Fitch says Brookfield Asset Management's asset restructuring not to lead to rating change

Fitch 16, 2011 - Fitch has commented that Canadian Brookfield Asset Management's (TSE:BAM.A) plans to merge its wholly-owned unit Brookfield Renewable Power Inc (BRPI) and the assets of its income fund Brookfield Renewable Power Fund (TSE:BRC.UN) into a single entity named Brookfield Renewable Energy Partners (BREP) will have no rating impact on the parent or BRPI.

Following the proposed deal, BAM will keep a 73% stake in BREP on a fully-exchanged basis through its unit BRPI, and a wholly-owned BAM subsidiary will be the general partner of the partnership.

Upon the deal completion, BREP is expected to emerge as one of the biggest renewable energy platforms globally.

BAM's ratings continue to be underpinned by its solid cash flow generation from a broad, well-diversified portfolio of investments, its firm liquidity position and management team with a strong track record. They further draw comfort from BAM's proven access to a wide variety of capital sources, its steady debt service coverage ratios, reasonable leverage and manageable debt maturity schedule.

"Credit concerns include a relatively complex ownership structure of investments, elevated leverage at a number of BAM's larger investments, and a propensity for entering into related-party transactions," Fitch noted.

Fitch expects to remove BRPI's ratings once the transaction is completed, as its debt will be taken up by BREP.

Rating agency website: www.fitchratings.com

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