424B3 1 a2228664z424b3.htm 424B3
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PROSPECTUS

 
GRAPHIC
  Filed Pursuant to Rule 424(b)(3)
Registration No. 333-207621

Brookfield Business Partners L.P.

Limited Partnership Units

This prospectus is being furnished to you as a stockholder of Brookfield Asset Management Inc., or Brookfield Asset Management, in connection with the planned distribution by way of a special dividend, or the spin-off, by Brookfield Asset Management to its Class A limited voting shares and Class B limited voting shares of approximately 20 million limited partnership units, or units, of Brookfield Business Partners L.P., or our company. Prior to the spin-off, we will acquire our initial operations from Brookfield Asset Management and its subsidiaries (other than our company), which we refer to as Brookfield. We will be Brookfield's flagship public company for its business services and industrial operations and the primary entity through which Brookfield owns and operates these businesses on a global basis.

Pursuant to the spin-off, holders of Class A limited voting shares and Class B limited voting shares of Brookfield Asset Management as of June 2, 2016, the record date for the spin-off, or the record date, will be entitled to receive one (1) of our units for every fifty (50) Class A limited voting shares or Class B limited voting shares held as of the record date, provided that the special dividend will be subject to any applicable withholding tax and no holder will be entitled to receive any fractional interests in our units. The distribution date for the spin-off is expected to be on or about June 20, 2016, or the distribution date. Holders who would otherwise be entitled to a fractional unit will receive a cash payment. Holders of Brookfield Asset Management's Class A limited voting shares and Class B limited voting shares will not be required to pay for the units to be received upon completion of the spin-off or tender or surrender Class A limited voting shares or Class B limited voting shares of Brookfield Asset Management or take any other action in connection with the spin-off. Brookfield Asset Management shareholders are not being asked for a proxy and are requested not to send a proxy.

Immediately following the spin-off, our company's sole direct investment will be a managing general partnership interest in Brookfield Business L.P., or the Holding LP. It is currently anticipated that immediately following the spin-off, holders of Class A limited voting shares and Class B limited voting shares of Brookfield Asset Management will hold units of our company representing in the aggregate an effective equity interest in our company of approximately 22% and Brookfield will hold a combination of our units, general partnership units, redemption-exchange units of the Holding LP, or Redemption-Exchange Units, and special limited partnership units of the Holding LP, or Special LP Units, representing an effective equity interest in our company of approximately 78%. As a result of holding the Special LP Units, Brookfield will be entitled to receive incentive distributions from the Holding LP.

Our general partner is an indirect, wholly-owned subsidiary of Brookfield Asset Management. In addition, wholly-owned subsidiaries of Brookfield Asset Management will provide management services to us pursuant to a master services agreement, or our Master Services Agreement.

Brookfield currently owns all of the outstanding units of our company. Accordingly, there is currently no public market for our units. We anticipate, however, that trading in our units will begin on a "when-issued" basis as early as two trading days prior to the record date and will continue up to and including the distribution date. "When-issued" trades generally settle within four trading days after the distribution date. On the first trading day following the distribution date, any "when-issued" trading of our units will end and "regular-way" trading will begin. We have been approved to list our units on the New York Stock Exchange, or the NYSE, under the symbol "BBU" and on the Toronto Stock Exchange, or the TSX, under the symbol "BBU.UN". Listing of our units on the TSX is subject to our company fulfilling all of the requirements of the TSX.

In reviewing this prospectus, you should carefully consider the matters described in the section entitled "Risk Factors" beginning on page 17. These risks include the following:

    Our company is a newly formed partnership with no separate operating history and an active and liquid trading market for our units may not develop.

    Unitholders do not have the right to vote on partnership matters.

    Our operating businesses are highly cyclical and subject to risks relating to general economic conditions and commodity risks.

    We operate in a highly competitive market for acquisition opportunities and the completion of new acquisitions involves risks to our business.

    Brookfield exercises substantial influence over our company and we are highly dependent on the Service Providers.

    Changes in tax law and practice may have a material adverse effect on the operations of our company, the Holding Entities, and the operating businesses.

NEITHER THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS INFORMATION IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

This prospectus does not constitute an offer to sell or the solicitation of an offer to buy any securities.

The date of this prospectus is May 13, 2016.



