Brookfield Infrastructure Partners LP BIP

RBC

[retiredcf]

October 11, 2024

Brookfield Infrastructure
Quick Take: Proposed reorganization of Brookfield Infrastructure Corporation

NYSE: BIP | USD 33.50 | Outperform | Price Target USD 40.00

Sentiment: Neutral

Our Take

We expect BIPC shareholders to approve the proposed arrangement, and we do not expect this news to have a material impact on the prices of the company's shares and partnership units, seeing as the proposed arrangement maintains the existing benefits of the current Brookfield Infrastructure business structure.

Details

• Due to potential changes to tax rules impacting mutual fund corporations (which BIPC qualifies as, as defined by the Income Tax Act (Canada)), BIP and BIPC announced their intention to complete a reorganization that aims to maintain the benefits of Brookfield Infrastructure's business structure, while addressing the potential changes to the Income Tax Act (Canada) that it expects to result in additional costs beginning in 2025 if no action is taken.

• Under the proposed reorganization, BIPC shareholders will receive one share in a new company (New BIPC) for each current BIPC share held, with New BIPC being the investment vehicle for these shareholders that provides all the same benefits that the shareholders have today in a similar corporate structure. The New BIPC shares will trade on the TSX and NYSE under the existing BIPC symbol, and have the same terms as the current BIPC shares in terms of being exchangeable and economically equivalent to partnership units.

• The proposed arrangement will be implemented pursuant to a plan of arrangement and will require court and shareholder approvals. Shareholders of record as of the close of business on October 21, 2024 will be entitled to vote at a special meeting of BIPC shareholders on December 3, 2024. If approved by the court and two-thirds of the votes cast by holders of exchangeable shares at the special meeting, Brookfield Infrastructure anticipates that the arrangement will be completed later in December.

• Brookfield Infrastructure also noted that investors in the partnership units will not be impacted by the reorganization, and are not required to approve it or take any other action.