New Issue: BEP FixedReset, 5.75%+501M575

Brookfield Renewable Partners L.P. has announced:

that it has agreed to issue 6,000,000 Cumulative Minimum Rate Reset Class A Preferred Limited Partnership Units, Series 9 (the “Series 9 Preferred Units”) on a bought deal basis to a syndicate of underwriters led by CIBC Capital Markets, RBC Capital Markets, Scotiabank and TD Securities Inc. for distribution to the public. The Series 9 Preferred Units will be issued at a price of $25.00 per unit, for gross proceeds of $150,000,000.

Holders of the Series 9 Preferred Units will be entitled to receive a cumulative quarterly fixed distribution yielding 5.75% annually for the initial period ending July 31, 2021. Thereafter, the distribution rate will be reset every five years at a rate equal to the greater of (i) the 5-year Government of Canada bond yield plus 5.01%, and (ii) 5.75%. The Series 9 Preferred Units are redeemable on July 31, 2021 and on each Series 9 Reclassification Date (as defined below) thereafter.

Holders of the Series 9 Preferred Units will have the right, at their option, to reclassify their Series 9 Preferred Units into Cumulative Floating Rate Reset Class A Preferred Limited Partnership Units, Series 10 (the “Series 10 Preferred Units”), subject to certain conditions, on July 31, 2021 and on July 31 every 5 years thereafter (each a “Series 9 Reclassification Date”). Holders of Series 10 Preferred Units will be entitled to receive a cumulative quarterly floating distribution at a rate equal to the 90-day Canadian Treasury Bill yield plus 5.01%.

Brookfield Renewable has granted the underwriters an option, exercisable until 48 hours prior to closing, to purchase up to an additional 2,000,000 Series 9 Preferred Units which, if exercised, would increase the gross offering size to $200,000,000.

The Series 9 Preferred Units will be offered in all provinces and territories of Canada by way of a supplement to Brookfield Renewable’s existing Canadian short form base shelf prospectus. The Series 9 Preferred Units may not be offered or sold in the United States or to U.S. persons absent registration or an applicable exemption from the registration requirements under the U.S. Securities Act.

Brookfield Renewable intends to use the net proceeds of the issue of Series 9 Preferred Units to repay indebtedness. The offering of Series 9 Preferred Units is expected to close on or about May 25, 2016.

It is my understanding that distributions on the units will be characterized in the same manner as, for instance, the related issue BEP.PR.G:

According to the prospectus:
Management anticipates the 5 year average per unit Canadian dividend, ordinary income and return of capital will be 50%, 25%, and 25%, respectively, for the period between 2015 and 2020; however, no assurance can be provided this will occur.

… but the prospectus supplement is not yet available for this particular new issue. It’s a pity they didn’t include this rather vital information in the press release.

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