ACQUISITIONS

6 Months Ended

Jun. 30, 2011

ACQUISITIONS

ACQUISITIONS

NOTE 4                 ACQUISITIONS

GTN and Bison Equity Investment Acquisitions

On May 3, 2011, the Partnership acquired a 25 percent interest in GTN and a 25 percent interest in Bison from subsidiaries of TransCanada for a total transaction value of $605.0 million, subject to certain closing adjustments. Both GTN and Bison are Delaware limited liability companies. The GTN pipeline system extends from an interconnection near Kingsgate, British Columbia, Canada at the Canadian border to a point near Malin, Oregon at the California border. The Bison pipeline system extends from the Powder River Basin near Gillette, Wyoming to Northern Border’s pipeline system in Morton County, North Dakota. GTN and Bison are both regulated by the FERC, and they are operated by a subsidiary of TransCanada.

The purchase price of $405.0 million for the interest in GTN less $81.3 million, which reflected 25 percent of GTN’s outstanding debt at the time of the acquisition, and $200.0 million for the interest in Bison less a $9.1 million future capital commitment to complete the Bison pipeline, was financed through a combination of (i) issuance of 7,245,000 common units to the public at $47.58 per common unit for net proceeds of $330.9 million, (ii) draw of $61.0 million on the Partnership's committed $400.0 million bridge loan facility, (iii) draw of $125.0 million on the Partnership's then existing $250.0 million senior revolving credit facility, (iv) capital contribution from the General Partner of $6.7 million, which was required to maintain the General Partner’s effective two percent general partner interest in the Partnership, and (v) approximately $14.5 million of cash on hand. In addition, the Partnership paid $23.5 million on closing, subject to certain post-closing adjustments, resulting in total cash paid of $538.1 million.

The Acquisitions were accounted for as transactions between entities under common control, whereby the equity investments in both GTN and Bison were recorded at TransCanada’s carrying values. As the fair market value paid for the GTN and Bison interests was greater than the recorded equity investments of GTN and Bison, the total excess purchase price paid of $130.9 million was recorded as a reduction to Partners’ Equity.

Yuma Lateral Asset Acquisition

Pursuant to an amendment to the acquisition agreement between the Partnership and TransCanada relating to the Partnership’s acquisition of North Baja, the Partnership agreed to make an additional payment of up to $2.4 million to TransCanada in the event that TransCanada secured additional contracts for transportation service before December 31, 2010. TransCanada secured an additional contract in July 2010 and, as a result, the Partnership paid $2.4 million to TransCanada on March 25, 2011 when the facilities associated with the additional contract were completed.