Brookfield Asset Management is spinning off Brookfield Business Partners, L.P. as a taxable dividend

Brookfield Asset Management will be packaging its worldwide business services and industrial operations subsidiaries into a new Bermuda LP subsidiary (“Holding LP”) of a new Bermuda holding LP (Brookfield Business Partners, L.P., or “BBP LP”) and distributing 55% of the non-voting units of BBP LP to its shareholders as a taxable dividend. By virtue of also holding a 45% partnership interest in Holding LP, Brookfield Asset Management initially will have a retained interest in the business of approximately 70%. A Brookfield subsidiary (“BBP GP”) will control BBP LP by virtue of being its GP, and control Holding LP by virtue of the 55% interest of BBP LP in Holding LP being a managing general partner interest. Withholding tax on the dividend will be handled by the applicable percentage of LP units being withheld and sold to Brookfield Asset Management for cash.

BBP GP intends for its central management and control to be outside Canada so that BBP LP and Holding LP will not be subject to SIFT taxation – although it is not clear how much they would have in the way of non-portfolio earnings in any event.

The 2013 spin-off of Brookfield Property Partners, L.P. was quite similar.

Neal Armstrong. Summary of preliminary prospectus of Brookfield Business Partners, L.P. under Spin-Offs – Taxable Dividends.