Category: Issue Comments

Brookfield has announced:

a plan to combine Brookfield Renewable Power Fund and the power generating assets owned Brookfield Renewable Power Inc., to create Brookfield Renewable Energy Partners L.P. (“BREP”), a global, publicly-traded partnership focused on renewable power generation.
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The transaction will require approval by 662/3% of Fund unitholders and a majority of unitholders other than Brookfield and related persons present at the meeting in person or by proxy and Ontario court approvals. In addition, Brookfield will seek approval from 662/3% of the holders of Preferred Shares and Brookfield Renewable Power’s unsecured bondholders, which are conditions to closing. Meeting materials containing details of the proposed transaction are expected to be mailed to security holders of the Fund, Brookfield Renewable Power Equity and Brookfield Renewable Power as soon as practicable. It is anticipated that meetings of security holders to seek the approvals referred to above will be held in October and November of 2011.

In response, DBRS has announced:

has today placed the Senior Unsecured Debentures and Notes rating of Brookfield Renewable Power Inc. (BRPI) Under Review with Developing Implications. DBRS has also placed the Issuer Rating and Income Fund rating of Brookfield Renewable Power Fund (the Fund) and the Preferred Shares, Series 1 (the Preferred Shares) rating of the Fund affiliate Brookfield Renewable Power Preferred Equity Inc. (Equity Inc.) Under Review with Developing Implications.
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Equity Inc.’s Preferred Shares will become the obligation of a BREP subsidiary, guaranteed on a subordinate basis by BREP, mimicking the current structure under which the Preferred Shares are guaranteed on a subordinate basis by the Fund. Similar to the Fund, BREP would feature a contracted generation portfolio, with a weighted-average term of approximately 24 years. For the Preferred Shareholders, DBRS views the Transaction as offering a number of positive aspects that reduce business risk:

(1) BREP would be a much larger and more diverse renewable generator than the Fund, with the addition of contracted assets in the United States and Brazil. BREP’s approximate $13 billion in total assets would be more than double the Fund’s current size (C$5.6 billion as of June 30, 2011). BREP’s generating capacity (approximately 4,400 MW) is also substantially larger than that of the current Fund (approximately 1,700 MW). As mentioned above, BREP is expected to generate $1.1 billion annual EBITDA and $550 million cash flow from operations, based on long-term average hydrology and production levels. The added geographic diversity would result in lower exposure to weak hydrology in any one area.

(2) Average contract prices for the Ontario generation operations, which represent approximately 50% of the Fund’s production, will increase from C$68/MWh to C$88/MWh.

(3) Counterparty exposure to BRPI will be reduced. Currently, BRPI is the counterparty on more than 70% of the Fund’s revenues (DBRS estimate); with the addition of the new assets, this concentration is expected to decline to the range of 50% to 60%.

(4) BREP is expected to have improved access to equity capital given its larger market capitalization and broader investor base.

However, the Transaction is expected to increase the financial risk from the perspective of the Preferred Shareholders as post-Transaction, the Preferred Shares would rank behind the C$1.1 billion of MTNs as opposed to behind the minimal levels of Fund-level debt that existed historically. Additionally, many of the U.S. and Brazilian generating assets have existing non-recourse project debt (as do many of the Fund’s current assets). DBRS views this negative effect as being balanced by the above-mentioned improvement in business risk resulting from the much larger, diverse contracted asset base and, therefore, as neutral from the perspective of an Equity Inc. Preferred Shareholder.

BAM Split Corp., issuer of BNA.PR.B, BNA.PR.C, BNA.PR.D and BNA.PR.E, has released its Semi-Annual Report to March 31, 2011.

Figures of interest are:

MER: (excluding dividends on preferred shares, issue costs and Class A Preferred Share redemption premium) 0.0%. You don’t see that number very often! A more precise calculation from the Income Statement shows that the expenses totalled $190,000 for the half, or about 2bp p.a. on assets.

The expenses are wel itemized, however, and are a delight for voyeurs. I found the Listing Fees of $97,000 and Rating Fees of $7,000 to be most interesting.

Average Net Assets: This must be calculated if we’re to find the second decimal point on the MER. There was share issuance approximately half-way through the period, so say [1,547,354 (beginning of period) + 1,670,440 (end of period)] / 2 = 1,609-million, about

Underlying Portfolio Yield: Given the fund’s portfolio composition and investment policy, deviations from the raw yield on BAM.A will not be material. This is currently 1.875%

Income Coverage: Dividends & Interest of $14.117-million less expenses (before amortization of issue costs) of $0.190-million is $13.927-million, to cover preferred dividends of $11.298-million is 123%.

