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Brookfield Renewable Power backtracks on conversion Add to ...

Late last week Brookfield Renewable Power Fund pulled the plug on its conversion to a corporation, opting instead to defer its plans to some time in 2011.

Had the company chosen the new path from the get-go, it wouldn't be such a surprising decision. But just a few weeks back, Brookfield announced its full-fledged conversion schedule and even set up a unitholder vote for late November. According to the plans, dividends going forward would be paid quarterly at an annualized rate of $1.30 per share.

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More than that, Brookfield hired PricewaterhouseCoopers LLP to conduct a fairness opinion of its conversion, which couldn't have been cheap.

The 180-degree turn surprised the Street, especially because Brookfield has offered up few details about its new plans. For now, investors only know that the fund will not be taxable in 2011 and Brookfield will also be able to issue new equity next year, if it so pleases. However, distributions next year will be taxed as dividends.

When called for comment, Brookfield said not much else can be disclosed at the moment because the firm's latest equity offering has not closed.

But a spokesperson did provide some clarity on the fund's tax situation. The firm is no longer rushing to convert because it previously picked up tax pools in previous acquisitions, which prevents it from being taxed through 2012. Yet that was known when the original conversion plans were announced.



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