- Brookfield Business Partners (BBU.UN) is creating a corporation to broaden BBU’s appeal to new investors
- Existing unitholders will receive class A shares of the new corporation, Brookfield Business Corporation (BBUC)
- Unitholders are expected to receive one BBUC class A share for every two BBU units held
- The special distribution is expected to be completed by year-end 2021
- Brookfield Business Partners is the flagship listed business services and industrials company of Brookfield Asset Management
- Brookfield Business Partners L.P. (BBU.UN) opened trading at C$55.10 per share
Brookfield Business Partners (BBU.UN) is creating a corporation to provide investors with greater flexibility to invest in BBU’s globally diversified services.
Brookfield Business Partners intends to distribute class A shares of the new corporation, Brookfield Business Corporation (BBUC) to existing unitholders.
The transaction will be analogous to a unit split as it will not result in any underlying change to BBU’s aggregate cash flows or net asset value except for the adjustment for the number of units/shares outstanding.
“The creation of BBUC is important to support the continued growth of our business and enhance our capital markets following,” said Cyrus Madon, Chief Executive Officer of Brookfield Business Partners.
“We expect BBUC, as a corporation, will broaden BBU’s appeal to new investors and increase our eligibility for inclusion in several meaningful indices that BBU is not eligible for today.”
The class A shares are intended to allow investors the ability to own the equivalent economic exposure to BBU through a corporate structure. Each BBUC share will have the same distribution as a BBU unit and will be exchangeable for one BBU unit.
Unitholders are expected to receive one BBUC class A share for every two BBU units held in the form of a special distribution.
There will be no change to the $0.25 per unit annual distribution made on BBU units, and the company intends to pay an annual dividend of $0.25 per exchangeable share of BBUC. As a result, the aggregate distributions received by holders of the units and exchangeable shares will be 50% higher.
Torys LLP is acting as legal advisor to Brookfield Business Partners for this transaction.
The majority of the BBUC class A shares will be held by the holders of Brookfield Business Partners units immediately after the effective split. Brookfield Business Partners will own all the BBUC class B and C shares. The class A and class B shares will control 25% and 75%, respectively, of the aggregate voting rights of the shares of BBUC.
BAM, as a unitholder of Brookfield Business Partners, is expected to hold approximately 64% of the BBUC class A shares, which is equivalent to its effective ownership of Brookfield Business Partners units. BBUC intends to apply to list its Class A shares in the United States on the NYSE and in Canada on the TSX.
Brookfield Business Partners anticipates completing the special distribution by year-end 2021.
In connection with this transaction, a registration statement has been filed with the U.S. Securities and Exchange Commission and a preliminary prospectus has been filed with the Canadian securities regulatory authorities.
Brookfield Business Partners is the flagship listed business services and industrials company of Brookfield Asset Management, a leading global alternative asset manager with over $600 billion of assets under management.
Brookfield Business Partners L.P. (BBU.UN) opened trading at C$55.10 per share.
