New Issue: BAM FixedReset 5.40%+230

Brookfield Asset Management has announced:

that it has agreed to issue to a syndicate of underwriters led by Scotia Capital Inc., CIBC World Markets, RBC Capital Markets, and TD Securities Inc. for distribution to the public 6,000,000 Preferred Shares, Series 24. The Preferred Shares, Series 24 will be issued at a price of $25.00 per share, for aggregate gross proceeds of CDN$150,000,000. Holders of the Preferred Shares, Series 24 will be entitled to receive a cumulative quarterly fixed dividend yielding 5.40% annually for the initial period ending June 30, 2016. Thereafter, the dividend rate will be reset every five years at a rate equal to the 5-year Government of Canada bond yield plus 2.30%.

Holders of Preferred Shares, Series 24 will have the right, at their option, to convert their shares into cumulative Preferred Shares, Series 25, subject to certain conditions, on June 30, 2016 and on June 30 every five years thereafter. Holders of the Preferred Shares, Series 25 will be entitled to receive cumulative quarterly floating dividends at a rate equal to the three-month Government of Canada Treasury Bill yield plus 2.30%.

Brookfield Asset Management Inc. has granted the underwriters an option, exercisable in whole or in part prior to closing, to purchase an additional 2,000,000 Preferred Shares, Series 24 at the same offering price. The Preferred Shares will be offered by way of prospectus supplement under the short form base shelf prospectus of Brookfield Asset Management Inc. dated January 12, 2009. The prospectus supplement will be filed with securities regulatory authorities in all provinces of Canada.

Note the relatively long term until the first Exchange Date: 6.5 years!

The first dividend will be for $0.2811, payable 2010-3-31, assuming a closing date of 2010-1-14.

BAM.PR.P, the 7.00%+445 FixedReset issued last June, closed last night at 27.30-42 to yield 4.90-79% until its presumed call 2014-9-30.

The BAM PerpetualDiscounts, BAM.PR.M & BAM.PR.N, closed last night yielding around 6.80%, therefore the Break-Even Rate Shock for the issue, according to the BERS Calculator is a very high 249bp.

Update: Brookfield has announced:

that as a result of strong investor demand for its previously announced public offering of Preferred Shares, Series 24, it has agreed to increase the size of the offering from CDN$150,000,000 to CDN$275,000,000 or from 6,000,000 Preferred Shares to 11,000,000 Preferred Shares. There will not be an underwriters’ option, as was previously granted.

Update: DBRS confirms a rating of Pfd-2(low) with a Stable trend.

One Response to “New Issue: BAM FixedReset 5.40%+230”

  1. […] the new FixedReset 5.40%+230 announced January 5 closed today and was able to close well above par on heavy volume. The issue traded 614,165 shares […]

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