constala Posted May 20, 2019 Share Posted May 20, 2019 End of the voyage for TOO. Brookfield offers below market and below close. Will enable them to reach 80%, from mid 70's, very cheaply. What is the squeeze out language thereafter precisely? are they forced to clean up after 80%, or can they wait? at what price? Link to comment Share on other sites More sharing options...
given2invest Posted May 20, 2019 Share Posted May 20, 2019 It's not a tender it's an offer to buy every share...so they won't reach 80% they will either get 100% of none. It's now in the special committee's hands. Link to comment Share on other sites More sharing options...
mjm Posted May 20, 2019 Share Posted May 20, 2019 would not the preferred be rated higher and worth more if bam was owner Link to comment Share on other sites More sharing options...
Steven B Posted May 20, 2019 Share Posted May 20, 2019 Wow. Offer us $1.50 so we could go to bed with dignity. This offer is a "you could scream but no one will hear you anyway.." type of offer. Can kick and scream about this one but it ain't gonna help. Don't envision the "special committee" to help much here. For me I learned some valuable lessons. First off, I assumed the FPSOs would mean-revert and it never really happened. Obviously if that would've happened the price would've (probably) been more rational and we wouldn't have been in the position to be taken under. Second, the second I saw Brookfield extracting value from the investment that wasn't for the best of the rest of the limited partners I should've cut bait. Told myself that all they want is just a little something something before the payoff. Third of all and most importantly, TOO was the security that I knew the least about in my portfolio. Can't say that that specific point came back to bite me necessarily, but one would be wise to revisit how well they know something and bear that in mind. Feel bad for the rest of you. Heth did a tremendous amount of work on the name, really good job. Packer and BG had very insightful takes on the name as well. Seth provided a deeper look and insight which was much appreciated. Sure I'm leaving some others out but thank you all. Link to comment Share on other sites More sharing options...
racemize Posted May 20, 2019 Share Posted May 20, 2019 Second, the second I saw Brookfield extracting value from the investment that wasn't for the best of the rest of the limited partners I should've cut bait. Told myself that all they want is just a little something something before the payoff. What are you referring to here? Link to comment Share on other sites More sharing options...
Steven B Posted May 20, 2019 Share Posted May 20, 2019 Brookfield acquired and intercompany loan from TK parent at ~$140M and put it back to TOO for full par if $200M plus a make whole. Could be more but that's all off the top of my head. Link to comment Share on other sites More sharing options...
petec Posted May 20, 2019 Share Posted May 20, 2019 Two questions: 1) what are the rules here? Under what circumstances can holders be forced to sell? 2) why would a special committee of independents recommend accepting this deal at the lowest share price ever, when the company commentary is positive? Isn't that a recipe for getting sued? Link to comment Share on other sites More sharing options...
Gregmal Posted May 20, 2019 Share Posted May 20, 2019 Yup, the scoundrels pounce. It amazes me how many people think they will print money "investing alongside" these type of companies. The same applies to the logic bending narratives with BRK and Warren doing all these benevolent things just to be an amazing person and make shareholders rich. Dudes who produce outsized returns do it because they maximize what they can extract from an investment. Not because they make everybody super rich by passing around free lunch tickets. These types of guys/groups almost never act in the interest of ALL shareholders. Link to comment Share on other sites More sharing options...
bjakes00 Posted May 20, 2019 Share Posted May 20, 2019 Gregmal, agreed BUT this is not a long term winning strategy. Ultimately these scoundrels depend, to some degree, on the public markets and if they continue to screw minority shareholders there are major reputational issues at stake. Take the busted IPO of Graftech for example, who wants to invest in a Brookfield IPO when you have precedent that they screw minorities? Link to comment Share on other sites More sharing options...
bjakes00 Posted May 20, 2019 Share Posted May 20, 2019 Also how did the value of the equity halve in the 18 months since their initial acquisition when all the metrics have improved? How can any independent committee recommend this deal when there was a line drawn in the sand with the initial purchase? The 20%+ minority shareholders should sue till the cows come home on this one. Link to comment Share on other sites More sharing options...