TABLE OF CONTENTS

 
  Page

NOTICE TO INVESTORS

  1

NOTICE REGARDING PRESENTATION OF OUR RESERVE INFORMATION

  2

QUESTIONS AND ANSWERS REGARDING THE SPIN-OFF

  4

SUMMARY

  8

RISK FACTORS

  17

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

  50

THE SPIN-OFF

  51

USE OF PROCEEDS

  55

DISTRIBUTION POLICY

  55

LISTING OF OUR UNITS

  55

CAPITALIZATION

  56

UNAUDITED PRO FORMA FINANCIAL STATEMENTS

  57

SELECTED HISTORICAL FINANCIAL INFORMATION

  65

BUSINESS

  66

OWNERSHIP AND ORGANIZATIONAL STRUCTURE

  86

GOVERNANCE

  89

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

  98

MANAGEMENT AND OUR MASTER SERVICES AGREEMENT

  123

RELATIONSHIP WITH BROOKFIELD

  129

DESCRIPTION OF OUR UNITS AND OUR LIMITED PARTNERSHIP AGREEMENT

  136

DESCRIPTION OF THE HOLDING LP LIMITED PARTNERSHIP AGREEMENT

  146

SECURITY OWNERSHIP

  156

UNITS ELIGIBLE FOR FUTURE SALES

  157

MATERIAL TAX CONSIDERATIONS

  158

LEGAL MATTERS

  182

EXPERTS

  182

INDEBTEDNESS OF DIRECTORS AND EXECUTIVE OFFICERS

  183

CEASE TRADE ORDERS, BANKRUPTCIES, PENALTIES OR SANCTIONS

  183

INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS

  183

PRIOR SALES

  183

MATERIAL CONTRACTS

  184

COSTS OF SPIN-OFF

  184

CANADIAN SECURITIES LAW EXEMPTIONS

  185

ENFORCEMENT OF CERTAIN CIVIL LIABILITIES

  186

WHERE YOU CAN FIND MORE INFORMATION

  187

INDEX TO FINANCIAL STATEMENTS

  F-1

APPENDIX A — CANADIAN OIL AND GAS RESERVES DISCLOSURE

  A-1

APPENDIX B — GLOSSARY

  B-1

i



NOTICE TO INVESTORS

About this Prospectus

        You should rely only on the information contained in this prospectus. We have not authorized any other person to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. You should assume that the information appearing in this prospectus is accurate only as of the date on the front cover of this prospectus, regardless of the time of delivery of this prospectus. Our business, financial condition, results of operations and prospects could have changed since that date. We expressly disclaim any duty to update this prospectus, except as required by applicable law.

Historical Performance and Market Data

        This prospectus contains information relating to our business as well as historical performance and market data for Brookfield Asset Management and certain of its operating platforms. When considering this data, you should bear in mind that historical results and market data may not be indicative of the future results that you should expect from us.

Financial Information

        The financial information contained in this prospectus is presented in United States dollars and, unless otherwise indicated, has been prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board, or IFRS. All figures are unaudited unless otherwise indicated. In this prospectus, all references to "$" are to United States dollars, references to "A$" are to Australian dollars and references to "C$" are to Canadian dollars.

Use of Non-IFRS Measures

        Our company evaluates its performance using net income attributable to parent company. In addition to this measure reported in accordance with IFRS, we also use Company FFO (defined below) to evaluate our performance. Company FFO does not have a standard meaning prescribed by IFRS and therefore may not be comparable to similar measures presented by other companies. Company FFO should not be regarded as an alternative to other financial reporting measures prepared in accordance with IFRS and should not be considered in isolation or as a substitute for measures prepared in accordance with IFRS.

        We define Company FFO as net income attributable to parent company prior to non-cash valuation gains/losses, impairment charges, depletion, depreciation and amortization and deferred income taxes. When determining Company FFO, we include our proportionate share of Company FFO of equity accounted investments.

        Company FFO has limitations as an analytical tool as it does not include depreciation and amortization expense, deferred income taxes and non-cash valuation gains/losses and impairment charges. Because Company FFO has these limitations, Company FFO should not be considered as the sole measure of our performance and should not be considered in isolation from, or as a substitute for, analysis of our results as reported under IFRS. However, Company FFO is a key measure that we use to evaluate the performance of our operations.

        For a reconciliation of Company FFO to net income attributable to parent company, see "Management's Discussion and Analysis of Financial Condition and Results of Operations — Reconciliation of Non-IFRS Measures". We urge you to review the IFRS financial measures in this prospectus, including the financial statements, the notes thereto, our pro forma financial statements and the other financial information contained herein, and not to rely on any single financial measure to evaluate our company.

1



NOTICE REGARDING PRESENTATION OF OUR RESERVE INFORMATION

        The reserve information presented in this prospectus (excluding Appendix A) represents estimates prepared by our internal staff of petroleum engineers at December 31, 2015 in accordance with reserve disclosure requirements of the U.S. Securities and Exchange Commission, or SEC. In addition, Appendix A contains information with respect to our Canadian oil and gas assets prepared by McDaniel & Associates Consultants Ltd., or McDaniel, and GLJ Petroleum Consultants Ltd., or GLJ, and with respect to our Australian oil and gas assets RISC Operations Pty Limited, or RISC, with respect to our oil and natural gas properties at December 31, 2015 which is required pursuant to Canadian reserve reporting requirements. The reserve estimates and related estimates of net present values presented in Appendix A were prepared in compliance with Canadian reserves disclosure standards and reserves definitions as set out in NI 51-101 — Standards of Disclosure for Oil and Gas Activities, or NI 51-101, issued by the Canadian Securities Administrators and the Canadian Oil and Gas Evaluation Handbook, or COGE Handbook, prepared jointly by The Society of Petroleum Evaluation Engineers and the Canadian Institute of Mining, Metallurgy & Petroleum.

