Brookfield Infrastructure Partners L.P. (NYSE: BIP; TSX: BIP.UN),
together with its institutional partners (collectively, “Brookfield
Infrastructure”), announces today its intention to pursue a
privatization transaction in respect of Inter Pipeline Ltd. (“IPL”
or the “Company”), pursuant to which it will offer to acquire all
of the outstanding common shares of the Company (“IPL Shares”) not
already owned by Brookfield Infrastructure, at a price per IPL
Share of C$16.50 (the “Offer”).
Under the terms of the Offer and subject to
proration, each IPL shareholder will have the ability to elect to
receive, per IPL share, C$16.50 in cash or 0.206 of a Brookfield
Infrastructure Corporation (NYSE: BIPC; TSX: BIPC) class A
exchangeable share (“BIPC Share”). The share exchange ratio has
been calculated based on the closing price of the BIPC Shares on
February 10, 2021, the last trading day prior to this announcement.
The Offer is fully financed, with a maximum cash consideration of
approximately C$4.9 billion (representing 76.2% of the Offer’s
total consideration) and a maximum aggregate number of BIPC shares
issued of approximately 19 million (representing 23.8% of the
Offer’s total consideration).
Financial and Strategic Benefits of the
Transaction
Brookfield Infrastructure firmly believes that
its Offer is in the best interests of all IPL shareholders and that
shareholders should have the opportunity to determine what is best
for their investment. Brookfield Infrastructure has a long and
successful track record of acquiring large-scale infrastructure
companies and believes its Offer is compelling for all IPL
shareholders and stakeholders alike for the following key
reasons:
Significant Premium to both IPL’s Recent Trading Levels
and the Company’s Analyst Consensus Estimates
- 23% premium to the
closing prices of C$13.40 per IPL Share and C$79.97 per BIPC Share
on February 10, 2021, the last trading day prior to announcement of
this Offer
- 28% premium to the
30-day volume-weighted average share prices of C$13.07 per IPL
Share and C$84.87 per BIPC Share for the period ended February 10,
2021
- 10% premium to
research analyst forward-looking share price targets, which average
C$14.98 per share, as well as a significant premium to the trading
levels of IPL’s relevant Canadian midstream comparable
companies
Immediate Catalyst to Surface Value in a Security that
has Significantly Underperformed in the Public Equity
Markets
- Despite a strong
recovery in global equity markets and a return of commodity prices
to pre-COVID levels, IPL’s share performance and credit profile
continues to be strained
- IPL has delivered
the lowest 1-year and 5-year total shareholder returns among its
Canadian energy infrastructure peers
Compelling Valuation and an Opportunity
for Immediate Liquidity
- Compelling
valuation, despite the uncertainty of the timely completion and
commercialization of the Heartland Petrochemical Complex
(“Heartland”) anticipated by the Company within the next two
years
- IPL shareholders
will have the option to elect to receive all of their consideration
in cash, subject to an aggregate limit of approximately C$4.9
billion, representing 76.2% of the Offer’s total consideration
Opportunity to Participate in Brookfield’s Diverse
Infrastructure Platform
- IPL shareholders
have an opportunity to receive an equity interest in a large-scale,
global infrastructure company with a long-term track record of
delivering compelling returns to shareholders
- Brookfield
Infrastructure Partners has delivered ~10% annual distribution
growth and an 18% annualized total return since inception
Brookfield Infrastructure is Uniquely Positioned to
Support IPL Through the Environmental Social & Governance
(“ESG”) Focused Transition
- Brookfield
Infrastructure is one of the largest owners and operators of
critical and diverse global infrastructure networks which
facilitate the movement and storage of energy, water, freight,
passengers and data
- Brookfield is a
responsible Canadian-headquartered company, and IPL will remain a
standalone company based in Calgary
- Brookfield
Infrastructure recognizes that ESG sentiment among public investors
is evolving at an unprecedented pace and we are confident that, as
part of a larger, more diversified organization, IPL will benefit
from Brookfield’s proven capabilities and stewardship around ESG
transition investing
Offer Background
Brookfield Infrastructure is currently the
largest investor in IPL with an aggregate economic interest in
84,341,555 IPL Shares, representing approximately 19.65% of the
issued and outstanding Shares of IPL on an undiluted basis.
Brookfield Infrastructure began to accumulate a position in the
Company for investment purposes beginning in March 2020.
