New York (HedgeCo.Net) – Activist hedge fund Sandell Asset Management is taking on oil giant TransCanada, requesting a spinoff of its energy sector and urging the company to take advantage of a low tax paying affiliate.

“Although we are excited about the recent positive developments at TransCanada, we are disappointed that the Company has neither fully embraced the Master Limited Partnership structure nor emphasized cash flow metrics such as Adjusted Funds From Operations to highlight the Company’s ample tax assets, low maintenance capital requirements and capacity for dividend payment.” Tom Sandell, CEO of Sandell, said. “Furthermore, we believe a spinoff of the Energy segment is the best long term course for this asset to attract a world-class, dedicated management team to deal with upcoming opportunities and challenges within the sector and to highlight the premium value of the Pipeline business.”

The NYT reports:  “Sandell first reached out to the energy company about three months ago, discussing matters like its corporate strategy, according to people briefed on the matter. But TransCanada executives said they were largely content with the current layout of the business. While the exact size of the hedge fund’s stake is unclear, Sandell plans to say it has a “significant” stake in the energy company. TransCanada’s market value as of Friday was about $35 billion.”

TransCanada is currenty working on the Coastal GasLink Pipeline Project and the Keystone Pipeline Project, which will transport crude oil from Hardisty, Alberta to U.S. Midwest markets at Wood River and Patoka, Illinois; Cushing, Oklahoma and the Gulf Coast.

Sandell also published a whitepaper on its strategy: “Un-TRPing Shareholder Value. (pdf)”

Alex Akesson 
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alex@hedgeco.net
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