PrefBlog

Brookfield Infrastructure has announced:

the completion of its previously announced issue of Cumulative Class A Preferred Limited Partnership Units, Series 1 (“Series 1 Preferred Units”) in the amount of $125,000,000. The offering was underwritten by a syndicate led by CIBC, RBC Capital Markets, Scotiabank, and TD Securities Inc.

Brookfield Infrastructure issued 5,000,000 Series 1 Preferred Units at a price of $25.00 per unit, for total gross proceeds of $125,000,000. Holders of the Series 1 Preferred Units will be entitled to receive a cumulative quarterly fixed distribution yielding 4.50% annually for the initial period ending June 30, 2020. Thereafter, the distribution rate will be reset every five years at a rate equal to the 5-year Government of Canada bond yield plus 3.56%. The Series 1 Preferred Units will commence trading on the Toronto Stock Exchange this morning under the ticker symbol BIP.PR.A.

BIP.PR.A is a FixedReset, 4.50%+356, announced March 4. It will be tracked by HIMIPref™ and has been assigned to the FixedResets subindex.

As I noted on the post regarding the announcement, the ‘tax considerations’ section of the prospectus (SEDAR, Brookfield Infrastructure Partners L.P. Mar 4 2015 21:37:58 ET, Prospectus supplement – English, PDF 305 K, sorry, I can’t link directly because this is Canada and regulators think you’re shit) is fraught with interest:

For Canadian federal income tax purposes, holders of Series 1 Preferred Units and Series 2 Preferred Units will be allocated a portion of the taxable income of our Partnership based on their proportionate share of distributions received on their units. The allocation of taxable income to such holders may be less than the distributions received and this difference is commonly referred to as a tax deferred return of capital (i.e., returns that are initially non-taxable but which reduce the adjusted cost base of the holder’s units). See “Certain Canadian Federal Income Tax Considerations” for further details. As shown in the table below, the historical 5 year average per unit return of capital (i.e., excess of distributions over allocated taxable income) expressed as a percentage of the annual distributions in respect of units of our Partnership for the period 2010 through 2014 was approximately 50%. Management anticipates a 5 year average per unit return of capital percentage of 50% for the period 2015 through 2019; however, no assurance can be provided this will occur.

	2014	2013	2012	2011	2010
Total distribution	C$2.1378	C$1.7883	C$1.4988	C$1.3198	C$1.1277
Total taxable income	C$2.1035	C$0.4131	C$0.7939	C$0.4825	C$0.2368
Return of capital	C$0.0343	C$1.3752	C$0.7049	C$0.8372	C$0.8909
Income %	98.40%	23.10%	52.97%	36.56%	21.00%
Return of capital %	1.60%	76.90%	47.03%	63.44%	79.00%

The details of the 2014 CANADIAN TAXABLE INCOME CALCULATION (for the non-preferred units, remember!) are mind-boggling:

The table below provides the Canadian taxable income information for Brookfield Infrastructure Partners for its 2014 taxation year.

All amounts are reported in Canadian dollars (unless stated otherwise) and are on a per unit basis by quarter. Taxable income is allcoated to unitholders based upon distributions.

All Canadian non-registered unitholders should have received a Form T5013 from their broker.

The information in the table below can be used by a unitholder to verify the amounts reported on Form T5013.

Quarterly return of capital amounts are determined as (i) the Cdn dollar equivalent of the quarterly distribution using the noon rate on the date of payment (according to the Bank of Canada), minus (ii) Canadian taxable income for the quarter.

Record date	28-Feb	30-May	29-Aug	28-Nov
Payment date	31-Mar	30-Jun	30-Sep	31-Dec	Full Year
Per Unit Distribution US$	$ 0.4800	$ 0.4800	$ 0.4800	$ 0.4800	$ 1 .9200
Cdn$/Unit	Cdn$/Unit	Cdn$/Unit	Cdn$/Unit	Cdn$/Unit
Per Unit Distribution	$ 0.5305	$ 0.5124	$ 0.5380	$ 0.5568	$ 2 .1378
Canadian source interest	$ 0.0049	$ 0.0049	$ 0.0049	$ 0.0049	$ 0.0198
Canadian eligible dividend	$ 0.0118	$ 0.0118	$ 0.0118	$ 0.0118	$ 0.0472
Foreign dividend and interest income	$ 0.6055	$ 0.6055	$ 0.6055	$ 0.6055	$ 2.4220
Other investment income	$ –	$ –	$ –	$ –	$ –
Carrying charges	$ (0.0994)	$ (0.0994)	$ (0.0994)	$ (0.0994)	$ (0.3977)
Capital gain / (loss)	$ 0.0030	$ 0.0030	$ 0.0030	$ 0.0030	$ 0.0122
Total tax allocation	$ 0.5259	$ 0.5259	$ 0.5259	$ 0.5259	$ 2.1035

BIP.PR.A traded 486,480 shares today (consolidated exchanges) in a range of 24.51-86 before closing at 24.51-60. Vital statistics are:

This entry was posted on Thursday, March 12th, 2015 at 11:07 pm and is filed under Issue Comments, Return of Capital. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.