DBRS Comments on Brookfield Renewable Energy Partners L.P.’s Acquisition

DBRS notes that Brookfield Renewable Energy Partners L.P. (BREP or the Company; rated BBB (high) with a Stable trend) has announced an agreement to, together with its institutional partners, acquire a $600 million portfolio of four hydroelectric generating stations in Tennessee and North Carolina. BREP will own an approximate 25% interest ($150 million) and manage the assets as part of its integrated North American operations. The transaction is expected to close before the end of 2012, subject to regulatory approval and other closing conditions.

The assets, with an expected total generation capacity of 378 megawatts after an extensive modernization program, have long-term average generation of approximately 1,400 gigawatt hours per year and access to the Tennessee Valley Authority, Duke Carolinas and PJM Interconnection systems.

DBRS expects that BREP will be able to provide its share of the permanent financing for the acquisition with non-recourse debt and equity capital and achieve a leverage ratio consistent with the Company’s existing capital structure and within the acceptable range of the current rating category. The deconsolidated metrics are expected to benefit from the incremental remitted or distributed cash flow from the assets, although the level of this cash flow would be subject to the regional hydrology and wholesale power market conditions.

Notes:
All figures are in U.S. dollars unless otherwise noted.

The applicable methodology for this rating is Rating Companies in the Non-Regulated Electric Generation Industry, which can be found on our website under Methodologies.