Q: I just saw a notice of AGM and Special Meeting in mail and there is one resolution:
to Authorize the company to issue up to a maximum of 101,899,808 exchangeable shares where by holders of BN:TSE class A shares could be exchangeable to BNRE:TSE in the ratio of one for one. Is this a kind of financial engineering? Is there any chances that CRA or related GOVT. authority can come after the company and shareholders pay the price when the stock price fall in future? Your views.
Thanks
Piyush
to Authorize the company to issue up to a maximum of 101,899,808 exchangeable shares where by holders of BN:TSE class A shares could be exchangeable to BNRE:TSE in the ratio of one for one. Is this a kind of financial engineering? Is there any chances that CRA or related GOVT. authority can come after the company and shareholders pay the price when the stock price fall in future? Your views.
Thanks
Piyush
5i Research Answer:
Nothing nefarious is going on here. Right now BNRE is convertible to BN, but not the other way around. Brookfield wants to increase the trading liquidity and market cap of BNRE, which should increase its valuation over time. Thus, it is offering an exchange on a fixed number of shares for a limited time. We would not expect any CRA/govt. issues here at all.