        U.S. reporting companies apply SEC reserves definitions and prepare their reserves estimates in accordance with SEC requirements and generally accepted industry practices in the United States, whereas NI 51-101 requires adherence to the definitions and standards promulgated by the COGE Handbook. Disclosure in this prospectus (excluding Appendix A) of reserves is presented in accordance with SEC requirements, while the information in Appendix A is presented in accordance with Canadian securities laws. Therefore, reserve estimates presented in this prospectus (excluding Appendix A) are comparable to those disclosed by U.S. companies in reports filed with the SEC.

        Below is a general description of the principal differences between SEC requirements and NI 51-101, some of which may be material:

    the SEC mandates disclosure of proved reserves using the preceding 12-month average prices and costs only, whereas NI 51-101 requires disclosure of reserves and related future net revenues using forecast prices and costs;

    the SEC mandates disclosure of reserves by geographic area only, whereas NI 51-101 requires disclosure of more reserve categories and product types;

    the SEC requires proved undeveloped reserves to be drilled within five years of the date the reserves were initially recorded (unless the specific circumstances justify a longer time), whereas NI 51-101 generally requires proved undeveloped reserves to be drilled within two or three years (depending on the magnitude of the capital expenditures required for development) and probable undeveloped reserves within five years of the date of the evaluation;

    the SEC permits disclosure of probable reserves at the issuer's discretion, whereas NI 51-101 requires disclosure of probable reserves;

    the SEC requires reserves to be cash flow positive on an undiscounted basis, whereas NI 51-101 requires reserves to show a hurdle rate of return;

    the SEC does not require disclosure of finding and development costs per boe of proved reserves additions, whereas NI 51-101 requires that, if an issuer chooses to disclose finding and development costs, various finding and development costs per boe and additional information be disclosed;

    the SEC requires disclosure of reserves on a net (after royalties) basis, whereas NI 51-101 requires disclosure on a gross (before royalties) and net (after royalties) basis;

    the SEC requires disclosure of production on a net (after royalties) basis, whereas the Canadian standards require disclosure of production on a gross (before royalties) basis;

    the SEC's technical rules in estimating reserves differ from NI 51-101 in areas such as the use of reliable technology, aerial extent around a drilled location, quantities below the lowest known oil and quantities across an undrilled fault block;

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    U.S. standards limit reserve bookings on undrilled acreage to "those directly offsetting development spacing areas that are reasonably certain of production when drilled, unless evidence using reliable technology exists that establishes reasonable certainty of economic producibility at greater distances," whereas under NI 51-101, reserves may be recognized on undrilled properties beyond directly offsetting spacing units if there is "compelling evidence of reservoir continuity";

    the SEC leaves the engagement of independent qualified reserves consultants to the discretion of a company's board of directors, whereas NI 51-101 requires issuers to engage such evaluators; and

    the SEC does not allow proved and probable reserves to be aggregated, whereas NI 51-101 requires issuers to disclose aggregate proved and probable reserves.

3



QUESTIONS AND ANSWERS REGARDING THE SPIN-OFF

        The following questions and answers address briefly some questions you may have regarding the spin-off. These questions and answers may not address all questions that may be important to you as a holder of Class A limited voting shares or Class B limited voting shares of Brookfield Asset Management and these questions and answers should be read together with the more detailed information and financial data and statements contained elsewhere in this prospectus. See "Appendix B — Glossary" for the definitions of the various defined terms used throughout this prospectus.

Questions   Answers About the Spin-Off
How will the spin-off work?   Brookfield Asset Management intends to make a special dividend to holders of its Class A limited voting shares and Class B limited voting shares of approximately 20 million units of our company. As a result of the special dividend, holders of Class A limited voting shares and Class B limited voting shares of Brookfield Asset Management will be entitled to receive one (1) of our units for every fifty (50) Class A limited voting shares or Class B limited voting shares held as of the record date for the special dividend, provided that the special dividend will be subject to any applicable withholding tax and no holder will be entitled to receive any fractional interests in our units. Holders who would otherwise be entitled to a fractional unit will receive a cash payment. For additional information about the spin-off, see "The Spin-Off".

Are there risks associated with owning the units?

 

Yes, our business faces both general and specific risks and uncertainties. For a discussion of factors you should consider, please see "Risk Factors".

What will our relationship with Brookfield be after the spin-off?

 

After the spin-off:

Brookfield will be our largest investor with an anticipated effective equity interest in our company of approximately 78%. Brookfield expects its interest to be reduced from this level over time through mergers, treasury issuances or secondary sales.

 

The BBP General Partner, a wholly-owned subsidiary of Brookfield Asset Management, will have sole authority for the management and control of our company.

 

The Service Providers, wholly-owned subsidiaries of Brookfield Asset Management, will provide management and administration services to us pursuant to our Master Services Agreement in exchange for a base management fee and reimbursement of out-of-pocket expenses. Our Master Services Agreement will continue in perpetuity until terminated in accordance with its terms.

 

Brookfield will be entitled to receive incentive distributions from the Holding LP as a result of its ownership of Special LP Units.

 

We expect to enter into a credit agreement with Brookfield providing for two, three-year revolving credit facilities. One will constitute an operating credit facility that will permit borrowings of up to $200 million for working capital purposes and the other will constitute an acquisition facility that will permit borrowings of up to $300 million for purposes of funding our acquisitions and investments. We expect that no amounts will be drawn under these credit facilities as of the date of the spin-off.


