Good afternoon and welcome to the Keyera Conference call to discuss the acquisition of Plains Midstream Canada NGL business. Please note, this call is pre-recorded and there will be no Q&A session following the presentation. A recording will be available on Keyera's website shortly after the call. For any follow-up inquiries, please contact Keyera's investor relations team. I will now turn the call over to Dan Cuthbertson, General Manager of Investor Relations. Please go ahead.
Thank you and welcome, everyone. On today's call, we're joined by Dean Setoguchi, President and CEO, and Eileen Mercier, Senior Vice President and CFO. They will walk you through the details of this transformative transaction. Before we begin, I'd like to remind listeners that some of the comments and answers that we will be giving today relate to future events. These forward-looking statements are given as of today's date and reflect events or outcomes that management currently expects. In addition, we will refer to some non-GAAP financial measures. The full forward-looking statements advisory and non-GAAP disclosures are included at the end of this presentation. For additional details, including reconciliations, please refer to Keyera' public filings on SEDAR Plus and on our website. With that, I'll now turn the call over to Dean.
Thanks, Dan, and good afternoon, everyone. Let's begin with slide two. At Keyera, our purpose is to empower the lives of people today to create a sustainable tomorrow. Our mission of connecting energy for life reflects the values that guide us every day. It is our vision to be the North American leader in delivering energy infrastructure solutions that this transaction most directly advances. Today, we're announcing a major milestone on that path: the acquisition of the Plains Canadian NGL business. This transaction strengthens our platform, accelerates our growth, and creates meaningful value for both customers and shareholders. Here's how we structured today's presentation. I'll provide an overview of the transaction and walk through the strategic rationale. I'll then discuss how the combined platform enhances customer value and positions us for long-term success.
Finally, Eileen will take us through the financial benefits and how our disciplined financial framework and capital allocation priorities remain unchanged. Let's get started. Turning to slide three, this transaction marks a pivotal step in the execution of our long-term strategy. We're acquiring substantially all of Plains Canadian NGL business for a total cash consideration of CAD 5.15 billion, subject to adjustments. This transaction brings key NGL infrastructure under Canadian ownership, enhancing domestic energy capabilities and reinforcing Canada's economic resilience by keeping value and decision-making closer to home. This deal is attractively valued at 7.8 times expected 2025 Adjusted EBITDA, or 6.8 times including near-term run rate synergies. It is immediately accretive to DCF per share with mid-teens accretion in the first full year.
The acquisition is fully financed through a CAD 1.8 billion bought deal equity offering of subscription receipts announced today, along with a bridge facility and subsequent debt financing. This structure preserves our financial strength and investment-grade rating. We anticipate closing in the first quarter of 2026, subject to regulatory approvals. Slide four highlights how this transaction is a natural extension of our strategy, enhancing the scale, connectivity, and service offering of our integrated NGL platform. It enhances the scale of our NGL infrastructure while extending our value chain east to Sarnia, broadening our geographic reach and downstream access. The assets are highly complementary, unlocking commercial potential where we can apply our risk management, marketing, and Canadian operating expertise to drive margin performance. On a combined basis, this transaction unlocks approximately CAD 100 million in near-term synergies and 70% of realized margin from the contracted fee-for-service sources.
This supports dividend sustainability and long-term growth. On the right, you'll see a map showing how these assets integrate across the country, along with a table summarizing the significant scale of processing, storage, and pipeline capacity that we're adding. Turning to slide five, let's take a step back and look at the macroeconomic context supporting this transaction. Western Canada is home to one of the lowest-cost and longest-life natural gas supplies in North America, including the world-class Montney and Duvernay plays. Continued infrastructure build-out and growing demand from LNG, petrochemicals, oil sands, and emerging sectors like AI and data centers are expected to drive sustained gas production growth in Western Canada. This, in turn, is supporting higher natural gas liquids volumes across the basin. This transaction enhances our ability to support that growth, strengthening our service offering and better connecting customers to high-value markets across North America.
The next few slides will now focus on Plains NGL business and its cash flow attributes. Slide six highlights the high-quality assets we are acquiring, which are highly complementary to Keyera's existing platform. On a standalone basis, Plains' portfolio forms a fully integrated cross-Canada NGL system connecting Western Canada supply to key demand centers across the Prairie Provinces, Ontario, and Eastern U.S. The system includes strategic hubs like Empress, Fort Saskatchewan, and Sarnia, which provide a reliable source of Canadian NGL supply through extensive fractionation, storage, pipeline, and logistics infrastructure. These assets enhance geographic reach and service continuity. Once integrated, the combined platform will offer stronger customer solutions and greater operational flexibility. On slide seven, it shows a breakdown of the acquired assets by segment. About 60% of expected realized margin contribution is coming from stable fee-for-service business segments.
