DBRS Comments on Brookfield Renewable Power Inc.’s Offering of Fund Units

DBRS notes that Brookfield Renewable Power Inc. (BRP) has announced a bought deal secondary offering which will result in BRP selling seven million units of Brookfield Renewable Power Fund (the Fund) at $21.85 per unit. This will reduce BRP’s fully-exchanged interest in the Fund from approximately 41.5% to 35.1% and will result in gross cash proceeds to BRP of approximately $153 million (excluding an over-allotment option under which the underwriters can purchase an additional one million units).

This transaction does not impact DBRS’s rating of BRP (BBB (high), Stable trend) given: 1) the distributions BRP receives from the Fund would decline by less than $10 million per year, having a negligible impact on BRP’s non-consolidated credit metrics, further offset by the additional liquidity that will be provided by the proceeds; and 2) BRP will remain the Fund’s largest unitholder, manager and growth vehicle for renewable power assets in Canada.

The transaction does also not impact the ratings of the Fund (BBB (high), Stable trend, STA-2 (high)) nor those of the Fund’s affiliate Brookfield Renewable Power Preferred Equity Inc. (Pfd-3 (high), Stable trend) as BRP will remain the Fund’s Manager. As the transaction is a secondary offering, no sale proceeds will flow to the Fund.

Closing of the offering is expected on or about October 29, 2010.

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 our website under Methodologies.