 

 

For information on our relationship with Brookfield after the spin-off, see "Relationship with Brookfield".

4


Questions   Answers About the Spin-Off
Will the BBP General Partner have any independent directors and will the directors have any unit ownership obligations?   Yes. After the spin-off, a majority of the BBP General Partner's directors will be independent under applicable law and the regulations of the securities exchanges on which our units will be listed. John Lacey will serve as the lead independent director immediately following completion of the spin-off. The lead independent director's primary role will be to facilitate the functioning of the board (independently of the Service Providers and Brookfield), and to maintain and enhance the quality of our company's corporate governance practices, including, when appropriate, consulting and communicating directly with unitholders or other stakeholders. Going forward, the lead independent director will be selected by the BBP General Partner's directors from among the independent directors. The audit committee and the governance and nominating committee of the BBP General Partner's board of directors will consist solely of independent directors.

 

 

The BBP General Partner's directors will be required to hold, within five (5) years of joining the board, units of our company with an acquisition cost equal to at least two times the directors' annual retainer. Directors are required to purchase units on an annual basis in an amount not less than 20% of this unit ownership requirement until this requirement is met.

Will our company make distributions on our units?

 

The BBP General Partner will have sole authority to determine whether our company will make distributions and the amount and timing of these distributions. The BBP General Partner intends to adopt a distribution policy pursuant to which our company intends to make quarterly cash distributions in an initial amount currently anticipated to be $0.25 per unit on an annualized basis. The level of distributions is not intended to grow as our company intends to reinvest its capital. Our ability to make distributions will depend on several factors, some of which are out of our control, including, among other things, general economic conditions, our results of operations and financial condition, the amount of cash that is generated by our operations, restrictions imposed by the terms of any indebtedness that is incurred to finance our operations and acquisitions or to fund liquidity needs, levels of operating and other expenses and contingent liabilities.

 

 

See "Distribution Policy" for additional information on our distribution policy following the spin-off.

When will the spin-off be completed?

 

Brookfield Asset Management expects to complete the spin-off on or about June 20, 2016.

What is the record date for the distribution?

 

On or about June 2, 2016.

If I am a holder of Brookfield Asset Management Class A limited voting shares or Class B limited voting shares, what do I have to do to participate in the distribution?

 

Nothing. You are not required to pay for the units that you will receive upon the spin-off or tender or surrender your Class A limited voting shares or Class B limited voting shares of Brookfield Asset Management or take any other action in connection with the spin-off. No vote of Brookfield Asset Management's shareholders will be required for the spin-off. If you own Brookfield Asset Management Class A limited voting shares or Class B limited voting shares as of the close of business on the record date, a certificate reflecting your ownership of our units will be mailed to you, or your brokerage account will be credited for our units, on or about June 23,  2016.

5


Questions   Answers About the Spin-Off
How many units will I receive?   You will be entitled to receive one (1) of our units for every fifty (50) Class A limited voting shares and Class B limited voting shares of Brookfield Asset Management you hold as of the record date of the special dividend. Based on the number of Class A limited voting shares and Class B limited voting shares of Brookfield Asset Management expected to be outstanding on the record date for the special dividend, Brookfield Asset Management expects to distribute approximately 20 million of our units. No holder will be entitled to receive any fractional interests in our units. Holders who would otherwise be entitled to a fractional unit will receive a cash payment. For additional information on the distribution, see "The Spin-Off".

Is the spin-off taxable for U.S. and Canadian federal income tax purposes?

 

Holders who receive our units pursuant to the spin-off generally will be considered to have received a taxable dividend equal to the fair market value of the gross amount of our units so received plus the amount of any cash received in lieu of fractional units, without reduction for any tax withheld. Non-Canadian limited partners who acquire our units pursuant to the spin-off will be considered to have received a taxable dividend for Canadian federal income tax purposes and will be subject to Canadian federal withholding tax on the amount of the special dividend. In addition, limited partners who are taxable in the U.S. and who fail to provide Brookfield Asset Management (or the relevant intermediary) with a properly completed IRS Form W-9 in a timely manner may be subject to U.S. federal "backup" withholding tax on the amount of the special dividend. To satisfy the withholding tax liabilities of non-Canadian registered shareholders, Brookfield will withhold a portion of our units, and a portion of any cash distribution in lieu of fractional units, otherwise distributable. Brookfield will purchase these withheld units and the proceeds of this sale, together with the amount of any cash withheld from any cash distribution in lieu of fractional units, will be remitted to the Canadian federal government or the U.S. federal government (as applicable) in satisfaction of the withholding tax liabilities described above. For non-Canadian beneficial shareholders, these withholding tax obligations will be satisfied in the ordinary course through arrangements with their broker or other intermediary. Beneficial owners should consult their brokers to determine how the withholding tax obligations will be satisfied for their units. You should carefully read the section in this prospectus entitled "Material Tax Considerations", which qualifies in its entirety the foregoing summary, and you should consult an independent tax adviser regarding the relevant tax considerations in light of your particular circumstances.

