

Don Wishart

Bevin Wirzba

 

Frequently asked questions


We will provide ongoing updates and share information as it becomes available. Please revisit this page regularly for further details.

As announced on July 27, 2023, the Board of Directors approved the proposed plan to separate TC Energy into two independent, investment-grade, publicly listed companies: TC Energy Corporation and South Bow Corporation. For the proposed separation to become effective, it must be approved by our shareholders.

TC Energy's Board of Directors and management team are confident the proposed separation will enhance long-term value for TC Energy shareholders by creating two highly focused, premium energy infrastructure companies. Each company will be structured to reflect distinct value propositions and the ability to pursue and achieve greater success than a combined entity by executing tailored strategies targeted to distinct customer sets. South Bow will be a low-risk, liquids transportation and storage business focused on enhancing the value of its unrivalled asset base. As a standalone entity with a distinct capital allocation strategy, South Bow will have greater flexibility to invest in strategic opportunities to expand, extend and unlock the full potential of its competitive corridor connecting WCSB crude oil to the U.S. Midwest and Gulf Coast.

Upon closing of the spinoff, the shares of South Bow are expected to be listed on the Toronto Stock Exchange (TSX) and New York Stock Exchange (NYSE) under the trading symbol "SOBO". TC Energy common shares are expected to continue trading on the TSX and NYSE under TC Energy's current trading symbol "TRP".

If you are a shareholder as of the Distribution Record Date you will receive, in exchange for each TC Energy share you hold on the Distribution Record Date, one New TC Energy Common Share and 0.2 of a South Bow Common Share. Accordingly, immediately after giving effect to the Arrangement, those persons who were shareholders as of the Distribution Record Date will hold all of the outstanding New TC Energy Common Shares and all of the outstanding South Bow common shares.

The directors of South Bow will be: Hal Kvisle, Chansoo Joung, George Lewis, Leonard Mallett, Bob Phillips, Sonya Reed, Shannon Ryhorchuk, Mary Pat Salomone, Frances Vallejo, Don Wishart and Bevin Wirzba.

TC Energy is holding its 2024 Annual and Special Meeting on Tuesday June 4, 2024 at 8 a.m. MDT via a virtual-only format using a live audio webcast available online at http://web.lumiagm.com/423961867 , password: "tc2024" (case sensitive). A physical or in-person meeting will not be held.

Registered shareholders and duly appointed proxyholders will be able to attend and ask questions at the virtual meeting.

Registered shareholders and duly appointed proxyholders can also vote in real-time at the virtual meeting by completing a ballot online during the virtual meeting, provided that they complete the instructions outlined in the 2024 Management Information Circular.

Guests and non-registered or beneficial shareholders who have not appointed themselves as a proxyholder will be able to listen to the meeting but will not be able to ask questions or vote.

Registered shareholders

If you hold your shares directly and have a share certificate or DRS Advice in your name, you may attend the meeting by following the instructions below on the day of the meeting:
  • Log in online at http://web.lumiagm.com/423961867 using a web browser on a smartphone, tablet or computer.
  • Click "I have a login" and then enter your control number located on the form of proxy or in the email notification you received from Computershare, and password "tc2024" (case sensitive).


Non-Registered (beneficial) shareholders

If you hold your shares beneficially through a broker, nominee or intermediary, you may attend the meeting by completing the following two steps by May 30, 2024:
  1. Appoint yourself or another person attending the meeting as a duly appointed proxyholder, by following the instructions on page 12 of the Management Information Circular.
  2. Visit http://www.computershare.com/TCEnergyAGM to register to attend the meeting. To register, enter your account number located on your voting information form, your name and email address. After the proxy deadline, Computershare will send you or your proxyholder via email a username that will be required to log into the meeting.

On the day of the meeting:

  • Log in online at http://web.lumiagm.com/423961867 using a web browser on a smartphone, tablet or computer.
  • Click "I have a login" and then enter the four letter username provided to you or your proxyholder by Computershare, and password "tc2024" (case sensitive).

Please note that non-registered shareholders must complete steps 1 by May 30, 2024 and step 2 by 8:00 AM MDT on May 31 in order to be able to vote at the meeting as a duly appointed proxyholder. In some cases, your intermediary may send you additional documentation that must also be completed in order for you to vote. If you do not complete these steps by the deadlines noted above, you may still attend the meeting as a guest.


Guests

If you are not a registered shareholder or a duly appointed proxyholder or if you are a non-registered shareholder and you have not appointed yourself as a proxyholder, you can still attend the meeting and listen by following the instructions below on the day of the meeting:
  • Log in online at http://web.lumiagm.com/423961867 using a web browser on a smartphone, tablet or computer.
  • Select "Guest" and complete the information requested in the form.

Common shareholders of record on April 16, 2024 are entitled to receive notice of the meeting and vote their shares at the meeting. TC Energy’s Board of Directors set this date to comply with legal requirements and allow enough time for shareholders to receive and review the materials, make their voting decisions and send in their voting instructions before the deadline.

You have two ways to vote:

  • by proxy*, or
  • by virtually attending the meeting and voting.

*voting by proxy means you are giving someone else the authority to attend the meeting and vote for you (your proxyholder).


Registered shareholders

We mail the Notice directly to you, and your package includes a proxy form. You may request a paper copy of the 2024 Management Information Circular and the TC Energy Annual Report by following the instructions in the Notice that was mailed to you. If you are a registered shareholder, you must return your signed proxy form in order to vote by proxy. The securities represented by your proxy will be voted or withheld from voting in accordance with the instructions provided in your proxy on any ballot that may be called for. If you appoint the TC Energy representatives named in the proxy form and specify your voting instructions, your shares will be voted, or withheld from voting, accordingly.


Non-Registered (beneficial) shareholders

Your broker, its agent or its nominee can only vote your shares if they have received proper voting instructions from you. If you are a beneficial shareholder, your package includes a voting instruction form. Complete the form and follow the return instructions on the form. The voting instruction form is similar to a proxy form, however, it can only instruct the registered shareholder how to vote your shares. You cannot use the form to vote your shares directly. Your broker is required by law to receive voting instructions from you before voting your shares. Every broker has their own mailing procedures and instructions for returning the completed voting instruction form, so be sure to follow the instructions provided on the form which may require you to take action earlier than the deadline for voting by proxy.

Most brokers delegate responsibility for obtaining instructions from their clients to Broadridge Investor Communications Corporation (Broadridge). Broadridge, or any other intermediary, as applicable, mails the proxy materials and voting instruction form to beneficial shareholders, at our expense. The voting instruction form will name the same TC Energy representatives listed on page 11 to act as TC Energy Proxyholders.

The purpose of the Arrangement and the related transactions is to separate TC Energy into two independent, investment-grade, publicly listed companies:

  1. TC Energy – a low-risk diversified, growth-oriented natural gas and energy solutions company, uniquely positioned to meet growing industry and consumer demand for reliable, lower-carbon energy and lower emitting energy sources, including natural gas and
  2. South Bow – a critical energy infrastructure company, with an unrivalled market position to connect resilient, safe and secure liquids supply to the highest demand markets with incremental growth and value creation opportunities.

The South Bow Shareholder Rights Plan is designed to ensure that South Bow Shareholders are treated fairly and provide the South Bow Board with adequate time to identify, develop, and negotiate alternative value maximizing transactions if there is a take-over bid for South Bow. For more information on the South Bow Shareholder Rights Plan see Schedule L of the 2024 Management Information Circular.

In order to pass:

  • subject to any further order of the Court, the Arrangement Resolution must be approved by at least two-thirds of the votes cast by shareholders present or represented by proxy at the meeting; and
  • the South Bow Shareholder Rights Plan Resolution must be approved by at least a simple majority of the votes cast by shareholders present or represented by proxy at the meeting.

The Liquids Pipelines spinoff is the result of a rigorous, two-year strategic review and analysis of potential alternatives conducted by the Board, management, and financial, tax and legal advisors. The Board considered a variety of transaction alternatives to address the long-term future of the Liquids Pipelines business. See ‘The Arrangement – Background to the Arrangement’ on page 56 of the 2024 Management Information Circular for more information.

The Board recommends that shareholders vote for the Arrangement Resolution and for the South Bow Shareholder Rights Plan Resolution.

Under the proposed spinoff, TC Energy shareholders as of the Distribution Record Date, as defined in the 2024 Management Information Circular dated April 10, 2024, will receive, in exchange for each TC Energy common share, one new TC Energy common share and 0.2 of a South Bow common share.

Assuming the spinoff is successfully completed, we expect to distribute DRS Advices for the South Bow Common Shares to Shareholders as soon as practicable after the Distribution Record Date. After such distribution, certificates and DRS Advices for TC Energy Common Shares issued prior to the completion of the Arrangement will be deemed to represent the New TC Energy Common Shares issued pursuant to the Arrangement and accordingly no new certificates will be issued for New TC Energy Common Shares.

Our 2024 Management Information Circular includes the audited carve-out financial statements of the Liquids Pipelines business for the years ended December 31, 2023, 2022 and 2021, the unaudited pro forma financial statements of South Bow for the year ended December 31, 2023 and the audited financial statements of South Bow for the period from incorporation on December 15, 2023 to December 31, 2023. To review these financial statements, please see Schedule G, Schedule H and Schedule I in the 2024 Management Information Circular.

Cautionary Note: The historical carve-out and pro forma financial information for South Bow included in the Circular has been prepared for illustrative purposes only and may not be indicative of the operating results or financial condition that would have been achieved if the Arrangement had been completed on the date or for the periods noted therein, nor do they purport to project the results of operations or financial position for any future period or as of any future date. See Risk Factors – Risks Relating to Carve-Out Financial Statements in Schedule F of our 2024 Management Information Circular.

The use of the phrase "tax-free" in the 2024 Management Information Circular is a reference to the tax-deferred nature of the Arrangement. The receipt of South Bow Common Shares pursuant to the Arrangement is generally intended not to result in taxable income or gain to Holders, (as defined in the Management Information Circular) for Canadian federal income tax purposes or U.S. federal income tax purposes.

More information can be found in the ‘Material Income Tax Considerations – Certain Canadian Federal Income Tax Considerations and Material Income Tax Considerations – Certain United States Federal Income Tax Considerations’ section of the 2024 Management Information Circular.

This site contains references to forward looking information which is subject to certain assumptions, risks and uncertainties. We encourage shareholders to review the following information here.