The Heartland Petrochemical Complex, owned by Inter Pipeline, will receive a $325 million grant by the government of Alberta (around C$408 million) to support the facility as it faces a hostile takeover bid by Brookfield Infrastructure Partners, the company announced this Monday.
Firstly, the Petrochemical Complex is a world-class integrated propane dehydrogenation (PDH) and polypropylene (PP) production facility, which will be operational in early 2022.
Secondly, the grant will come out of the province’s Petrochemicals Incentive Program, which is a fund specially focused in both investing and attracting investment to petrochemical facilities in the province.
Moreover, the program aims at taking advantage of the growing global petrochemical sector; utilizing Alberta’s abundant natural gas reserves to diversify its economy; therefore, creating a competitive, investor-friendly business environment.
Thirdly, the development of the Heartland facilities have endured a difficult year, as the insurgence of the Covid-19 pandemic provoked construction delays and cost overruns. This would’ve made the company and its Heartland project an easy target for hostile take overs.
Consequently, last February, Brookfield Infrastructure launched a hostile takeover bid, with C$7,1 billion. A hostile takeover bid happens when a company attempts to take control of a publicly traded company, or asset, without the consent of the target company’s board of directors.
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Heartland Petrochemical Complex, a high impact asset for Alberta
On the other hand, the Heartland Petrochemical Complex, once in service, will create over 1,000 jobs; as well as nearly $50 million in tax revenue for provincial and municipal governments.
Consequently, the facility has a major impact in Canada’s energy sector and remains as a highly anticipated, and disputed asset. However, Alberta granted the company with funds that would be paid in equal installments of three years, once it is operational.
In addition, “the project’s positive impacts to the province; to the community and also to thousands of skilled-tradespersons is exactly what’s needed to aid Alberta’s economic recovery; we’re pleased to be a part of it.” Said Terry Parker, Executive Director, BTA.
On the other hand, Brookfield may now have to revisit its cash bid; it offered C$16,50 a share for Inter, and it said it could go as high as C$18,25 per share.
Finally, Inter is exploring a range of options to respond to the takeover. The company also expects a superior offer to emerge.
