News Release

ASC issues oral ruling on Brookfield, IPL and Pembina applications

Jul 13, 2021

CALGARY – July 13, 2021 – An Alberta Securities Commission (ASC) panel issued an oral ruling July 12 on applications brought June 9, 2021 by Bison Acquisition Corp. and Brookfield Infrastructure Corporation Exchange Limited Partnership (Brookfield Application); June 18, 2021 by Inter Pipeline Ltd. (IPL Application); and June 18, 2021 by Pembina Pipeline Corporation (Pembina Application). The applications related to competing proposals for IPL common shares by Brookfield (Brookfield Offer) and Pembina. The hearing of the applications was held on Friday, July 9, 2021.

Brookfield alleged that IPL used improper defensive tactics in response to the Brookfield Offer. The panel dismissed the Brookfield Application, as it found that Brookfield did not establish sufficient grounds for the panel to exercise its public interest jurisdiction and make the orders sought. The panel did not find that IPL's actions were improper.  

The IPL and Pembina Applications 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.

With a view to protecting the market and the integrity of IPL shareholders' choice between Brookfield's and Pembina's competing proposals for IPL, the panel issued orders in the public interest:

  1. prohibiting Brookfield from purchasing any IPL securities deposited under the Brookfield Offer unless more than 55 per cent 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Brookfield or by anyone acting jointly or in concert with Brookfield), are deposited under the Brookfield Offer and not withdrawn (Modified Minimum Tender Condition);
  2. directing Brookfield to disclose the Modified Minimum Tender Condition in accordance with the Notice of Variation requirements in the applicable regulatory instrument; and
  3. directing Brookfield to disclose the following information in accordance with the same Notice of Variation requirements:
  1. the name of the Swap Counterparty;
  2. the dates of the International Swaps and Derivatives Association agreements between Brookfield and the Swap Counterparty;
  3. the dates of the swap transactions pursuant to which Brookfield acquired its economic interest in IPL common shares;
  4. certain specified information concerning Brookfield’s commercial relationship with the Swap Counterparty; and
  5. 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.

The ASC panel will issue its decision, with reasons, in writing at a later date.

The ASC is the regulatory agency responsible for administering the province’s securities laws. It is entrusted with fostering a fair and efficient capital market in Alberta and with protecting investors. As a member of the Canadian Securities Administrators, the ASC works to improve, coordinate and harmonize the regulation of Canada's capital markets.

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Theresa Schroder
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