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 https://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:
- 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.
- 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.