This position is comprised of beneficial
ownership and control of an aggregate of 41,848,857 IPL Shares,
representing approximately 9.75% of the issued and outstanding IPL
Shares on an undiluted basis, and in addition, a cash-settled total
return swap (the “Total Return Swap”) that provides Brookfield
Infrastructure with economic exposure to an aggregate of 42,492,698
IPL Shares. The Total Return Swap affords economic exposure
comparable to beneficial ownership but does not give Brookfield
Infrastructure any right to vote, or direct or influence the
voting, acquisition, or disposition of any IPL Shares.
In September 2020, Brookfield Infrastructure
first approached the Company to discuss a collaborative strategic
transaction, ultimately leading to the submission of specific
indicative privatization proposals to the Company’s Board of
Directors in November and December of 2020 based exclusively on
publicly available information. The offer prices represented
significant premiums in the range of 40% to 50% of IPL’s trading
prices at various times during our discussions with the Company and
were predicated on Brookfield Infrastructure’s ability to conduct
confirmatory due diligence to validate the assumptions underlying
its proposed price, in particular regarding Heartland. Each
indicative proposal submitted to the Company by Brookfield
Infrastructure also contained a "go shop" clause to afford the
Company an opportunity to proactively canvass the market for a
third party offer at a superior price following definitive
agreement.
While subsequent correspondence between
Brookfield Infrastructure and the Company was positive in spirit,
ultimately the Company declined to engage constructively on a
privatization transaction citing a view of intrinsic value far in
excess of our assessment, largely driven by a more optimistic
outlook of future growth and a recovery of commodity prices in
excess of current market expectation. Brookfield Infrastructure
believes the Company’s view fails to recognize the capital market
realities facing energy-based infrastructure companies now and in
the future.
Consequently, as the largest investor in the
Company, Brookfield Infrastructure firmly believes it is in the
best interest of all shareholders to be made aware of its efforts
in this regard and be given the opportunity to opine directly on
the Offer and for the Company to establish a process to facilitate
its privatization.
Brookfield Infrastructure remains open to
engaging directly with the Company on fair and balanced terms.
Brookfield Infrastructure has made prior proposals to the Company
in good faith, with an objective of receiving access to
confirmatory due diligence to support a valuation for the Company
above the Offer, indicatively in the range of C$17.00 to C$18.25
per IPL share. Brookfield Infrastructure has made this Offer based
exclusively on publicly available information. Any ability for
Brookfield Infrastructure to increase the Offer would be predicated
on (i) being granted the ability to perform customary confirmatory
due diligence, including but not limited to an ability to
substantiate credible growth potential and the Company’s publicly
outlined timeline and commercialization objectives for Heartland,
and (ii) IPL not conditioning our access to diligence on
restrictions that would preclude our ability to make any offer
directly to shareholders, or otherwise inappropriately limit our
strategic alternatives in regard to our current position on an
appropriate timeline.
Offer Details
Full details of the Offer will be included in a
formal take‐over bid circular to be filed with securities
regulatory authorities and mailed to IPL shareholders. Brookfield
Infrastructure will request a shareholders’ list from the Company
and expects to mail the Offer and take‐over bid circular to IPL
shareholders as soon as practical upon receipt of this list. The
Offer will be open for acceptance for 105 days following the
commencement of the Offer and will constitute a “Permitted Bid” for
purposes of IPL’s shareholder rights plan as approved by IPL
shareholders on May 7, 2020. The Offer is premised on there being
429,219,175 IPL Shares outstanding, on a fully diluted basis.
The Offer will also be subject to certain
conditions of completion, including receipt of all necessary
regulatory approvals, customary approval by the TSX and NYSE in
relation to the issuance and listing of the additional BIPC Shares
contemplated by our Offer, absence of material changes to the
business and Brookfield Infrastructure owning not less than 66⅔% of
the IPL Shares, calculated on a fully diluted basis, after taking
up IPL Shares deposited under the Offer and not withdrawn (in
addition to the non-waivable statutory condition that more than 50%
of the outstanding IPL Shares, excluding IPL Shares beneficially
owned by Brookfield Infrastructure, are deposited under the Offer
and not withdrawn). Once the two‐thirds percentage acceptance level
is met, Brookfield Infrastructure intends, but will not be
required, to take steps to acquire all remaining IPL Shares in
accordance with applicable law.
The BIPC Shares included in the Offer are the
economic equivalent of units of Brookfield Infrastructure Partners
L.P. (“BIP”) and are exchangeable for limited partnership units of
BIP on a one for one basis.
