TC Energy to appeal Delaware court rulings in lawsuit related to 2016 Columbia Pipeline acquisition
TC Energy (NYSE: TRP) plans to appeal a Delaware Chancery Court decision regarding its 2016 acquisition of Columbia Pipeline Group. The court ruled that the former CEO and CFO of Columbia breached their fiduciary duties to shareholders, and that TC Energy aided and abetted these breaches. Consequently, TC Energy and the former Columbia executives are each responsible for half of the awarded damages, totaling US$398.4 million. TC Energy's share amounts to US$199.2 million, plus an estimated US$179.5 million in interest. TC Energy disputes the court's findings and aims for the appeal to conclude by mid-2025, posting a bond to cover the damages in the meantime.
- TC Energy is actively appealing the court's decision, demonstrating proactive legal strategy.
- The company will post a bond instead of paying the damages outright, reducing immediate financial strain.
- Appeal process expected to conclude by mid-2025, providing a clear timeline for resolution.
- Liability ruling results in a substantial financial obligation of US$199.2 million plus an estimated US$179.5 million in interest.
- Negative court ruling may impact investor confidence and stock performance.
- Legal disputes can be costly and time-consuming, diverting resources from other business operations.
Insights
The Delaware Chancery Court's ruling against TC Energy in relation to its 2016 Columbia Pipeline acquisition has significant legal ramifications. The decision involves a substantial sum, with
From a legal standpoint, this situation illustrates the risks associated with mergers and acquisitions, especially when fiduciary duties are called into question. Understanding the basis of the court's decision, particularly the breaches by the former Columbia executives and TC Energy’s involvement, is crucial. When courts allocate liability in such cases, it can serve as a precedent influencing future corporate governance practices and M&A due diligence.
Retail investors should take note of how prolonged litigation can affect company valuation and resource allocation. The ongoing appeal process means potential future legal expenses and prolonged uncertainty which might impact stock performance.
Rating: -1
The financial implications of the Delaware Chancery Court’s ruling are noteworthy. TC Energy is facing a charge of
From a balance sheet perspective, the need to post a bond instead of paying the damages outright offers some short-term relief but does not eliminate the financial obligation. Investors should be aware that prolonged litigation and the associated costs can strain the company’s financial resources. This could lead TC Energy to reallocate funds from other projects or strategic initiatives to cover legal expenses, potentially affecting growth prospects.
The possibility of a successful appeal adds an element of uncertainty. If the appeal is unsuccessful, TC Energy would need to secure funds to cover the damages and interest, which could lead to increased debt or reduction in dividends. In contrast, a successful appeal could mitigate these financial stresses, but the uncertainty will likely weigh on investor confidence until resolved.
Rating: -1
CALGARY, Alberta, May 15, 2024 (GLOBE NEWSWIRE) -- News Release – TC Energy Corporation (TSX, NYSE: TRP) (TC Energy or the Company) strongly disagrees with the final decision issued today by the Delaware Chancery Court (the “Court”) allocating liability for earlier determined damages in an ongoing class action lawsuit related to TC Energy’s 2016 acquisition of Columbia Pipeline Group Inc. ("Columbia"). The Court previously held, in a decision issued in June 2023, that the former CEO and CFO of Columbia breached their fiduciary duties to Columbia stockholders and that TC Energy aided and abetted those breaches. TC Energy believes the Court made material errors of fact and law in its decisions and will appeal the determinations to the Delaware Supreme Court.
In its May 15, 2024 decision, the Court awarded the Columbia stockholders damages of US
TC Energy will appeal the Court’s decision and anticipates that the appeal will proceed through 2024 and conclude by mid-2025. TC Energy will post a bond in lieu of paying the damages award pending the outcome of its appeal.
About TC Energy
We’re a team of 7,000+ energy problem solvers working to safely move, generate and store the energy North America relies on. Today, we’re delivering solutions to the world’s toughest energy challenges – from innovating to deliver the natural gas that feeds LNG to global markets, to working to reduce emissions from our assets, to partnering with our neighbours, customers and governments to build the energy system of the future. It’s all part of how we continue to deliver sustainable returns for our investors and create value for communities.
TC Energy’s common shares trade on the Toronto (TSX) and New York (NYSE) stock exchanges under the symbol TRP. To learn more, visit us at TCEnergy.com.
FORWARD-LOOKING INFORMATION
This release contains certain information that is forward-looking and is subject to important risks and uncertainties (such statements are usually accompanied by words such as "anticipate", "expect", "believe", "may", "will", "should", "estimate", "intend" or other similar words). Forward-looking statements in this document are intended to provide TC Energy security holders and potential investors with information regarding TC Energy and its subsidiaries, including management's assessment of TC Energy's and its subsidiaries' future plans and financial outlook. All forward-looking statements reflect TC Energy's beliefs and assumptions based on information available at the time the statements were made and as such are not guarantees of future performance. As actual results could vary significantly from the forward-looking information, you should not put undue reliance on forward-looking information and should not use future-oriented information or financial outlooks for anything other than their intended purpose. We do not update our forward-looking information due to new information or future events, unless we are required to by law. For additional information on the assumptions made, and the risks and uncertainties which could cause actual results to differ from the anticipated results, refer to the most recent Quarterly Report to Shareholders and Annual Report filed under TC Energy’s profile on SEDAR+ at www.sedarplus.ca and with the U.S. Securities and Exchange Commission at www.sec.gov.
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Media Inquiries:
Media Relations
media@tcenergy.com
403-920-7859 or 800-608-7859
Investor & Analyst Inquiries:
Gavin Wylie / Hunter Mau
investor_relations@tcenergy.com
403-920-7911 or 800-361-6522
PDF available: http://ml.globenewswire.com/Resource/Download/83806e2a-f967-48ae-b637-5654d057c9c9
FAQ
What is the financial impact of the Delaware court ruling on TC Energy (TRP)?
Why is TC Energy (TRP) appealing the Delaware court decision?
What is the timeline for TC Energy's (TRP) appeal process?
How will TC Energy (TRP) manage the damages award during the appeal?
What is the total amount of damages awarded in the lawsuit related to TC Energy's (TRP) acquisition of Columbia Pipeline?
