Brookfield Asset Management Inc.
) declared a public offering of 8 million Class A Preferred Shares,
Series 34. The company priced the shares at CDN$25 per share. The
sale proceeds, worth CDN$200 million, will be used for general
corporate purposes as well as for redemption of the Class A
Preference shares, Series 11.
The Preferred Shareholders will receive a cumulative quarterly
fixed dividend, yielding 4.20% on an annual basis for the initial
period concluding March 31, 2019. Subsequently, the dividend rate
will change in every five years at an identical rate to the 5-year
Government of Canada bond yield plus 2.63%. The estimated date for
the closure of the transaction is September 12, 2012.
In addition, Brookfield has provided an option to the underwriters
for purchasing an additional 2 million shares. This option will
expire 48 hours before the closing of the transaction. The
additional shares will be issued at $25, yielding gross proceeds of
In accordance with the Brookfield Asset Management's present
short-form base shelf prospectus as of June 7, 2011, which was
later modified on June 13, 2012, the company will make the shares
available in all districts of Canada. However, the shares may not
be sold in the United States absent registration with the United
States Securities and Exchange Commission or an exemption from
registration under the U.S. Securities Act.
TD Securities Inc., a unit of
The Toronto-Dominion Bank
Canadian Imperial Bank of Commerce
), RBC Capital Markets, a subsidiary of
Royal Bank of Canada
) and Scotia Capital Inc., a division of
The Bank Of Nova Scotia
) acted as underwriters of the deal. These financial institutions
have committed to purchase the entire offering from Brookfield.
We believe that the issuance of preferred shares will finance
future projects for Brookfield as well as improve its financials to
a great extent.
Brookfield currently retains a Zacks #3 Rank, which translates into
a short-term Hold rating.
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