Life & Banc Split Corp. has released its Semi-Annual Report to June 30, 2011.

Figures of interest are:

MER: 0.99% of the whole unit value.

Average Net Assets: We need this to calculate portfolio yield, but it’s very rough due to the issuance of $63-million worth of new units on February 22 via a warrant offering. Try [190.8-million (NAV, beginning of period) + 250.3-million (NAV, end of period)] / 2 = about 221-million

Underlying Portfolio Yield: Total income of 4,367,129, times two (semi-annual) divided by average net assets of 221-million is 3.95%.

Income Coverage: Net Investment Income was 3,076,865. Preferred Share Distributions were 3,582,177, but don’t count the 0.13125 dividends on the 3,341,143 preferreds issued in March totalling 438,525. So net preferred dividends were 3,143,652, so Income Coverage is 98%.

Brompton Split Bank Corp. has released its Semi-Annual Report to June 30, 2011.

Figures of interest are:

MER: 1.00% of the whole unit value.

Average Net Assets: We need this to calculate portfolio yield. [128.1-million (NAV, beginning of period) + 132.3-million (NAV, end of period)] / 2 = about 130-million.

Underlying Portfolio Yield: Total income of 2,580,360, times two (semi-annual) divided by average net assets of 130-million is 3.97%

Income Coverage: Net Investment Income of 1,910,961 divided by Preferred Share Distributions of 1,574,707 is 121%.

Huh. It’s not too long ago that the float of BSC.PR.B doubled – now it’s been more than halved.

BNS Split Corp. II has announced:

that it has called 842,301 Preferred Shares for cash redemption on September 22, 2011 (in accordance with the Company’s Articles) representing approximately 46.440% of the outstanding Preferred Shares as a result of the special annual retraction of 1,684,602 Capital Shares by the holders thereof. The Preferred Shares shall be redeemed on a pro rata basis, so that each holder of Preferred Shares of record on September 20, 2011 will have approximately 46.440% of their Preferred Shares redeemed. The redemption price for the Preferred Shares will be $18.85 per share.

In addition, holders of a further 1,320,922 Capital Shares and 660,486 Preferred Shares have deposited such shares concurrently for retraction on September 22, 2011. As a result, a total of 3,005,574 Capital Shares and 1,502,787 Preferred Shares, or approximately 60.641% of both classes of shares currently outstanding, will be redeemed.

Holders of Preferred Shares that are on record for dividends but have been called for redemption will be entitled to receive dividends thereon which have been declared but remain unpaid up to but not including September 22, 2011.

Payment of the amount due to holders of Preferred Shares will be made by the Company on September 22, 2011. From and after September 22, 2011 the holders of Preferred Shares that have been called for redemption will not be entitled to dividends or to exercise any right in respect of such shares except to receive the amount due on redemption.

BNS Split Corp. II is a mutual fund corporation whose principal undertaking is to invest in common shares of The Bank of Nova Scotia. Capital Shares and Preferred Shares of BNS Split Corp. II are listed for trading on The Toronto Stock Exchange under the symbols BSC and BSC.PR.B respectively.

BSC.PR.B was last mentioned on PrefBlog when the warrant issue doubled the float about nine weeks ago. BSC.PR.B is tracked by HIMIPref™ but relegated to the Scraps index on volume concerns.

DundeeWealth Inc. has announced:

that at a special meeting of shareholders of DundeeWealth held earlier today, its shareholders approved a special resolution authorizing an amendment to the Company’s articles to permit the Company to redeem all of the issued and outstanding first preference shares, series 1 (the “Series 1 Shares”) at a price of $26.50 plus accrued and unpaid dividends up to but excluding the redemption date. Of the 2,795,594 votes cast by the holders of Series 1 Shares at the meeting, 99.65% voted in favour of the special resolution. All of the common shares, special shares, series C and first preference shares, series X were voted in favour of the special resolution. On September 8, 2011, the Series 1 Shares will be redeemed by the Company and delisted from trading on the Toronto Stock Exchange.

The potential for redemption was discussed on PrefBlog when the Special Meeting was announced.

DW.PR.A was tracked by HIMIPref™ but relegated to the Scraps index on credit concerns.

