TC Energy expects to appeal Columbia Pipeline ruling

Canadian infrastructure company TC Energy said July 2 it expected to appeal the latest ruling from the Delaware Chancery Court into its 2016 acquisition of Columbia Pipeline Group.

The lawsuit, filed in 2018 on behalf of former Columbia Pipeline Group shareholders, alleged that Columbia’s then CEO and CFO breached their fiduciary duties to Columbia shareholders, that there were “material” omissions in Columbia’s proxy statement associated with the sale to TC Energy and that TC Energy “aided and abetted” the fiduciary duty breaches and disclosure violations.

The plaintiffs claimed damages in excess of US$3bn, but Columbia’s former executives settled prior to the trial for US$79mn. At trial, TC Energy disputed the allegations.

The Court ruled in favour of the plaintiffs and awarded damages in the amount of US$1/share, and while the final amount of the award is yet to be determined, it is expected to be in the range of US$400mn, plus interest, TC Energy said.

Liability for the award will be allocated between Columbia’s former executives and TC Energy in a subsequent proceeding before the Court that will determine proportionate responsibility and account for the prior settlement. TC Energy’s final obligation will not be known until an allocation hearing is held and a decision rendered, likely later this year.

“TC Energy is disappointed with this decision and disputes many of the findings of fact and law,” the company said. “TC Energy intends to appeal once the final allocation is determined and anticipates an appeal will take upwards of one year.”

This is the second Delaware Chancery Court proceeding related to the acquisition of Columbia Pipeline. An appraisal rights action filed in 2016 found that the US$25.50/share paid by TC Energy to Columbia shareholders was fair value.