Advisors
Brookfield Infrastructure has engaged BMO
Capital Markets and Barclays Capital Canada Inc. to act as joint
financial advisors and McCarthy Tétrault LLP to act as its legal
advisor in connection with the Offer. Laurel Hill Advisory Group
has also been engaged to act as Brookfield Infrastructure’s
strategic communications advisor and information agent.
Additional Information
Laurel Hill Advisory Group has been retained as
Information Agent for the Offer. Shareholders may contact Laurel
Hill at:
Toll Free in North America:
1-877-452-7184Outside North America, Banks, Brokers and Collect
Calls: 416-304-0211Email: assistance@laurelhill.com
Brookfield Infrastructure
Partners is a leading global infrastructure company that
owns and operates high-quality, long-life assets in the utilities,
transport, midstream and data infrastructure sectors across North
and South America, Asia Pacific and Europe. We are focused on
assets that generate stable cash flows and require minimal
maintenance capital expenditures. Investors can access its
portfolio either through Brookfield Infrastructure Partners L.P.
(NYSE: BIP; TSX: BIP.UN), a Bermuda-based limited partnership, or
Brookfield Infrastructure Corporation (NYSE, TSX: BIPC), a Canadian
corporation. Further information is available at
www.brookfield.com/infrastructure.
Brookfield Infrastructure Partners is the
flagship listed infrastructure company of Brookfield Asset
Management, a global alternative asset manager with approximately
US$600 billion of assets under management. For more information, go
to www.brookfield.com.
No Offer or SolicitationThis
news release is for informational purposes only and does not
constitute an offer to buy or sell, or a solicitation of an offer
to sell or buy, any securities. The offer to acquire IPL securities
and to issue securities of Brookfield Infrastructure Corporation
will be made solely by, and subject to the terms and conditions set
out in the formal offer to purchase and bid circular and
accompanying letter of transmittal and notice of guaranteed
delivery.
NOTICE TO U.S. HOLDERS OF IPL
SHARES
Brookfield Infrastructure intends to
make the offer and sale of the BIPC Shares in the Offer subject to
a registration statement of BIPC and BIP covering such offer and
sale to be filed with the United States Securities and Exchange
Commission (the “SEC”) under the U.S. Securities Act of 1933, as
amended. Such registration statement covering such offer and sale
will include various documents related to such offer and sale.
INVESTORS AND SHAREHOLDERS OF IPL ARE URGED TO READ SUCH
REGISTRATION STATEMENT AND ANY AND ALL OTHER RELEVANT DOCUMENTS
FILED OR TO BE FILED WITH THE SEC IN CONNECTION WITH THE OFFER AS
THOSE DOCUMENTS BECOME AVAILABLE, AS WELL AS ANY AMENDMENTS OR
SUPPLEMENTS TO THOSE DOCUMENTS, BECAUSE THEY CONTAIN OR WILL
CONTAIN IMPORTANT INFORMATION. You will be able to obtain a free
copy of such registration statement, as well as other relevant
filings regarding BIP and BIPC or such transaction involving the
issuance of the BIPC Shares and the underlying BIP limited
partnership units, at the SEC’s website (www.sec.gov) under the
issuer profiles for BIP and BIPC, or on request without charge from
Brookfield Infrastructure, at 250 Vesey Street, 15th Floor, New
York, New York, 10281-1023 or by telephone at (212)
417-7000.
BIPC is a foreign private issuer and
Brookfield Infrastructure is permitted to prepare the offer to
purchase and takeover bid circular and related documents in
accordance with Canadian disclosure requirements, which are
different from those of the United States. BIPC prepares its
financial statements in accordance with IFRS, and they may not be
directly comparable to financial statements of United States
companies.
Shareholders of IPL should be aware that
owning BIPC Shares may subject them to tax consequences both in the
United States and in Canada. The offer to purchase and takeover bid
circular may not describe these tax consequences fully. IPL
shareholders should read any tax discussion in the offer to
purchase and takeover bid circular, and holders of IPL Shares are
urged to consult their tax advisors.
