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Alberta Securities Commission steps in on Inter Pipeline and Pembina concerns with Brookfield

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The Alberta Securities Commission has dismissed an application made by Brookfield Infrastructure Corporation Exchange Limited Partnership in regards to competing proposals for the acquisition of Inter Pipeline Ltd. between Brookfield and Pembina Pipeline Corporation.

Brookfield and Bison Acquisition Corp. alleged that Inter Pipeline had used improper defensive tactics in response to the hostile takeover attempt by Brookfield. The ASC decided that Brookfield had not established sufficient grounds for the panel to exercise its public interest jurisdiction and make the orders sought; the panel also did not find that Inter's actions were improper.

Applications from Pembina and Inter Pipeline were also decided by the Commission. THey concerned certain cash-settled total return swap agreements (Total Return Swaps) Brookfield entered into with a swap dealer (Swap Counterparty). The panel held that Brookfield's use of and disclosure relating to the Total Return Swaps was clearly abusive to IPL shareholders and the capital market, and therefore contrary to the public interest. In addition, the panel found that the disclosure in the Brookfield Offer did not comply with the requirements in the applicable regulatory instrument. It concluded that Brookfield's limited disclosure regarding the Total Return Swaps adversely affected IPL shareholders and the IPL auction process.

The panel issued several orders with regards to its decision. It prohibited Brookfield from purchasing any IPL securities deposited under the Brookfield Offer unless more than 55 percent of the IPL securities that are subject to the Brookfield Offer (excluding any IPL securities beneficially owned by Brookfield or by anyone acting jointly or in concert with Brookfield), are deposited under the Brookfield Offer and not withdrawn (Modified Minimum Tender Condition).
Brookfield was directed to disclose the Modifed Minimum Tender Condition in accordance with Notice of Variation requirements in the applicable regulatory instrument.

In addition, Brookfield was directed to disclose the name of the Swap Counterparty, the dates of the International Swaps and Derivatives Association agreements between itself and the Swap Counterparty, the dates of the swap transactions pursuant to which Brookfield acquired its economic interest in IPL common shares, certain information regarding Brookfield's commercial relationship with the Swap Counterparty, and the existence of, amount of and conditions for the payment of the completion fee set out in an engagement letter between BMO Nesbitt Burns Inc. and Brookfield.

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4000, 585 - 8th Avenue S.W.
Calgary, AB
CA, T2P 1G1


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