OTTAWA (dpa-AFX) - Canadian asset manager Brookfield Asset Management, Inc. (BAM, BAM_A.TO) announced Tuesday a strategic combination of Brookfield Renewable Power Fund (BRC_UN.TO) and Brookfield Renewable Power, Inc. to create the world's largest listed pure-play renewable power businesses with about $13 billion of power generating assets. The transaction is expected to close in the fourth quarter of 2011.
Brookfield Renewable Power Fund is a premier Canadian income fund and one of the largest power income funds in North America, while Brookfield Renewable Power, Inc. comprises most of the power operations of Brookfield Asset Management, and owns about 34 percent of the Fund's outstanding units.
The combination will create a global, publicly-traded partnership called Brookfield Renewable Energy Partners L.P. The transaction is expected to provide the Fund's security holders significantly greater growth prospects, with increases in the amount of distributions.
Following the transaction, the new combined company will become the primary vehicle through which Brookfield Asset will acquire renewable power assets on a global basis.
'In the nearly 12 years since its formation, the Fund, with Brookfield Power as its manager, has earned a reputation as one of the most successful Canadian income trusts generating total annual unitholder returns in excess of 15%,' Chairman of the Fund Andre Bureau said in a statement.
The combined pure-play company's portfolios will have an installed capacity of 4,400 MW and long term average generation of 17,000 GWh annually, with the portfolio including 168 hydroelectric generating stations on 67 river systems and two wind farms having operations across ten power markets in Canada, the U.S. and Brazil.
The transaction will see the combining of all outstanding assets of the Fund, as well as Brookfield Power's Brazilian, U.S. and Canadian power assets. Fund unitholders will receive one limited partnership unit of the new combined company for every Fund unit held.
Following the completion of the transaction, the combined company will have 265.2 million units outstanding, with Brookfield Asset directly and indirectly owning 73 percent of it and the existing public unitholders of the Fund owing the balance 27 percent.
Upon successful completion of the transaction, the new company intends to pay an initial cash distribution of $1.35 per unit, effective with the fourth quarter distribution payable in January 2012.. The distribution is expected to target annual growth 3% to 5%, while maintaining a payout ratio in the range of 80% of distributable cash.
The transaction requires the approval by two-third of Fund unitholders and a majority of unitholders other than Brookfield and Ontario court approvals. Further, Brookfield will also seek two-third approval from holders of Preferred Shares and Brookfield Power's unsecured bondholders.
BAM closed Monday's regular trading session at $27.77, up $0.50 on a volume of 1.19 million shares. Meanwhile, BAM-A.TO last traded on the Toronto Stock Exchange at C$27.52.
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