An IPL shareholder’s ability to enforce
civil liabilities under the United States federal securities laws
may be affected adversely because Brookfield Infrastructure
Corporation is incorporated in British Columbia, Canada, some or
all of Brookfield Infrastructure’s officers and directors and some
or all of the experts named in the offering documents reside
outside of the United States, and a substantial portion of
Brookfield Infrastructure’s assets and of the assets of such
persons are located outside the United States. IPL shareholders in
the United States may not be able to sue Brookfield Infrastructure
or its officers or directors in a non-U.S. court for violation of
United States federal securities laws. It may be difficult to
compel such parties to subject themselves to the jurisdiction of a
court in the United States or to enforce a judgment obtained from a
court of the United States.
NEITHER THE SECURITIES AND EXCHANGE
COMMISSION NOR ANY STATE SECURITIES REGULATOR HAS OR WILL HAVE
APPROVED OR DISAPPROVED THE BIPC SHARES OFFERED IN THE OFFERING
DOCUMENTS, OR HAS OR WILL HAVE DETERMINED IF ANY OFFERING DOCUMENTS
ARE TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
IPL shareholders should be aware that,
during the period of the Offer, Brookfield Infrastructure or its
affiliates, directly or indirectly, may bid for or make purchases
of the securities to be distributed or to be exchanged, or certain
related securities, as permitted by applicable laws or regulations
of Canada or its provinces or
territories.Cautionary Statement Regarding
Forward-looking Statements
This news release may contain forward-looking
information within the meaning of Canadian provincial securities
laws and “forward-looking statements” within the meaning of Section
27A of the U.S. Securities Act of 1933, as amended, Section 21E of
the U.S. Securities Exchange Act of 1934, as amended, “safe harbor”
provisions of the United States Private Securities Litigation
Reform Act of 1995 and in any applicable Canadian securities
regulations. The words “believe”, “expect”, “will” derivatives
thereof and other expressions which are predictions of or indicate
future events, trends or prospects and which do not relate to
historical matters, identify the above mentioned and other
forward-looking statements. Forward-looking statements in this news
release include statements regarding Brookfield Infrastructure’s
intention to pursue the privatization of IPL; Brookfield
Infrastructure’s intention to make the Offer; the proposed terms
and conditions of the Offer, including the amount, form and mix of
consideration under the Offer, the expected conditions to
completion of the Offer, the expected timing of the Offer, the
pricing of the BIPC Shares issuable under the Offer, the maximum
amount of cash consideration and the maximum number of BIPC Shares
under the Offer and the anticipated acceptance period of the Offer;
Brookfield Infrastructure’s intentions regarding the funding of the
Offer; Brookfield Infrastructure’s intention to request a list of
IPL’s shareholders; the expected mailing of the take-over bid
circular in respect of the Offer; Brookfield Infrastructure’s
intention to take steps to acquire IPL Shares not acquired under
the Offer; and potential further engagement between Brookfield
Infrastructure and the Company, including possibly varying the
terms or conditions of the Offer.
Although Brookfield Infrastructure believes that
these forward-looking statements and information are based upon
reasonable assumptions and expectations, the reader should not
place undue reliance on them, or any other forward-looking
statements or information in this news release. The actual outcome
of future events could differ from the forward-looking statements
and information herein, which are subject to a number of known and
unknown risks and uncertainties. Factors that could cause actual
events to differ materially from those contemplated or implied by
the statements in this news release include the ability to obtain
regulatory approvals (including approval of the TSX and the NYSE)
and meet other closing conditions to any possible transaction, the
ability to realize financial, operational and other benefits from
the proposed transaction, general economic conditions in the
jurisdictions in which we operate and elsewhere which may impact
the markets for our products and services, the impact of market
conditions on our businesses, the fact that success of Brookfield
Infrastructure is dependent on market demand for an infrastructure
company, which is unknown, the availability of equity and debt
financing for Brookfield Infrastructure, the ability to effectively
complete transactions in the competitive infrastructure space and
to integrate acquisitions into existing operations, changes in
technology which have the potential to disrupt the business and
industries in which we invest, the market conditions of key
commodities, the price, supply or demand for which can have a
significant impact upon the financial and operating performance of
our business and other risks and factors described in other
documents filed by Brookfield Infrastructure with the securities
regulators in Canada and the United States. Except as required by
law, Brookfield Infrastructure undertakes no obligation to publicly
update or revise any forward-looking statements or information,
whether as a result of new information, future events or
otherwise.
For more information, please
contact:
Media:Claire HollandSenior Vice President,
CommunicationsTel: (416) 369-8236 Email:
claire.holland@brookfield.com |
Investors:Kate WhiteManager, Investor Relations
Tel: (416) 956-5183Email: kate.white@brookfield.com |
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