Brookfield Infrastructure Partners L.P. (NYSE: BIP; TSX: BIP.UN),
together with its institutional partners (collectively,
“
Brookfield Infrastructure”, “
we”
or “
our”), is pleased to announce its intention to
file a second notice of variation to its offer to acquire all of
the outstanding common shares of Inter Pipeline Ltd. (TSX: IPL)
(“
IPL” or the “
Company”)
commenced February 22, 2021, as varied on June 4, 2021 (the
"
Offer") to include an option for IPL shareholders
to elect to receive 100% cash consideration at C$19.50 per IPL
Share without proration, and to extend the expiry time of the Offer
until July 13, 2021.
1 If Brookfield Infrastructure is successful in
its application to the ASC to eliminate or reduce the amount of the
Break Fee, it is prepared to further amend its Offer to increase
the consideration by such amount.
IPL Shareholders can now Elect to
Receive 100% Cash Consideration without Proration
Based on feedback received from institutional
and event-driven investors with significant ownership positions in
IPL’s common shares, Brookfield Infrastructure is prepared to
expand the maximum cash consideration to be paid in the context of
its Offer to 100%.
We believe an all-cash option provides superior
value and flexibility for IPL shareholders, as well as enhanced
certainty and a clean exit for those institutional and event-driven
investors with near-term mandates. Conversely, the all-share
consideration included in the Alternative Transaction would result
in a substantial and protracted overhang on Pembina’s share price
given monetization considerations for event-driven funds, select
institutional shareholders and Brookfield Infrastructure’s C$1.6
billion economic interest (the “Brookfield
Block”).
The revised Offer preserves the ability for
eligible shareholders to elect tax deferred BIPC Shares as
consideration, which provides access to the long-term growth
potential of BIPC’s diversified global infrastructure platform.
With forecast corporate liquidity of over $4.5
billion, inclusive of $1 billion of additional liquidity provided
by Brookfield Asset Management Inc., Brookfield Infrastructure
Partners L.P. has more than sufficient liquidity readily available
to support the Offer.
Brookfield Infrastructure Continues to
Challenge IPL’s Inappropriate Defensive Tactics
The ASC has confirmed a hearing date of July 7th
for Brookfield Infrastructure’s challenge of the inappropriate
defensive tactics employed by IPL and the special committee of its
board of directors, which are not in the interests of IPL
shareholders. Specifically, Brookfield Infrastructure is seeking to
eliminate or otherwise reduce the C$350 million Break Fee which
threatens to inappropriately enrich Pembina at the expense of IPL’s
shareholders, and to cease-trade both of IPL’s shareholder rights
plans, colloquially referred to as “poison pills” as they no longer
serve any valid purpose.
Brookfield Infrastructure is prepared to
increase the cash consideration of our Offer by the amount of any
corresponding reduction in the Break Fee with such resolution
anticipated before the expiration of our Offer. In the event the
Break Fee is successfully set aside, this would represent an
additional C$0.90 per IPL share.
Brookfield Infrastructure Reaffirms the
Merits of its Offer
We note IPL’s press release issued June 10,
2021, in which the IPL Board of Directors reconfirmed its support
for the Alternative Transaction on June 1st. We do not believe
that the justifications provided by the Company outweigh the
flexibility and certainty provided by our superior Offer.
- 100% Cash Consideration
Option. Our Offer provides IPL shareholders an ability to
elect up to 100% cash consideration, without proration. The value
of the Alternative Transaction is dependent on forward-looking
outcomes which include the realization of operational synergies
that are inherently uncertain and may prove illusory.
- Ability to Maximize the
Amount of Tax-Deferred Consideration. Our Offer continues
to include the expanded option for eligible shareholders who elect
to receive 100% of their consideration in BIPC Shares on a
tax-deferred rollover basis, with an ability to maximize the amount
of tax-deferred consideration they seek to receive subject to the
aggregate limit of 31.0 million BIPC Shares.
- Access to Globally
Diversified Infrastructure Platform Focused on Total
Returns. Ability, through BIPC, to benefit from continued
participation in IPL as part of a globally diversified
infrastructure company focused on both dividend growth and
generating total return for shareholders. Over the past decade
Brookfield Infrastructure has delivered an average of 10% per annum
dividend growth and average annual total shareholder returns of
18%.
- Speed to Close.