In the post YLO Discloses August Preferred Share BuyBacks, I noted:

As pointed out by Assiduous Reader radamesb, it appears that the company has reached – and even gone beyond! – its NCIB limit for the two retractibles; it looks like any further purchases of YLO.PR.A and YLO.PR.B will have to be done by public tender (such as was done for the NA high-coupon FixedResets, but – heh-heh – with a lower price).

Assiduous Reader radamesb suggested in the comments (edited to reflect correction):

Cangator pointed out to me in an email that using May 13 June 13 as the start date for Series 1 & 2 comes out to exactly the right amount of Series A shares, and leaves room for Series B if the cancellation of 490,904 shares on May 14 is counted towards the previous year’s buyback (since the original purchases were made before May 13). It seems that while they calculated the volume based on the same dates, that they were permitted to finish the previous year’s buyback before starting the new one, leaving different end dates as well.

I sent an eMail to YLO’s Investor Relations Department:

I have calculated totals for your shares purchased in the past few months, as disclosed on SEDI.

I calculate a total of 1,232,948 YLO.PR.A since May 13, compared to your NCIB annual maximum of 1,127,882.

Similarly, I calculate 771,888 YLO.PR.B since May 13, compared to the NCIB maximum of 684,028.

Can you explain these discrepencies?

The IR department has now responded:

Thank you for your interest in Yellow Media Inc.

Please note that the amount of Series 1 & 2 preferred shares purchased through the NCIB from May 13, 2011 to June 10, 2011 followed the NCIB approved by the TSX on June 8, 2010.

The amount of Series 1 & 2 preferred shares purchased through the NCIB since June 13, 2011 followed the NCIB approved by the TSX on May 11, 2011.

Prime Dividend Corp. has announced (although not yet on their website):

that a special meeting of the holders of the Company’s Preferred Shares and Class A Shares will be held at 11:00 a.m. (Eastern standard time) on Thursday, November 3, 2011. The purpose of the meeting is to consider a special resolution to extend the mandatory termination date for the Company from December 1, 2012 to December 1, 2018. Shareholders of record at the close of business on September 29, 2011 will be provided with the notice of meeting and management information circular in respect of the meeting and will be entitled to vote at the meeting.

If the extension is approved, Class A Shareholders and Preferred Shareholders will be provided with a Special Retraction right which is designed to provide Shareholders with an opportunity to retract their Shares and receive a retraction price that is calculated in the same way that such price would be calculated if the Company were to terminate on December 1, 2012 as originally contemplated.

PDV.PR.A was last mentioned on PrefBlog in August 2009. PDV.PR.A is not tracked by HIMIPref™ – the issue size is simply too small.

Brookfield Office Properties has announced:

the completion of its previously announced Preferred Shares, Series R issue in the amount of C$250 million. The offering was underwritten by a syndicate led by RBC Capital Markets, CIBC, Scotia Capital Inc. and TD Securities Inc.

Brookfield Office Properties issued 10.0 million Preferred Shares, Series R at a price of C$25.00 per share yielding 5.10% per annum for the initial five-year period ending September 30, 2016. Net proceeds from the issue will be added to the general funds of Brookfield Office Properties and be used for general corporate purposes, including, but not limited to, the repayment or refinancing of debt, acquisitions, capital expenditures and working capital needs.

The Preferred Shares, Series R will commence trading on the Toronto Stock Exchange on September 2, 2011 under the ticker symbol BPO.PR.R.

BPO.PR.R is a 5.10%+348 FixedReset, announced August 25. It will be tracked by HIMIPref™ but relegated to the Scraps index on credit concerns.

The issue traded 279,850 shares today in a relatively wide range of 24.70-05 before closing at 24.95-99, 5×25. Vital statistics are:

Details from SEDI.

Normal Course Issuer Bid (NCIB) information from YLO Press Release 2011-5-11.

As pointed out by Assiduous Reader radamesb, it appears that the company has reached – and even gone beyond! – its NCIB limit for the two retractibles; it looks like any further purchases of YLO.PR.A and YLO.PR.B will have to be done by public tender (such as was done for the NA high-coupon FixedResets, but – heh-heh – with a lower price).

However, the Exchange reports the usual batch of 3,134 insider buys today, so I’m not sure what’s going on. Anybody who knows the rules better than I do – or can shake an answer out of YLO Investor Relations – may enlighten me in the comments.