I am in the middle of this, have to go for the day, but figured I would put up to start a discussion.
these are real raw, and not complete notes. could be lots of errors. I would welcome discussion on the financials. I will try and add more info as i work with it.
I am trying to determine, why NOI is so large. Also, I need to look at free cash flow. I would love to discuss this stuff. Basically discuss, financially, what would be the proper metric range of Brookfield Power valuation.
When reviewing Brookfield Power Inc,. make sure you look for �Brookfield Power Inc� (BPI) and not �Brookfield Power Corp.
It is my understanding that BPI is being valued at about $6B - $8B. I saw that in a CSFB report dated September 14, 2007. In their report, CSFB wrote, ��., sometimes challenging financial disclosures�..�
We follow AES Corporation, and they are the nearest competitor. If I remember correctly, AES is primarily in coal driven fuel, whereas BPI is more hydro.
2. Short term investments include promissory notes from BAM. Carried at Lower of Cost or Market.
3. Financial Instruments are carried at Market, yet I don�t see them listed.
1. �Property-specific and subsidiary debt increased to $3.4 billion from $2.8 billion at the beginning of 2006 due to new debt secured by acquired facilities and 30-year unsecured bonds issued by Brookfield Power during the fourth quarter that have no recourse to the Corporation. Property-specific debt totalled $2.7 billion at year end (2005 � $2.4 billion) and corporate unsecured notes issued by our power generating operations totalled $0.7 billion (2005 � $0.4 billion). Property-specific debt has an average interest rate of 8% and an average term of 16 years and is all investment grade quality. The corporate unsecured notes bear interest at an average rate of 5%, have an average term of 10 years and are rated BBB by S&P and BBB (high) by DBRS and BBB by Fitch.
Non-controlling interests represent the 49% interest in the Great Lakes Hydro Income Fund that is held by other shareholders.�
2. �Contract Profile - We endeavour to maximize the stability and predictability of our power generating revenues by contracting future power sales to minimize the impact of price fluctuations, by diversifying watersheds, and by utilizing water storage reservoirs to minimize fluctuations in annual generation levels.
Approximately 80% of our projected 2007 and 2008 revenues are currently subject to long-term bilateral power sales agreements or shorter-term financial contracts. The remaining revenue is generated through the sale of power in wholesale electricity markets. Our long-term sales contracts, which cover approximately 55% of projected revenues during this period, have an average term of 13 years and the counterparties are almost exclusively customers with long-standing favourable credit histories or have investment grade ratings. The financial contracts typically have a term of between one and three years.
All power that is produced and not otherwise sold under a contract is sold in wholesale electricity markets, and due to the low variable cost of hydroelectric power and the ability to concentrate generation during peak pricing periods, we are often able to generate highly attractive margins on power which is otherwise uncontracted. This approach provides an appropriate level of revenue stability, without exposing the company to undue risk of contractual shortfalls, and also provides the flexibility to enhance profitability through the production of power during peak price periods.