Where will I be able to trade the units?

 

There is no public trading market for our units. However, our company has been approved to list its units on the NYSE under the symbol "BBU" and on the TSX under the symbol "BBU.UN". Listing of our units on the TSX is subject to our company fulfilling all of the requirements of the TSX.

 

 

We anticipate that trading in our units will begin on a "when-issued" basis as early as two trading days prior to the record date for the special dividend and will continue up to and including the distribution date. "When-issued" trading in the context of a spin-off refers to a sale or purchase made conditionally on or before the distribution date because the securities of the spun-off entity have not yet been distributed.

6


Questions   Answers About the Spin-Off
    "When-issued" trades generally settle within four trading days after the distribution date. On the first trading day following the distribution date, any "when-issued" trading of our units will end and "regular-way" trading will begin. Regular-way trading refers to trading after the security has been distributed and typically involves a trade that settles on the third full trading day following the date of the trade. We cannot predict the trading prices for our units before, on or after the distribution date.

Will the number of Brookfield Asset Management shares I own change as a result of the spin-off?

 

No. The number of Class A limited voting shares and Class B limited voting shares of Brookfield Asset Management that you own will not change as a result of the spin-off.

What will happen to the listing of Brookfield Asset Management's Class A limited voting shares?

 

Nothing. Brookfield Asset Management's Class A limited voting shares will continue to trade on the NYSE under the symbol "BAM", on the TSX under the symbol "BAM.A" and on the NYSE Euronext under the symbol "BAMA".

Whom do I contact for information regarding you and the spin-off?

 

Before the spin-off, you should direct inquiries relating to the spin-off to:

Brookfield Asset Management Inc.
Suite 300, Brookfield Place
181 Bay Street
P.O. Box 762
Toronto, Ontario, Canada M5J 2T3

 

 

Attention: A.J. Silber

 

 

After the spin-off, you should direct inquiries relating to our units to:

 

 

Brookfield Business Partners Limited
73 Front Street, 5th Floor
Hamilton, HM 12
Bermuda

 

 

Attention: Jane Sheere, Corporate Secretary

 

 

After the spin-off, we expect that the transfer agent and registrar for our units will be:

 

 

CST Trust Company
320 Bay St.
Toronto, Ontario M5H 4A6

 

 

and the co-transfer agent and co-registrar for our units will be:

 

 

American Stock Transfer & Trust Company, LLC
6201 15th Avenue
Brooklyn, New York, USA 11219

7



SUMMARY

        This summary highlights selected information contained elsewhere in this prospectus and does not contain all of the information you should know about our company and our units. You should read this entire prospectus carefully, especially the "Risk Factors" section of this prospectus and our consolidated financial statements and related notes appearing at the end of this prospectus. Some of the statements in this prospectus constitute forward-looking statements that involve risks and uncertainties. See "Special Note Regarding Forward-Looking Statements" for more information. Unless the context requires otherwise, when used in this prospectus, the terms "we", "us" and "our" refer to our company, the Holding LP, the Holding Entities and the operating businesses, each as defined in this prospectus, taken together; "our company" refers to Brookfield Business Partners L.P.; "Brookfield Asset Management" refers to Brookfield Asset Management Inc.; "Brookfield" refers to Brookfield Asset Management and its subsidiaries (other than us); and "limited partners" refers to holders of our units. Unless otherwise indicated or the context otherwise requires, the disclosure in this prospectus assumes that the spin-off has been completed and we have acquired our initial operations from Brookfield, although we will not acquire our initial operations until shortly prior to the spin-off. See "Appendix B — Glossary" for the definitions of the various defined terms used throughout this prospectus.

Our Business

        We are a business services and industrials company, focused on owning and operating high-quality businesses that are low-cost producers and/or benefit from high barriers to entry. We will be Brookfield's primary vehicle for business services and industrial operations. Our principal business service operations include construction services, residential real estate services and facilities management. Our principal industrial operations are comprised of crude oil and natural gas, or oil and gas, exploration and production, palladium and aggregates mining, bath and shower products manufacturing, the production of graphite electrodes and the manufacturing and supply of engineered precast systems and pipe products. Prior to the spin-off, we will acquire from Brookfield our initial operations, which we refer to as the Business.

        The charts below provide a breakdown of total assets of $7.6 billion as of December 31, 2015 and revenue of $6.8 billion for the year ended December 31, 2015 by operating segment and region.(1)

GRAPHIC

GRAPHIC

   


(1)
We have made acquisitions within our industrials business in 2015 that are not fully reflected in revenues for the period presented, including the acquisition of our graphite electrode production operations in August 2015. In addition, we equity account for our Western Australia oil and gas operations, which were acquired in June 2015, therefore total revenues do not include revenues from these assets for the entire period presented.

 

8


 

        We seek to enhance the value of our operations by focusing on profitability, sustainable operating, product margins and cash flows. We look to ensure that each of our businesses has a clear, concise business strategy built on its competitive advantages. We emphasize downside protection by utilizing business plans that do not rely exclusively on top-line growth or excessive leverage.

