MOSCOW (MRC) -- Canada’s Inter Pipeline Ltd. has started production at a new C$4.3 billion (USD3.3 billion) petrochemical plant in Alberta, a key milestone for a project that was at the center of a takeover battle for the company last year, said the company.
The unit of Brookfield Infrastructure Partners LP commissioned its Heartland polypropylene plant and began initial production in late June, according to a statement from the company. The remainder of the plant, including the propane dehydrogenation facility, is on schedule to start operation and begin commercial production in the third quarter.
The Heartland project faced cost overruns and delays due to the Covid-19 pandemic, putting pressure on Inter Pipeline’s stock and helping to make it vulnerable to an unsolicited takeover bid from Brookfield.
The Calgary-based energy infrastructure company launched a strategic review, including seeking potential partners for Heartland, and secured a higher offer from Pembina Pipeline Corp. But Brookfield sweetened its bid and eventually prevailed in a CD8.6 billion deal.
The Alberta plant will convert locally-produced propane into 525,000 metric tons a year of polypropylene, a polymer used to manufacture items including food packaging, textiles, health-care products and medical supplies, the company said. Inter Pipeline has secured contracts for 70% of the plant’s output for an average of nine years, according to the release.
As per MRC, Brookfield Infrastructure Partners’ fourth offer for Inter Pipeline Ltd. has convinced the embattled pipeline company to abandon a friendly deal with rival Pembina Pipeline Corp. in favour of the Toronto-based asset manager. IPL’s move comes after Brookfield Infrastructure Partners earlier this month raised its hostile bid for IPL, and as two shareholder advisory firms advised IPL shareholders against the merger deal with Pembina. Instead of pursuing the merger with Pembina, IPL will now engage with Brookfield “to reach a mutually agreeable transaction”, it said in a filing late on Monday.
Inter Pipeline Ltd is a multinational oil transportation and infrastructure limited company that ranks among North America's leading natural gas production and processing companies. It is one of the top 100 companies in Alberta in terms of earnings and assets.
Pembina Pipeline has been a gas supplier to the North American power system for over 60 years. Pembina owns and operates pipelines that transport a variety of hydrocarbon fluids, including conventional and synthetic crude oil and others, produced in Western Canada and North Dakota.