Brookfield Asset Management has announced:
Brookfield intends to distribute to its Class A shareholders a direct interest in its infrastructure operations through a newly created publicly traded partnership to be named Brookfield Infrastructure Partners L.P. (“Brookfield Infrastructure”). … Subject to receipt of the various required approvals, Brookfield will implement the spin-off by way of a special dividend currently estimated to be approximately US$1.00 per Brookfield Class A Share, taking into account the pending three-for-two stock split, or approximately $600 million in aggregate.
Based on their March 31, 2007, Balance Sheet, $600-million is about 10% of common equity. This is not good news for debt-holders or preferred share holders – whether it is sufficiently bad to warrant a downgrade awaits a detailed analysis by more specialized practitioners than I.
BAM currently has the following preferred share issues outstanding : BAM.PR.B BAM.PR.C BAM.PR.E BAM.PR.G BAM.PR.H BAM.PR.I BAM.PR.J BAM.PR.K BAM.PR.L BAM.PR.M BAM.PR.T and there is a new perpetual coming out soon.
Update: One source of uncertainty in the meaning of this is the book-value vs. the market-value of the assets spun out. BAM has a P/B ratio of 4.13:1. If the assets spun out have a market value of $1 and a book value of $0.25, then this will be a relatively minor change to the balance sheet.
This entry was posted on Wednesday, May 2nd, 2007 at 3:36 pm and is filed under Issue Comments. You can follow any responses to this entry through the RSS 2.0 feed.
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BAM to Spin-Off Assets – What will the Agencies Say?
Brookfield Asset Management has announced:
Based on their March 31, 2007, Balance Sheet, $600-million is about 10% of common equity. This is not good news for debt-holders or preferred share holders – whether it is sufficiently bad to warrant a downgrade awaits a detailed analysis by more specialized practitioners than I.
BAM currently has the following preferred share issues outstanding : BAM.PR.B BAM.PR.C BAM.PR.E BAM.PR.G BAM.PR.H BAM.PR.I BAM.PR.J BAM.PR.K BAM.PR.L BAM.PR.M BAM.PR.T and there is a new perpetual coming out soon.
Update: One source of uncertainty in the meaning of this is the book-value vs. the market-value of the assets spun out. BAM has a P/B ratio of 4.13:1. If the assets spun out have a market value of $1 and a book value of $0.25, then this will be a relatively minor change to the balance sheet.
This entry was posted on Wednesday, May 2nd, 2007 at 3:36 pm and is filed under Issue Comments. 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.