{"id":28096,"date":"2015-03-04T21:31:34","date_gmt":"2015-03-05T02:31:34","guid":{"rendered":"http:\/\/prefblog.com\/?p=28096"},"modified":"2015-03-04T21:31:34","modified_gmt":"2015-03-05T02:31:34","slug":"new-issue-bip-fixedreset-4-50356","status":"publish","type":"post","link":"https:\/\/prefblog.com\/?p=28096","title":{"rendered":"New Issue: BIP FixedReset, 4.50%+356"},"content":{"rendered":"

Brookfield Infrastructure Partners L.P. has announced<\/a>:<\/p>\n

that it has agreed to issue 5,000,000 Cumulative Class A Preferred Limited Partnership Units, Series 1 (\u201cSeries 1 Preferred Units\u201d) on a bought deal basis to a syndicate of underwriters led by CIBC, RBC Capital Markets, Scotiabank and TD Securities Inc. The Series 1 Preferred Units will be issued at a price of $25.00 per unit, for gross proceeds of $125,000,000. Holders of the Series 1 Preferred Units will be entitled to receive a cumulative quarterly fixed distribution at a rate of 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 are redeemable on or after June 30, 2020.<\/p>\n

Holders of the Series 1 Preferred Units will have the right, at their option, to reclassify their Series 1 Preferred Units into Cumulative Class A Preferred Limited Partnership Units, Series 2 (\u201cSeries 2 Preferred Units\u201d), subject to certain conditions, on June 30, 2020 and on June 30 every 5 years thereafter. Holders of Series 2 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 3.56%.<\/p>\n

Brookfield Infrastructure has granted the underwriters an option, exercisable until 48 hours prior to closing, to purchase up to an additional 2,000,000 Series 1 Preferred Units which, if exercised, would increase the gross offering size to $175,000,000. The Series 1 Preferred Units will be offered in all provinces and territories of Canada by way of a supplement to Brookfield Infrastructure\u2019s existing short form base shelf prospectus.<\/p>\n

Brookfield Infrastructure intends to use the net proceeds of the issue of the Series 1 Preferred Units for general corporate purposes, including to fund new investments that were previously announced and repay amounts outstanding under its credit facilities. The offering of Series 1 Preferred Units is expected to close on or about March 12, 2015.<\/p><\/blockquote>\n

But have a look at the issuer! Brookfield Infrastructure Partners L.P.<\/b>! LP, LP! For various tax reasons I am not competent to either judge or explain, this means that they cannot guarantee that the distributions will actually be dividends; instead, the distributions will be partially a return of capital and the “Certain Canadian Federal Income Tax Considerations” section of the prospectus will be more fraught with interest than otherwise might be the case.<\/p>\n

For the past five years, the Return of Capital proportion of distribution with respect to ordinary units has been (starting with 2014) 1.60%, 76.90%, 47.03%, 63.44% and 79.00%, which many will consider gives rise to a pleasant deferral of tax (you eventually pay tax. Don’t worry about that! The ROC lowers the Adjusted Cost Base for capital gains purposes).<\/p>\n

Just what the proportions might be in the future is for God to know and man to guess, but it appears that REI.PR.A and REI.PR.C<\/a> and AX.PR.A, AX.PR.E and AX.PR.G<\/a>, which also have this ROC structure now have some competition in the ‘deferred taxation’ space.<\/p>\n","protected":false},"excerpt":{"rendered":"

Brookfield Infrastructure Partners L.P. has announced: that it has agreed to issue 5,000,000 Cumulative Class A Preferred Limited Partnership Units, Series 1 (\u201cSeries 1 Preferred Units\u201d) on a bought deal basis to a syndicate of …<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[17,26],"tags":[],"class_list":["post-28096","post","type-post","status-publish","format-standard","hentry","category-new-issues","category-return-of-capital"],"_links":{"self":[{"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/posts\/28096","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=28096"}],"version-history":[{"count":0,"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/posts\/28096\/revisions"}],"wp:attachment":[{"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=28096"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=28096"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=28096"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}