Our Offer is not subject to any regulatory or Court approvals and
IPL shareholders will receive their consideration within three
business days following the Offer expiry date if our Offer is
successful, thus providing IPL shareholders with value certainty
and an expeditious closing when compared to the Alternative
Transaction. The Alternative Transaction would not be expected to
close before Q3 / Q4 2021, implying lost opportunity cost and
notably exposure to potentially fluctuating capital markets,
commodity and broad business environment factors.
- High Degree of
Certainty. Brookfield Infrastructure has received all
required regulatory and anti-trust approvals and is committed to
close quickly. Conversely, the risk of closing the Alternative
Transaction remains high as it is subject to two sets of
shareholder approvals, regulatory approval risk and
anti-competition uncertainty. Pursuant to the Alternative
Transaction’s “hell or high water” provisions, the risk of any
punitive regulatory or anti-competition rulings or outcomes will be
borne by IPL shareholders due to the proposed all-share
consideration.
Details of the Offer
Under the terms and subject to the conditions of
our intended Offer, each IPL shareholder can elect to receive, per
IPL share, either C$19.50 in cash or 0.225 of a Brookfield
Infrastructure Corporation (NYSE: BIPC; TSX: BIPC) class A
exchangeable share (“BIPC Share”). 0.225 of a BIPC
Share has a market value of C$19.99 per IPL share, based upon the
TSX closing price of a BIPC Share on June 17, 2021. As described
herein, we intend to amend the Offer to remove the limit on cash
consideration. As revised, our Offer will provide an enhanced and
attractive value proposition for IPL shareholders who may elect up
to 100% cash consideration, not subject to proration.
For IPL shareholders seeking to participate in
the upside from the integration of IPL into a globally diversified
infrastructure company, the Offer will continue to include an
option to elect to receive BIPC Shares as consideration and an
option for eligible shareholders to access a tax deferred rollover
in respect of any BIPC Shares received pursuant to the Offer. The
maximum BIPC Share consideration remains 23.0 million aggregate
shares (representing 26% of the total consideration), with eligible
shareholders who elect to receive 100% of their consideration in
BIPC Shares on a tax-deferred basis having access to an incremental
8 million BIPC Shares (with such incremental shares priced at the
fair market value as of the expiry date of the Offer, in lieu of
cash).
We believe this amendment will provide investors
with ultimate- flexibility, allowing investors to participate in
IPL through shares of BIPC and providing additional value certainty
and liquidity to those investors who value a clean exit from the
company.
Our Offer, as revised, will be open for
acceptance until 5:00 p.m. (Mountain Standard Time) on July 13th
unless otherwise extended.
Brookfield Infrastructure encourages IPL
shareholders to read the full details of the Offer to be set forth
in the Second Notice of Variation, which, together with the
original Offer to Purchase and Circular dated February 22, 2021
(the “Offer and Circular”) and the Notice of
Variation, Change and Extension dated June 4, 2021 (the
“First Notice of Variation”), which will contain
the full terms and conditions of the Offer and other important
information as well as detailed instructions on how IPL
shareholders can tender their IPL shares to the Offer. Copies of
the Second Notice of Variation, once filed, and the Offer and
Circular and First Notice of Variation will be available without
charge on request from the Information Agent and are available at
www.ipl-offer.com or on SEDAR at www.sedar.com.
IPL shareholders who have questions or require
assistance in depositing IPL shares to the Offer, IPL shareholders
should contact the Information Agent and Depositary, Laurel Hill
Advisory Group, by telephone at 1-877-452-7184 (North American Toll
Free Number) or 416-304-0211 (outside North America) or by email at
assistance@laurelhill.com.
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.
Brookfield Infrastructure is a
leading global infrastructure company that owns and operates
high-quality, long-life assets in the utilities, transport,
midstream and data sectors across North and South America, Asia
Pacific and Europe. We are focused on assets that have contracted
and regulated revenues that generate predictable and stable cash
flows. 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 over 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 the revised terms of the
Offer; statements relating to the ASC proceedings; statements
relating to Brookfield Infrastructure’s intention to increase the
consideration available under the Offer; liquidity available to
Brookfield Infrastructure; the expected mailing of the Second
Notice of Variation; statements regarding IPL’s transaction with
Pembina, including Brookfield Infrastructure’s intention to vote
against the Alternative Transaction; statements regarding
expectations relating to regulatory review; and statements
regarding growth plans and opportunities for Brookfield
Infrastructure.
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 |
|
|
Shareholder Questions / Tendering
Assistance:Laurel Hill Advisory GroupNorth American
Toll-Free: 1-877-452-7184 (+1-416-304-0211 outside North
America)Email: assistance@laurelhill.com |
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