        We plan to grow by acquiring positions of control or significant influence in businesses at attractive valuations and by enhancing earnings of the businesses we operate. In addition to pursuing accretive acquisitions within our current platforms, we will opportunistically pursue transactions to build new platforms or make investments where our expertise, or the broader Brookfield platforms, provide insight into global demand for goods and commodities to source acquisitions that are not available or obvious to competitors. We may partner with others, primarily institutional capital, to make acquisitions that we may not otherwise be able to make on our own. Accordingly, an integral part of our strategy is to participate with institutional investors in Brookfield sponsored or co-sponsored consortiums for single asset acquisitions and as a partner in or alongside Brookfield sponsored or co-sponsored partnerships that target acquisitions that suit our profile. Brookfield has a strong track record of leading such consortiums and partnerships and actively managing underlying assets to improve performance. Brookfield has agreed that it will not sponsor such arrangements that are suitable for us in the business services and industrial sectors unless we are given an opportunity to participate.

        See "Business" for further detail.

Management

        Our general partner is an indirect, wholly-owned subsidiary of Brookfield Asset Management. In addition, the Service Providers, also wholly-owned subsidiaries of Brookfield Asset Management, will provide management services to us pursuant to our Master Services Agreement. The senior management team that will be principally responsible for providing us with management services includes many of the same executives that have successfully overseen and grown the Business, including Cyrus Madon who is a Senior Managing Partner of Brookfield Asset Management and the Head of its Private Equity Group. See "Management and Our Master Services Agreement" for further details.

About Brookfield Asset Management

        Brookfield Asset Management is a global alternative asset manager with over $225 billion in assets under management. It has over a 100-year history of owning and operating real assets with a focus on property, renewable energy, infrastructure and private equity. Brookfield has a range of public and private investment products and services. Brookfield Asset Management is listed on the NYSE under the symbol "BAM", on the TSX under the symbol "BAM.A" and on the NYSE Euronext under the symbol "BAMA". See "Management and Our Master Services Agreement — About Brookfield" for further details.

        It is currently anticipated that, immediately following the spin-off, Brookfield will hold a combination of our units, general partnership units, Redemption-Exchange Units and Special LP Units representing an effective equity interest in our company of approximately 78%. Brookfield expects its interest to be reduced from this level over time through mergers, treasury issuances or secondary sales.

Stock Exchange Listings

        Our company has been approved to list its units on the NYSE, under the symbol "BBU" and on TSX under the symbol "BBU.UN". Listing of our units on the TSX is subject to our company fulfilling all of the requirements of the TSX.

 

9


 

The Spin-Off

        The spin-off is intended to achieve the following objectives for Brookfield:

    Create a company with significant market capitalization that will provide an attractive currency to source and execute large-scale transactions outside of property, renewable energy and infrastructure, thereby broadening the spectrum of opportunities available to Brookfield.

    Delineate and emphasize the scale and value of our business services and industrial operations for shareholders of Brookfield Asset Management.

    Provide greater transparency for Brookfield as a global alternative asset manager.

        See "The Spin-Off — Background to and Purpose of the Spin-Off" for further details.

 

10


 

Ownership and Organizational Structure

        The chart below represents a simplified summary of our organizational structure. All ownership interests indicated below are 100% unless otherwise indicated. "GP Interest" denotes a general partnership interest and "LP Interest" denotes a limited partnership interest. Certain subsidiaries through which Brookfield Asset Management holds units of our company and the Redemption-Exchange Units have been omitted.

GRAPHIC


(1)
It is currently anticipated that public holders of our units will own approximately 45% of our units and Brookfield will own approximately 55% of our units upon completion of the spin-off. Our company's sole direct investment will be a managing general partnership interest in the Holding LP. Brookfield will also own a limited partnership interest in the Holding LP through Brookfield's

 

11


 

    ownership of Redemption-Exchange Units and Special LP Units. The Redemption-Exchange Units are redeemable for cash or exchangeable for our units in accordance with the Redemption-Exchange Mechanism, which could result in Brookfield owning approximately 78% of the units of our company issued and outstanding on a fully exchanged basis. On a fully exchanged basis, public holders of our units would own approximately 22% of the units of our company issued and outstanding. Brookfield's interest in our company on the closing date of the spin-off will consist of a combination of our units and general partner interests, the Redemption-Exchange Units and the Special LP Units. The Special LP units will entitle the holder to receive incentive distributions. See "Relationship with Brookfield — Incentive Distributions". The BBP General Partner intends to adopt a distribution policy pursuant to which our company intends to make quarterly cash distributions to public holders of our units. In general, quarterly cash distributions by the company will be made from distributions received by the company on its Managing General Partner Units. Distributions of available cash (if any) by the Holding LP will be made in accordance with the Holding LP Limited Partnership Agreement, which generally provides for distributions to be made by the Holding LP to all owners of the Holding LP's partnership interests (including the Managing General Partner Units owned by us and the Special LP Units and Redemption-Exchange Units owned by Brookfield) on a pro rata basis. Immediately after the spin-off, our company will own approximately 44 million Managing General Partner Units and Brookfield will own approximately 46 million Redemption-Exchange Units and four Special LP Units. However, if available cash in a quarter is not sufficient to pay the quarterly distribution amount, currently expected to be $0.0625 per unit, to the owners of all the Holding LP interests, then the company can elect to defer distributions on the Redemption-Exchange Units and accrue such deficiency for payment from available cash in future quarters. See "Distribution Policy" and "Description of the Holding LP Limited Partnership Agreement — Distributions".