The remaining 40% is generated from marketing activities, which support overall margin optimization and are expected to benefit from strong supply and demand fundamentals. Eileen will speak shortly to how we'll manage these exposures through our disciplined risk management program and continue to ensure cash flow stability and margin protection. Moving to slide eight, the fee-for-service margin is supported by long-term customer contracts with an average remaining life of over 10 years, and about 30% of that is take or pay. In addition, about 75% of total revenue is with investment-grade counterparties, further reinforcing the stability and credit quality of the platform. These attributes align well with Keyera's existing business model and support our commitment to delivering consistent long-term shareholder value. Turning to slide nine, this acquisition builds on the strong momentum Keyera has established already in 2025 by executing key elements of our strategy.
This year, we have successfully advanced several major initiatives aimed at expanding our integrated value chain and supporting customer growth, including advancing the FRAC 2D bottleneck project and sanctioning the FRAC 3 expansion. Extending our value chain to overseas export markets through commercial agreements with AltaGas, adding integrated contracting at Wapiti and Simonette, and most recently, sanctioning the CAPS zone for expansion to reach into the Montney. The acquisition of the Plains NGL business is a natural extension of this strategy. The balance of the presentation will now focus on the combined platform. As shown on slide 10, the combined platform offers seamless end-to-end connectivity from Western Canadian production regions to key demand centers, including export access to Asia via the West Coast and across the Prairie Provinces, Eastern Canada, and the U.S.
This integration creates a compelling value proposition for customers, enhancing reliability, flexibility, and market access across the entire NGL value chain. Turning to slide 11, this transaction is ultimately about delivering value to our customers. The true strength of this combination lies in its ability to optimize every link in our NGL value chains across key products like ethane, propane, butane, isooctane, and condensate. Together, the combined platform enhances reliability, operational flexibility, and market access, enabling us to move products more efficiently and maximize net packs for customers. With that, I'll now hand it over to Eileen, who will take us through the financial benefits of the transaction and our capital allocation priorities.
Thank you, Dean. Turning to slide 12, this transaction materially enhances Keyera's growth outlook. In the first full year following the acquisition, we expect fee-based EBITDA to grow by about 50%. This is mostly driven by contributions from the acquired assets and also includes $100 million in near-term synergies, which we expect to deliver in the first full year. This growth will be further enhanced in the following years by further optimizations and the completion of projects already underway. Turning to slide 13, this transaction maintains Keyera's strong and stable cash flow profile with a mix of fee-for-service and contracted assets that remains consistent with our current business. Looking ahead, we expect further improvements as the FRAC 2 to bottleneck, FRAC 3 expansion, and CAPS zone 4 all come into service by 2028.
Each of these growth projects is underpinned by long-term take or pay contracts and will contribute to an even more durable and higher quality cash flow profile. These assets are expected to increase the proportion of realized margin generated from fee-for-service segments to an average of about 70%, with 45% of that margin backed by take or pay commitments over the next few years. Also, an average of 72% of revenue over the same timeframe is expected to come from investment-grade customers, further strengthening our commercial foundation. This positions us well to sustain our dividend and continue investing in capital-efficient, fee-based growth opportunities across all market cycles. Turning to slide 14, this transaction has been structured to preserve Plains' strong financial position and flexibility.
The acquisition is fully funded through a financing package, which includes a committed bridge facility, a CAD 1.8 billion bought deal equity financing through the issuance of subscription receipts, and the remainder funded through a combination of debt securities and bank facilities. Our disciplined financing approach builds on Plains' track record of deleveraging and prudent capital management. Pro forma net debt to adjusted EBITDA is expected to be within our long-term target range of 2.5-3 times. This structure ensures we maintain balance sheet strength and continue operating with one of the most resilient financial profiles in the sector. In terms of risk management, we will leverage Keyera's robust existing program to lock in margins, stabilize operating costs, and manage both commodity and foreign exchange exposure. On slide 15, you can see this transaction unlocks meaningful near and long-term synergies by integrating two highly complementary platforms.
In the first full year, we expect to realize approximately $100 million in annual run rate synergies. These will come from corporate cost savings, supply chain improvements, and operational efficiencies. Longer term, we see additional value from optimizing cavern storage and product flows across interconnected assets and from further integrating the two platforms. These synergies will enhance margin performance, improve asset utilization, and strengthen service across the combined network. With that, I'll now turn the call back to Dean for closing remarks.
Thanks, Eileen. Wrapping up on slide 16, this transaction marks a defining moment for Keyera. It strengthens our position as a Canadian midstream leader, expands our integrated NGL platform across the country. At its core, this deal is about delivering long-term value for our customers by providing greater market access, more flexibility, and stronger end-to-end service. It also brings critical NGL infrastructure under Canadian ownership, reinforcing Canada's economic resilience and ensuring that value creation and decision-making remain closer to home. For investors, it delivers immediate financial benefits while preserving our disciplined financial framework and long-term growth strategy. It's a rare opportunity to add scale, unlock value, and extend our platform for decades to come. Thank you for joining us.
Thank you, ladies and gentlemen. The conference has now ended. Thank you all for joining. You may all.