DBRS Comments on Brookfield Renewable Power Fund

DBRS notes that Brookfield Renewable Power Fund (Fund) has today provided details on its expected conversion from an income trust to a corporation.

Under a Plan of Arrangement, Fund unitholders would receive one common share of Brookfield Renewable Energy Corporation (Corporation) for each Fund unit (the Transaction). Pending unitholder, court, regulatory and other approvals, the Transaction is expected to become effective on November 30, 2010. The Corporation’s expected monthly dividend is not expected to change from the Fund’s current monthly distribution.

The closing of the Transaction would not impact the Fund’s current BBB (high) Issuer Rating, which would be continued as the Corporation’s Issuer Rating. Currently, the Pfd-3 (high) rating of Fund affiliate Brookfield Renewable Power Preferred Equity Inc.’s Preferred Shares, Series 1 (Series 1 Preferreds), is based largely upon the subordinated guarantee of the Fund. Under the proposed Transaction, the Series 1 Preferreds will become a direct obligation of the Corporation, with no impact on the preferred share rating. Additional details of the mechanics of the conversion will be provided in a future information circular.

DBRS expects to discontinue the Fund’s stability rating (STA-2 (high)) concurrent with the closing of the Transaction, as there will no longer be any publicly traded units outstanding.

Note:
All figures are in Canadian dollars unless otherwise noted.

The applicable methodology is Rating North American Energy Utilities (Electric, Natural Gas and Pipelines), which can be found on the DBRS website under Methodologies.