(2)
The Holding LP will own, directly or indirectly, all of the equity interests of the Holding Entities. Brookfield will subscribe for $5 million of preferred shares of CanHoldco and two of our other subsidiaries, which preferred shares will be entitled to vote with the equity interests of the applicable entity. Brookfield will have an aggregate of 1% of the votes to be cast in respect of each of the applicable entities. See "Relationship with Brookfield — Preferred Shares of Certain Holding Entities".
(3)
Certain of the operating businesses and intermediate holding companies that will be directly or indirectly owned by the Holding Entities and that will directly or indirectly hold our operating businesses are not shown on the chart. All percentages listed represent our equity interest in the applicable entity or group of assets, which may not be the same as our voting interest in those entities and groups of assets. All interests are rounded to the nearest one percent and are calculated as of the date of this prospectus. See "Ownership and Organizational Structure" for additional information.

Our Current Operations

        Our business services operations are comprised principally of construction services, including construction management and contracting services and residential real estate services and facilities management.

        Our construction services business is a leading international contractor with a focus on high-quality construction, primarily on large-scale, complex landmark buildings and social infrastructure. Founded in Perth, Australia in 1962, our construction services business was acquired by Brookfield as part of the privatization of Multiplex Group in 2007. Some of our landmark projects include One St. George Wharf in London, King Street Wharf in Sydney and Emirates Towers in Dubai. Today, we operate in Australia, Europe and the Middle East across a broad range of sectors, including: commercial, residential, social infrastructure, retail and mixed use properties.

        In addition to construction services, we provide a variety of other business services, principally related to residential real estate and facilities management, where the broader Brookfield platform provides a competitive advantage. Our focus is on building high-quality platforms where quality of service and/or a global footprint are competitive differentiators. In keeping with our overall strategy, we seek to pursue accretive acquisitions to grow our existing platforms and create new ones and to opportunistically make investments where our operating footprint provides us with an advantage in doing so.

        Our industrial operations leverage the history and pedigree of Brookfield as an owner and operator of capital intensive and/or commodity-related businesses. Our industrial operations were built using the acquisition strategy that we have adopted for our business generally and is comprised principally of Canadian oil and gas exploration and production, principally through our coal-bed methane, or CBM, platform in Alberta, Canada; Western Australia oil and gas exploration and production; specialty metal and aggregates mining operations in Canada and select industrial manufacturing operations comprised principally of the global production of graphite electrodes, the manufacturing of infrastructure support products such as pre-cast concrete products and corrugated pipe and other drainage products in Canada and the manufacturing of bath and shower products in North America.

 

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Our Growth Strategy

        We seek to build value through enhancing the cash flows of our businesses, pursuing an operations-oriented acquisition strategy and opportunistically recycling capital generated from operations and dispositions into our existing platforms, new acquisitions and investments. We look to ensure that each of our businesses has a clear, concise business strategy built on its competitive advantages, while focusing on profitability, sustainable operating product margins and cash flows. We emphasize downside protection by utilizing business plans that do not rely exclusively on top-line growth or excessive leverage.

        We plan to grow by acquiring positions of control or significant influence in businesses at attractive valuations and by enhancing earnings of the businesses we operate. In addition to pursuing accretive acquisitions within our current operations, we plan to opportunistically build new platforms or make investments where our expertise, or the broader Brookfield platforms, provide insight into global demand for goods and commodities to source acquisitions that are not available or obvious to competitors.

        We offer a long-term ownership structure to companies whose management teams are seeking additional sources of capital but prefer not to be public as a standalone business. From time to time, we will recycle capital opportunistically, but we will have the ability to own and operate businesses for the long-term.

        Consistent with Brookfield's history as an owner/operator, our strategy is to:

    build and operate businesses with sustainable cash flows to reduce risk and lower the cost of capital;

    utilize an active management approach focused on strategic, operational and/or financial improvements;

    acquire businesses on a value basis; deploying contrarian thinking to target out-of-favor sectors; and

    make direct acquisitions or add-on acquisitions within existing platforms and/or sectors where we believe we possess competitive advantages.

        In addition, we may make opportunistic investments in private and public securities of businesses where we can leverage our operating footprint or the broader Brookfield platform to provide us with a competitive advantage.

Distribution Policy

        The BBP General Partner will have sole authority to determine whether our company will make distributions and the amount and timing of these distributions. The BBP General Partner intends to adopt a distribution policy pursuant to which our company intends to make quarterly cash distributions in an initial amount currently anticipated to be $0.25 per unit on an annualized basis. The level of distributions is not intended to grow as our company intends to reinvest its capital.

        Our ability to make distributions will depend on several factors, some of which are out of our control, including, among other things, general economic conditions, our results of operations and financial condition, the amount of cash that is generated by our operations, restrictions imposed by the terms of any indebtedness that is incurred to finance our operations and acquisitions or to fund liquidity needs, levels of operating and other expenses and contingent liabilities.

