PrefBlog

Brookfield Renewable Power Fund has announced:

that the Corporation (as defined below) will issue in Canada a total of 7 million Class A Preference Shares, Series 1 (the “Series 1 Preferred Shares”) guaranteed by the Fund, at a price of $25.00 per share, for aggregate gross proceeds of $175 million, on a bought deal basis to a syndicate of underwriters in Canada led by Scotia Capital Inc., CIBC, RBC Capital Markets and TD Securities Inc.

The holders of Series 1 Preferred Shares will be entitled to receive fixed cumulative dividends at an annual rate of $1.3125 per share, payable quarterly, as and when declared by the Board of Directors of Brookfield Renewable Power Preferred Equity Inc. (the “Corporation”), a wholly-owned subsidiary of the Fund. The Series 1 Preferred Shares will yield 5.25% annually at the issue price, for the initial five-year period ending April 30, 2015 with the first dividend payment date scheduled for April 30, 2010, based on an anticipated closing date of March 10, 2010. The dividend rate will reset on April 30, 2015 and every five years thereafter at a rate equal to the then five-year Government of Canada Bond yield plus 2.62%. The Series 1 Preferred Shares are redeemable on or after April 30, 2015.

The holders of Series 1 Preferred Shares will have the right to convert their shares into Class A Preference Share, Series 2 (the “Series 2 Preferred Shares”), subject to certain conditions, on April 30, 2015 and on April 30 of every fifth year thereafter. The holders of Series 2 Preferred Shares will be entitled to receive quarterly floating rate cumulative dividends, as and when declared by the Board of Directors, at a rate equal to the then three month Government of Canada Treasury Bill yield plus 2.62%.

The Corporation has granted the underwriters an over-allotment option exercisable up to 30 days after closing to purchase up to an additional 1.05 million Series 1 Preferred Shares at the issue price on the same terms, for additional gross proceeds of up to $26.25 million.

The Corporation intends to lend the net proceeds of the offering to the Fund, which will repay in whole or in part the $200 million promissory note issued to Brookfield Renewable Power Inc. (“BRPI”) in connection with the Fund’s acquisition of substantially all of BRPI’s Canadian power generating assets in August 2009.

The Fund has previously announced its intention to convert to a corporation on or before January 1, 2011. It is expected that the Corporation will become the successor of the Fund through the conversion. If the Corporation does not become the successor, the successor entity will assume all the obligations of the Fund including those related to the Series 1 and Series 2 Preferred Shares.

The Series 1 and Series 2 Preferred Shares will be offered to the public in Canada pursuant to a short form prospectus that will be filed with securities regulatory authorities in each of the provinces of Canada.

Sorry for the lengthy headline, but I don’t think Brookfield Renewable Power Preferred Equity Inc. has a ticker symbol at this time. The parent and guarantor, Brookfield Renewable Power Fund, is BRC.UN.

Brookfield Asset Management (BAM) notes:

The Brookfield Renewable Power Fund (formerly Great Lakes Hydro Income Fund) was established in November 1999 as a publicly traded investment vehicle to acquire long-life, low cost generating assets which provide stable and sustainable cash distributions to unitholders. Brookfield owns 50.01% of the units on a fully-exchanged basis, with the remaining 49.99% owned by institutional and retail unitholders.

… so this issue should be counted as BAM for issuer concentration calculation purposes.

Update: I understand the deal size has been increased to $250-million.

Update, 2010-2-19: Brookfield press release on increase:

Brookfield Renewable Power Fund (the “Fund”) today announced that as a result of strong investor demand for its previously announced public offering of Class A Preference Shares, Series 1 (the “Series 1 Preferred Shares”), it has agreed to increase the size of the offering from $175 million to $250 million, or from 7 million Series 1 Preferred Shares to 10 million Series 1 Preferred Shares. The issue will be guaranteed by the Fund and will be completed on a bought deal basis to a syndicate of underwriters in Canada led by Scotia Capital Inc., CIBC, RBC Capital Markets and TD Securities Inc. There will not be an over-allotment option, as was previously granted.

DBRS maintains the Pfd-3(high) provisional rating.

This entry was posted on Thursday, February 18th, 2010 at 11:07 am and is filed under New Issues. 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.