Historical information

On May 15, 2003, TC Energy Corporation (then TransCanada Corporation) received regulatory approvals to establish it as the parent company of TransCanada PipeLines Limited. Shareholders voted in favour of the change to the corporate structure of the company at the Annual and Special Meeting on April 25.

For background on this issue, please see the letter to shareholders and Q&As from Board of Directors' then chairman, Dick Haskayne and then chief executive officer, Hal Kvisle, as well as information included in the Management Proxy Circular.

If you have any questions after reading this Q&A, please email them to us and we'll do our best to answer them.

You do not need to take any action. Your common shares of TransCanada PipeLines Limited are now recognized as shares of TC Energy Corporation (previously TransCanada Corporation). TC Energy Corporation (previously TransCanada Corporation) common shares now trade under the symbol 'TRP' on the Toronto and New York stock exchanges.

No. The declaration and payment of dividends will still be at the discretion of the Board of Directors.

Yes. TC Energy Corporation (previously TransCanada Corporation) will have a dividend reinvestment plan for common shareholders. This plan allows reinvestment of dividends received on TC Energy  Corporation common shares in the same manner as was the case with the TransCanada PipeLines Limited plan.

Preferred shareholders of TransCanada PipeLines Limited will also be able to participate in TC Energy Corporation's (previously TransCanada Corporation) dividend reinvestment plan in respect to their dividends on preferred shares.

You do not need to take any action to continue to participate in the dividend reinvestment plan. Plan members will receive a letter in late May providing additional information on the TC Energy Corporation dividend reinvestment plan.

No. Only the common shares of TransCanada PipeLines Limited have become common shares of TC Energy Corporation (then TransCanada Corporation). Existing preferred shareholders remain preferred shareholders of TransCanada PipeLines Limited.

Generally speaking, no gain or loss will be recognized for income tax purposes. More detailed information is provided in the Proxy Circular. If you have any additional questions, we recommend you consult your personal tax or financial advisor.

Information related to the tax implications for institutional shareholders is included in the Proxy Circular.

This is purely a legal change in our corporate structure and has no impact on our day-to-day operations or our employees. All of the existing employees of TC Energy (previously TransCanada) continue to be employed by TransCanada PipeLines Limited.

The new company, TC Energy Corporation (previously TransCanada Corporation), does not have any employees. The management and Board of TransCanada PipeLines Limited will also manage TC Energy Corporation.

No additional compensation will be paid to either the directors or management for their dual roles in TC Energy Corporation (previously TransCanada Corporation) and TransCanada PipeLines Limited.

The rationale for this change is two-fold: to address certain restrictions contained in the terms and conditions of the company's debt, and to provide the company with greater flexibility in how it holds its assets in the future.

Some of the company's trust indentures have a covenant, or restriction, that effectively sets a limit on how much TransCanada PipeLines Limited can invest in certain types of assets. If the company exceeds this limit, it would be prohibited from paying dividends. While TransCanada PipeLines Limited presently has significant capacity to invest in assets, many of the types of restricted assets are in businesses the company has targeted for future growth.

For example:

• The covenant allows for investment in natural gas fired power generation, but restricts investment in power generated from other sources such as low cost hydroelectric or biomass.
• The covenant may constrain investments of any kind, including investment in natural gas pipelines, if we share control of those investments with partners. Many opportunities for the expansion of our pipeline business may require partners - for example, new pipelines from the North as well as the potential for investment in existing pipelines in the United States.
• The covenant could restrict us from buying all of a pipeline in the US if that pipeline is required by its US regulator to borrow from third parties.

Under the new holding company structure, TransCanada PipeLines Limited will continue to hold its existing assets and be subject to its existing liabilities, including liabilities to holders of its debt under its trust indentures. TC Energy Corporation (previously TransCanada Corporation) is now the company that common shareholders own and it will be the Board of TC Energy Corporation (previously TransCanada Corporation) that will declare common share dividends. TC Energy Corporation (previously TransCanada Corporation) will not be bound by the covenant contained in the trust indentures of TransCanada PipeLines Limited.

On July 2, 1998, TC Energy (then called TransCanada Pipelines Limited or "TCPL") and NOVA Corporation merged and then split off the commodity chemicals business carried on by NOVA into a separate public company, NOVA Chemicals.

Merger and tax information

• US Shareholders Income Tax Information for 1998 (14 KB, PDF)
  (includes ordinary dividend income, reduction in tax basis of TC Energy Common Shares, and capital gain information.)
• Joint Management Information Circular (5/98)(1.31 MB, PDF) (information pertaining to the July 2, 1998 merger.)

Joint letter from Nova and TC Energy (then called TransCanada) to Canadian shareholders

Re: Determination of Fair Market Value of Shares on July 2, 1998

As was stated in the Canadian income tax section set out on pages 66 - 70 of the Joint Management Information Circular dated May 19, 1998 (the "Joint Information Circular"), the determination of the fair market value of certain shares is relevant to the shareholders of NOVA and TransCanada in determining the Canadian income tax consequences of the transactions described in the Plan of Agreement (the "Plan"), which became effective on July 2, 1998.

All capitalized terms not otherwise defined herein have the same meanings as set out in the Joint Information Circular.Revenue Canada may accept a number of different approaches in valuing shares of a public company at a particular time. For your information, NOVA and TransCanada are presently planning for purposes of their respective Canadian tax filings to determine the fair market value of the publicly traded shares by reference to the ten day weighted average prices as transacted on The Toronto Stock Exchange.

