This post may contain links from our sponsors and affiliates, and Flywheel Publishing may receive
compensation for actions taken through them.
Last Thursday, Kinder Morgan Canada, a subsidiary of Kinder Morgan Inc. (NYSE: KMI), filed documents to come public on the Toronto Stock Exchange (TSX). The initial public offering (IPO) was completed Tuesday morning with the sale of 102.94 million restricted voting shares at a price of C$17.00 per share. Underwriters have an overallotment option on an additional 15.44 million shares.
The preliminary filings were made in late April and the final prospectus was filed May 25. That’s pretty quickly as these things go. And the IPO was completed right after a three-day weekend in the United States, not the best day for an IPO typically.
Kinder Morgan Canada trades on the TSX under the ticker symbol KML, and Kinder Morgan retains ownership of about 70% of the Canadian firm’s stock. If the underwriters exercise their overallotment, Kinder Morgan’s percentage of ownership drops to around 66%.
The stock is off to an inauspicious start, trading down about 4.5% in the noon hour at C$16.24. Shares traded as low as C$15.25 earlier this morning.
Gross proceeds from the IPO were expected to reach C$1.75 billion (about U.S.$1.3 billion), and the lion’s share of the funds are directed to the expansion of the Trans Mountain pipeline from its current capacity of 300,000 barrels a day to 890,000 barrels. The federal government and prime minister Justin Trudeau approved the pipeline project earlier this year, but opposition remains.
For one thing, the British Columbia provincial government headed by the Liberal party supported the expansion of the Trans Mountain pipeline, but the party lost a recent election and the winning New Democratic Party (NDP) party has formed a coalition government with the Canada’s Green party. Neither supported the pipeline expansion.
The expansion project already is hampered by at least a dozen legal challenges, all on different grounds, and at least some of the country’s First Nations have also aligned themselves against the project. In its final prospectus, Kinder Morgan Canada even noted:
A prospective investor should carefully consider each and every one of the risk factors set out below. In addition, prospective investors should carefully review and consider all other information contained in this prospectus before making an investment decision. An investment in Restricted Voting Shares should only be made by persons who can afford a significant or total loss of their investment.
This is often just boilerplate. In this case, there are, indeed, significant risks. The biggest may be funding. Gross proceeds of C$1.75 billion are a small part of the overall estimated C$7.4 billion Trans Mountain expansion project.
Want to Retire Early? Start Here (Sponsor)
Want retirement to come a few years earlier than you’d planned? Or are you ready to retire now, but want an extra set of eyes on your finances?
Now you can speak with up to 3 financial experts in your area for FREE. By simply clicking here you can begin to match with financial professionals who can help you build your plan to retire early. And the best part? The first conversation with them is free.
Click here to match with up to 3 financial pros who would be excited to help you make financial decisions.
Have questions about retirement or personal finance? Email us at [email protected]!
By emailing your questions to 24/7 Wall St., you agree to have them published anonymously on a673b.bigscoots-temp.com.
By submitting your story, you understand and agree that we may use your story, or versions of it, in all media and platforms, including via third parties.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.
Latest from 24/7
Our expert who first called NVIDIA in 2009 is predicting 2025 will see a historic AI breakthrough.
You can follow him investing $500,000 of his own money on our top AI stocks for free.