Brookfield Property Partners’ second-stage acquisition of Brookfield Office Properties shares includes an exchangeable LP unit option and a deemed dividend option

Brookfield Property Partners ("BPY") is engaging in a second-stage transaction under a Plan of Arrangement to acquire the common shares of Brookfield Office Properties Inc. ("BPO") which were not tendered to an offer made by it in February 2014.

As in the previous offer, the consideration to be provided is cash or BPY units (with the aggregate consideration fixed at approximately 67% units and 33% cash) – except that (again as before) Canadian-resident BPO shareholders can choose to receive exchangeable units of an indirect subsidiary Ontario LP ("Exchange LP") of BPY in order to elect under s. 97(2).  Perhaps in order to fit within the exchangeable share structure blessed in the Explanatory Notes on derivative forward agreements,  the exchangeable units are only retractable against Exchange LP for BPY units, with no direct exchange right with BPY – although on retraction BPY has an overriding call right to acquire the exchangeable units.

An additional feature not present in the previous Offer is that BPO common shareholders also can elect to have their common shares redeemed by BPO itself for BPY units or cash, giving rise to a deemed dividend of over half the value of the consideration.

Convertible preferred shareholders of BPO generally have the option of exchanging their shares for preferred shares of an indirect BPY subsidiary which is expected to qualify as a mutual fund corporation.

Neal Armstrong.  Summary of Circular for Brookfield Property Partners second-stage acquisition of Brookfield Office Properties under Mergers & Acquisitions – Subsequent Acquisition Transactions.