The agreement will enable an Indigenous-owned investment partnership to purchase a 5.34% stake in the NGTL system and Foothills assets in western Canada.
Calgary-based TC is best known for its Keystone oil pipeline, but the company is undergoing an overhaul and in the process of spinning off its oil business to focus on transporting natural gas.
Analysts said the widely anticipated deal was a key step to achieving the company's C$3 billion asset sale target for 2024 and the healthy valuation would have a positive impact on investor sentiment.
"With significant asset sales announced, we see its funding plan being further de-risked," Scotiabank analyst Robert Hope wrote in a note.
TC shares were flat on the Toronto Stock Exchange at C$58.05.
The deal is backed by the Alberta Indigenous Opportunities Corporation (AIOC), a provincial crown corporation, and was negotiated by a consortium committee representing 72 communities closest to the pipeline system in Alberta, British Columbia and Saskatchewan.
Chief Isaac Twinn of the Sawridge First Nation, chairman of the consortium committee, said in a statement the committee had significantly improved the terms of the deal during negotiations.
The agreement follows a number of other similar agreements struck by companies including Enbridge (ENB.TO), opens new tab and Suncor Energy (SU.TO), opens new tab that have enabled Indigenous communities to take a stake in energy projects situated near their territories.
TC Energy CEO Francois Poirier said the deal allowed the company to achieve its corporate objective of reducing debt while also partnering with Indigenous communities.
"It's nice when you can kill two birds with one stone," Poirier told a news conference.
The NGTL, spanning about 24,400 kilometers (15,150 miles) in length, connects most of the natural gas production in western Canada to domestic and export markets.
"Owning part of this premier energy asset will create significant new revenue streams for every single community that signs on," Alberta Premier Danielle Smith said.
The deal is the largest Indigenous loan guarantee ever issued in Canada and the first to involve communities from different provinces, said Chana Martineau, head of the AIOC.
A growing number of Canadian Indigenous communities are investing in natural resource projects. Last month, the Haisla Nation on British Columbia's west coast announced a positive final investment decision on the C$4 billion Cedar LNG project, in partnership with Pembina Pipeline Corp .
The Canadian government this year said it would provide up to C$5 billion in loan guarantees to help Indigenous groups invest in natural resource projects.
Now that the agreement has the backing of the AIOC and the consortium, each of the 72 communities represented will review the deal and decide whether to participate. The transaction is expected to close in the third quarter.
