Where's the f'ing money, Lebowski?
Brookfield is a powerhouse that focuses on buying up assets - namely comericial realestate, companies that are a bargain, infrastruture pieces and renewable energy resources.
It's this last one that has them popping the champagne this evening. As the Toronto Media Co-op has pointed out before, some of the largest publicly traded companies in Canada, owe their genesis or success to the government taking nationally owned-corporations and selling them to the private sector for a song. Governments often get a one-time windfall of revenue but miss out on revenues that pile up and often can end up having to pay more money for the services of a company that they used to own.
Which brings us to Enwave. Enwave is a for-profit company that does the amazing business of taking energy from Lake Ontario and cooling (or steam heating) public and private buildings in the City through an underground system of pipes. The heating is clean and renewable and said to be very reliable. Enwave is owned jointly by the City of Toronto and a municipal employees pension plan (OMERS). At least it was until a few hours ago.
Both OMERS and the City just sold the company to Brookfield Asset Management for a reported $480 million. The sale will net the City a cool $100 Million in profit which will liley be used to pay off the cost of streetcars. The streetcar purchase, done in 2009 was supposed to be paid for by Toronto, Ontario and the Federal government three ways until the feds said the project wouldn't be eligable for infrastruture dollars.
The City originally thought they would only get $30 Million, which forces the Lebowski blog to consider: will that $100 Million seem like chump change in the future? Another example of Conservative governments gifting money to the private sector?
Accoridng to the National Post, Enwave doesn’t currently pay dividends but had a 2010 net income of $11.2-million. Projections show it's profit increasing in future years as the cost of cooling energy goes up and it would've been in a position to start filling up City coffers soon.
That's right. After the original infrastructure investments have been made and big, fat profits are right around the corner, the City decides to sell.
It gets even better. Not only are they selling a company slated to start raking in the cash, but the rising costs from cooling will lilkely result in the City paying more down the road for its cooling costs...and paying to a company that it used to partially own.
I wouldn't worry about Brookfield though. It should continue to be a banner year for them, especially since they got all those people out of that park that they own in New York.
The Lebowski Blog tracks big piles of money. It appears regularly on the Toronto Media Co-op.