BG2008 Posted May 20, 2019 Share Posted May 20, 2019 Also how did the value of the equity halve in the 18 months since their initial acquisition when all the metrics have improved? How can any independent committee recommend this deal when there was a line drawn in the sand with the initial purchase? The 20%+ minority shareholders should sue till the cows come home on this one. They do a lot of business with investment banks and one of them will "whore" themselves out to earn that fee Link to comment Share on other sites More sharing options...
heth247 Posted May 20, 2019 Share Posted May 20, 2019 Well, BG was right again -- BBU got to do what is best for themselves. $1.05 for ~$400M is really beyond my expectation. (It seems the market is expecting a little higher). How would the conflict committee justify such a lowball offer? Link to comment Share on other sites More sharing options...
petec Posted May 20, 2019 Share Posted May 20, 2019 Personally I can't blame Brookfield for making an opportunistic offer. Their game is raising assets, and to do that you need the best possible historic IRR, and if the market offers you a silly price you take it. I will, however, be staggered if the independents accept the bid. Surely they must at least hold out for a premium to prior close! Link to comment Share on other sites More sharing options...
given2invest Posted May 20, 2019 Share Posted May 20, 2019 In their 13D with the letter they claim they paid $1.05 for the block from TK and thus that's the fair price for the rest. I think will be a real stretch for board to agree to this, especially since board members also own stock. They get grants every year. Link to comment Share on other sites More sharing options...
racemize Posted May 20, 2019 Share Posted May 20, 2019 Personally I can't blame Brookfield for making an opportunistic offer. Their game is raising assets, and to do that you need the best possible historic IRR, and if the market offers you a silly price you take it. I will, however, be staggered if the independents accept the bid. Surely they must at least hold out for a premium to prior close! I agree, Brookfield is there to take advantage of the market offering low prices. We are just invested along side other people selling their shares at a price we don't like. I imagine we get a bit of a bump, but not much. Last time I'm on the other side of Brookfield though (I have plenty on their side already). Link to comment Share on other sites More sharing options...
Spekulatius Posted May 20, 2019 Share Posted May 20, 2019 Yup, the scoundrels pounce. It amazes me how many people think they will print money "investing alongside" these type of companies. The same applies to the logic bending narratives with BRK and Warren doing all these benevolent things just to be an amazing person and make shareholders rich. Dudes who produce outsized returns do it because they maximize what they can extract from an investment. Not because they make everybody super rich by passing around free lunch tickets. These types of guys/groups almost never act in the interest of ALL shareholders. It’s GGP all over again. Investing alongside BAM means one needs to buy BAM stock, nothing else. BAM tries to obtain control as cheaply as they can, nothing else. Link to comment Share on other sites More sharing options...
Foreign Tuffett Posted May 20, 2019 Share Posted May 20, 2019 Guy "Big Swiss" Spier making it known via Twitter that's he TOO, isn't pleased with recent developments. https://twitter.com/GSpier/status/1130499466769911808 Link to comment Share on other sites More sharing options...
gokou3 Posted May 20, 2019 Share Posted May 20, 2019 Could Brookfield pull another GGP / Rouse, i.e. apparently neglecting them for years and then privatize TOO at a trivial premium to market price? Didn't expect that this happens so soon.. and at a price even lower than the prior day close. Also noted that prices have been sliding for the past 2-3 weeks... Link to comment Share on other sites More sharing options...