Based on a valuation approach derived from the use of ten day weighted average prices, the fair market values were:

Using this valuation approach,

1. The proceeds of disposition of a NOVA Common Share were $16.90;
2. The cost of a TransCanada Common Share received by a NOVA Common Shareholder was initially $32.50;
3. For purposes of calculating the cost of a TransCanada common share (referred to in the Joint Information Circular as an EnergyCo. Common Share) immediately after the Plan is effective, $5.57 (being .2 of $27.85 to reflect the 1 for 5 share consolidation) must be deducted from the adjusted cost base otherwise determined of each TransCanada Common Share;
4. The cost of a NOVA common share (post-merger) (referred to in the Joint Information Circular as a NOVA Chemicals Common Share) was $27.85.

The above information is being provided in light of numerous requests received by both companies from Canadian shareholders. This letter is not intended to be a substitute for the description of tax consequences in the Joint Information Circular and should not be construed to be legal, business, tax or valuation advice to any particular shareholder. Accordingly, shareholders should consult their own advisors as to the tax consequences to them of the Plan in their circumstances, particularly if a shareholder wishes to consider adopting a different valuation approach.

In addition to the foregoing, NOVA will be sending its shareholders T5 income tax reporting slips for purposes of reporting the deemed dividend arising on the cash payment in lieu of (and on the cancellation of) an interest in a fractional share as described on page 68 of the Joint Information Circular.If you have any questions with respect to any of the foregoing, please contact NOVA at 1.800.522.1721 or TransCanada at 1.800.361.6522.

Joint letter from Nova and TC Energy (then called TransCanada) to United States shareholders

Re: Determination of Fair Market Value of Shares on July 2, 1998

The plan of Arrangement (the "Plan") involving NOVA Corporation ("NOVA") and TransCanada PipeLines Limited ("TransCanada") described in the Joint Management Information Circular dated May 19, 1998 (the "Joint Information Circular") became effective on July 2, 1998 (the "Effective Date"). As stated in the United States income tax section, set forth on pages 70 - 75 of the Joint Information Circular, the fair market value of a common share of NOVA on the Effective Date after consummation of the Plan (a "NOVA common share" which is referred to in the Joint Information Circular as a NOVA Chemicals Common Share) and the fair market value of a common share of TransCanada without giving effect to the distribution of the NOVA Common Shares (a "TransCanada Common Share") is relevant to shareholders of TransCanada and NOVA for purposes of determining certain United States federal income tax consequences to them of the Plan. The purpose of this letter is to provide information regarding estimates of such fair market values.

All capitalized terms not otherwise defined herein have the same meanings as set out in the Joint Information Circular.

The Internal Revenue Service may accept different approaches in valuing shares of a publicly-traded company at a particular time.

Based on discussions with US tax counsel, we believe that it would be reasonable to use the following amounts (which are expressed in United States dollars) as estimates of fair market value:

The estimated fair market value of a TransCanada Common Share was derived from the simple average of the high and low trading prices on the Toronto Stock Exchange on July 2, 1998. The estimated fair market value of a NOVA Common Share (referred to in the Joint Information Circular as a NOVA Chemicals Common Share) was derived from the opening trading price on the Toronto Stock Exchange on July 3, 1998. These amounts were converted to United States dollars based on the mid-day exchange rate in effect on the particular date.

Using these estimated values,

1. The fair market value of the consideration received for a NOVA Common Share was $11.56 (being .52 x $22.23);
2. The initial tax basis in a TransCanada Common Share received by a NOVA Common Shareholder, prior to any adjustment to such tax basis as a result of the distribution of the NOVA Common Shares, was $22.23;
3. The initial tax basis in a NOVA Common Share (referred to in the Joint Information Circular as a NOVA Chemicals Common Share) received by NOVA and TransCanada common shareholders was $20.89.

TransCanada intends to report to United States shareholders in February 1999 the portion of the fair market value of a NOVA Common Share (referred to in the Joint Information Circular as a NOVA Chemicals Common Share) that should be treated as a dividend for US federal income tax purposes.

The above information is being provided in light of numerous requests received by both companies from United States shareholders. This letter is not intended to be a substitute for the description of tax consequences in the Joint Information Circular and should not be construed to be legal, business, tax or valuation advice to any particular shareholder. We believe that the use of the trading prices set forth above is a reasonable approach to estimate the fair market values of a TransCanada Common Share and a NOVA Common Share for purposes of determining certain United States federal income tax consequences of the Plan; however, as stated above, other approaches could be utilized for this purpose. Accordingly, shareholders should review the United States tax section in the Joint Information Circular and should consult their own advisors as to the tax consequences to them of the Plan in their particular circumstances, particularly if a shareholder wishes to consider adopting a different valuation approach.

In addition to the forgoing, NOVA will be sending its United States shareholders NR4 supplementary income tax reporting slips for purposes of reporting for Canadian federal income tax purposes the deemed dividend and related non-resident withholding tax arising on the cash payment in lieu of (and on the cancellation of) an interest in a fractional share as described on page 70 of the Joint Information Circular.

If you have any questions with respect to any of the foregoing, please contact NOVA 1.800.522.1721 or TransCanada at 1.800.361.6522.

Stock splits

There has been two stock splits in TC Energy's history: