BAM Investments Corp.

BAM Investments Corp.

November 13, 2009 17:01 ET

(BNB-TSX) BAM Investments Reports Third Quarter Results

TORONTO, ONTARIO--(Marketwire - Nov. 13, 2009) - BAM Investments Corp. (TSX:BNB) today announced its financial results for the third quarter ended September 30, 2009.

The company recorded net income of $2.3 million for the three months ended September 30, 2009 compared to net income of $3.0 million in the same period last year. The decrease in net income primarily relates to a $1.2 million redemption premium which was paid in connection with the early redemption of the Class A Preferred Shares. Net income per common share was $0.03 for the three month period, compared with $0.04 for the same period in 2008.

On July 9, 2009, BAM Split issued $125.0 million Class AA, Series IV Preferred Shares and used the proceeds to fund the early redemption of the $125.0 million Class A Preferred Shares. The Class A Preferred Shares were otherwise scheduled to be redeemed no later than September 30, 2010. Accordingly, this transaction successfully extended the maturity profile of the company's financial obligations. The Class AA, Series IV Preferred Shares have an annual yield of 7.25% and mature on July 9, 2014.

In the first quarter of 2009, the company redeemed all of the exchangeable debentures that it had previously issued, by delivering 5.3 million Class A Limited Voting Shares ("Class A Shares") of Brookfield Asset Management Inc. ("Brookfield") and 0.2 million Limited Partnership Units of Brookfield Infrastructure Partners LP ("Brookfield Infrastructure"). As a result, the company no longer bears interest expense on the exchangeable debentures, whereas the comparable period in 2008 included $1.4 million of interest expense on the exchangeable debentures, which exceeded the investment income on the securities delivered in settlement.

The company's principal investment is a direct interest in 55.5 million Class A Shares of Brookfield.

Consolidated Statements of Operations

Three months Nine months
ended Sept. 30 ended Sept. 30
$ thousands, except per share amounts 2009 2008 2009 2008
Investment income
Dividends, interest and other $ 8,403 $ 9,487 $ 27,142 $ 26,684
Gain on the repurchase of preferred
share obligations 65 59 1,394 196
Gain on sale of investments - - 434 -
8,468 9,546 28,970 26,880
Operating 147 108 661 509
Interest expense - 1,389 137 3,472
Amortization of deferred financing
costs 606 419 1,293 1,263
Subsidiary preferred share
dividends 4,544 5,049 13,770 15,285
5,297 6,965 15,861 20,529
Net income before income tax and
redemption premium 3,171 2,581 13,109 6,351
Class A Preferred Share redemption
premium (1,200) - (1,200) -
Future income tax recovery 340 396 3,466 6,868
Net income $ 2,311 $ 2,977 $ 15,375 $ 13,219
Net income per common share $ 0.03 $ 0.04 $ 0.19 $ 0.17

Net Book Value

The net book value of the company's common shares as at September 30, 2009 based on the stock market price of Brookfield's Class A Shares of $24.37 was $11.83 per share. BAM Investments holds approximately 7 Brookfield Class A Shares for every 10 common shares of BAM Investments. The information in the following table has been extracted from the company's consolidated balance sheet as at September 30, 2009.

Statement of Financial Position
As at September 30, 2009 ($thousands, except per share
amounts) Net Asset Value
Investment in Brookfield Asset Management Inc.(1) $ 1,351,712
Investment in Brookfield Infrastructure Partners(2) 38,938
Cash and equivalents 53,453
Other assets 148
$ 1,444,251
Accounts payable and provisions $ 2,048
Retractable preferred shares(3) 361,085
Future tax liability(4) 142,776

Shareholders' Equity
Common shares 938,342
$ 1,444,251
Net Asset Value Per Common Share, pre tax(5) $ 13.63

Net Asset Value Per Common Share, after tax(5) $ 11.83

(1) The investment in Brookfield Asset Management Inc. consists of 55.5
million Class A Shares at a bid price of $24.37 per Brookfield Class A
Share at September 30, 2009.
(2) The investment in Brookfield Infrastructure Partners consists of 2.2
million Limited Partnership Units at a bid price of $17.55 per unit at
September 30, 2009.
(3) Represents $367.4 million retractable preferred shares issued by BAM
Split Corp, which is a subsidiary of the company, net of $6.3 million
of unamortized issuance costs.
(4) The future tax liability represents the potential future income tax
liability of the company based on the difference between the carrying
values of the company's assets and liabilities and their respective tax
values, as well as giving effect to estimated capital and non-capital
losses as at the date of this statement.
(5) As at September 30, 2009, there were 79,339,510 common shares of the
company issued and outstanding.

Note: This news release contains "forward-looking information" within the meaning of Canadian provincial securities laws and regulations. The words "potential" and "estimated" and other expressions which are predictions of or indicate future events, trends or prospects and which do not relate to historical matters identify forward-looking information. Forward-looking information in this news release includes statements with regard to potential future income taxes.

Although the company believes that the anticipated future results or achievements expressed or implied by the forward-looking information and statements are based upon reasonable assumptions and expectations, the reader should not place undue reliance on the forward-looking information and statements because they involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the company to differ materially from anticipated future results, performance or achievement expressed or implied by such forward-looking information and statements.

Factors that could cause actual results to differ materially from those contemplated or implied by the forward-looking information and statements include: the behavior of financial markets, including fluctuations in interest and exchange rates, availability of equity and debt financing and other risks and factors detailed from time to time in the company's other documents filed with the Canadian securities regulators.

We caution that the foregoing list of important factors that may affect future results is not exhaustive. When relying on our forward-looking information to make decisions with respect to the company, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. Except as may be required by law, the company undertakes no obligation to publicly update or revise any forward-looking information or statements, whether written or oral, that may be as a result of new information, future events or otherwise. Reference should be made to the company's most recent Annual Information Form for a description of the major risk factors.

Contact Information

  • BAM Investments Corp.
    Edward C. Kress
    (416) 956-5140