Lakesider Posted May 21, 2019 Share Posted May 21, 2019 If you bought now for 1.05 your downside is protected, any surprised will be to the upside? Link to comment Share on other sites More sharing options...
nodnub Posted May 21, 2019 Share Posted May 21, 2019 would not the preferred be rated higher and worth more if bam was owner Maybe. The par value on the three series of prefs is $365m. That's significant relative to what BAM will pay to takeunder the common units. How optimistic are you that BAM will be motivated to give pref holders fair treatment? Have you read the prospectus for these prefs? No party involved in this seems to have any fiduciary duty to the pref holders. I'm curious to hear thoughts from anyone that has an opinion on these Link to comment Share on other sites More sharing options...
Spekulatius Posted May 21, 2019 Share Posted May 21, 2019 Guy "Big Swiss" Spier making it known via Twitter that's he TOO, isn't pleased with recent developments. https://twitter.com/GSpier/status/1130499466769911808 Surprised? i guess he hasn’t paid attention. Isn’t this at least the third time that BAM has squeezed out minority investors on the cheap? I can’t recall when BAM paid full price for anything. Value investor 101 - buy low. Link to comment Share on other sites More sharing options...
Seth Lowry Posted May 21, 2019 Share Posted May 21, 2019 For those interested, we are writing a letter to the TOO conflicts committee and to Brookfield Asset Management. Governance at BBU is exceptionally bad and off-brand for Brookfield. Will post a link shortly or email me at seth@jdpcap.com Link to comment Share on other sites More sharing options...
cornerbrook Posted May 21, 2019 Share Posted May 21, 2019 This part of the BBU Q4 2018 letter to unitholders dated "February, 2019" and signed by Cyrus Maddon is interesting: "Early in 2018, Teekay Offshore completed the last of its growth projects that were underway when we acquired the business and these new vessels have driven improved financial results. Despite this performance, the public unit market price for Teekay Offshore decreased during the fourth quarter reflective of, in our estimate, negative sentiment toward the oil and gas industry. In contrast to much of the oil and gas industry, Teekay Offshore’s recurring cashflows and EBITDA were stable year over year. Teekay Offshore has limited commodity exposure, with medium to long term contracts with premium petroleum companies which provide stability of forward revenues. In 2018 we assisted Teekay Offshore to refinance its near term debt maturities. Teekay Offshore’s enhanced capital structure, together with its on-going growth projects, position the company well for the years ahead." It seems like either BBU was misleading the limited partners then, they are ripping off TOO unitholders now, or there was a big change in TOO's situation. Or maybe some combination of the three. Neither TOO nor BBU have mentioned any such big change, including when reporting and presenting on the Q1 results. Link to comment Share on other sites More sharing options...
kab60 Posted May 21, 2019 Share Posted May 21, 2019 After what Oaktree did with Alliance Healthcare Services - and now this - it seems most fitting these guys are joining forces. I'm not invested, can't even say I'm surprised, but I do understand why some would be disappointed in their actions. I wonder if people might have downplayed the risk since everyone seems to be fans of Bruce (I enjoy his writings as well - perhaps less so his actions). Link to comment Share on other sites More sharing options...
mjm Posted May 21, 2019 Share Posted May 21, 2019 would not the preferred be rated higher and worth more if bam was owner Maybe. The par value on the three series of prefs is $365m. That's significant relative to what BAM will pay to takeunder the common units. How optimistic are you that BAM will be motivated to give pref holders fair treatment? Have you read the prospectus for these prefs? No party involved in this seems to have any fiduciary duty to the pref holders. I'm curious to hear thoughts from anyone that has an opinion on these from "B" prospectus In the event of any liquidation, dissolution or winding up of our affairs, whether voluntary or involuntary, holders of the Series B Preferred Units will have the right to receive the liquidation preference of $25.00 per unit plus an amount equal to all accumulated and unpaid distributions thereon to the date of payment, whether or not declared, before any payments are made to holders of our common units or any other Junior Securities. A consolidation or merger of us with or into any other entity, individually or in a series of transactions, will not be deemed to be a liquidation, dissolution or winding up of our affairs. am just a layman in these affairs, but would also like to hear some opinions from others Link to comment Share on other sites More sharing options...
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