        See "Distribution Policy" for further detail.

Management Fee and Incentive Distributions

        Pursuant to our Master Services Agreement, we pay a quarterly base management fee to the Service Providers equal to 0.3125% (1.25% annually) of the total capitalization of our company. For purposes of calculating the base management fee, the total capitalization of our company is equal to the quarterly volume-weighted average trading price of a unit on the principal stock exchange for our units (based on trading volumes) multiplied by the number of units outstanding at the end of the quarter (assuming full conversion of the Redemption-Exchange Units into units), plus the value of securities of the other Service Recipients that are not held by us, plus all outstanding third party debt with recourse to a Service Recipient, less all cash held by such entities. See "Management and Our Master Services Agreement" for further detail.

 

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        As a result of holding Special LP Units, Brookfield will be entitled to receive from Holding LP incentive distributions calculated as (a) 20% of the growth in the market value of our units quarter-over-quarter (but only after the market value exceeds the "Incentive Distribution Threshold" being initially $25.00 and adjusted at the beginning of each quarter to be equal to the greater of (i) our unit's market value for the previous quarter and (ii) the Incentive Distribution Threshold at the end of the previous quarter) multiplied by (b) the number of units outstanding at the end of the quarter (assuming full conversion of the Redemption-Exchange Units into units). For the purposes of calculating incentive distributions, the market value of our units will be equal to the quarterly volume-weighted average price of our units on the principal stock exchange for our units (based on trading volumes). The incentive distribution amount, if any, will be calculated at the end of each calendar quarter and paid concurrently with any other distributions by Holding LP in accordance with the Holding LP Limited Partnership Agreement. The Incentive Distribution Threshold will be adjusted in accordance with the Holding LP Limited Partnership Agreement in the event of transactions with a dilutive effect on the value of the units, including any quarterly cash distribution above the initial amount of $0.0625/unit. For any quarter in which our company determines that there is insufficient cash to pay the incentive distribution, our company may elect to pay all or a portion of this distribution in Redemption-Exchange Units or may elect to defer all or a portion of the amount distributable for payment from available cash in future quarters. See "Description of the Holding LP Limited Partnership Agreement — Distributions" for further detail.

Governance

        The BBP General Partner, a wholly-owned subsidiary of Brookfield Asset Management, has sole authority for the management and control of our company. Our units are non-voting limited partnership units in our company, and holders of our units, in their capacities as such, may not take part in the management or control of the activities and affairs of our company. As well, they are not entitled to vote on the election of the directors of the BBP General Partner or the appointment of our auditors or other matters relating to our company, and do not have any right or authority to act for or to bind our company, to take part in or interfere with the conduct or management of our company. A holder of our units will not have statutory rights normally associated with ownership of shares of a corporation. The rights of holders of our units are based on our Limited Partnership Agreement. There is no statute governing the affairs of our company equivalent to the Canada Business Corporations Act, or the CBCA, or the Delaware General Corporation Law which sets out the rights and entitlements of shareholders of corporations in various circumstances. Holders of our units do have consent rights with respect to certain fundamental matters and related party transactions. Each unit entitles the holder thereof to one vote for the purposes of any approvals required of holders of units. See "Description of Our Units and Our Limited Partnership Agreement" and "Canadian Securities Law Exemptions" for further detail.

        Prior to completion of the spin-off, the BBP General Partner's board of directors will be expanded to seven (7) directors, a majority of whom will be independent. John Lacey will serve as the lead independent director immediately following completion of the spin-off. The lead independent director's primary role will be to facilitate the functioning of the board (independently of the Service Providers and Brookfield), and to maintain and enhance the quality of our company's corporate governance practices. The lead independent director will preside over the private sessions of the independent directors of BBP's General Partner that will take place following each meeting of the board and convey the results of these meetings to the chair of the board. In addition, the lead independent director will be available, when appropriate, for consultation and direct communication with unitholders or other stakeholders of our company. Going forward, the lead independent director will be selected by the BBP General Partner's directors from among the independent directors.

        The audit committee and the governance and nominating committee of the BBP General Partner's board of directors will consist solely of independent directors. See "Governance" for further detail.

        The BBP General Partner's directors will be required to hold, within five (5) years of joining the board, units of our company with an acquisition cost equal to at least two times the directors' annual retainer. Directors are required to purchase units on an annual basis in an amount not less than 20% of this unit ownership requirement until this requirement is met.

 

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Relationship with Brookfield

        We will enter into an agreement, referred to as the Relationship Agreement, under which Brookfield Asset Management has agreed that we will serve as the primary entity through which Brookfield will own and operate its business services and industrial operations. Brookfield Asset Management has agreed that it will offer our company the opportunity to take up Brookfield's share of any acquisition through consortium arrangements, partnerships or by other entities that involves the acquisition of business services and industrial operations that are suitable for us, subject to certain limitations. See "Relationship with Brookfield" for further detail.

Certain Tax Considerations

        For Canadian and United States federal income tax purposes, a holder who receives our units pursuant to the spin-off generally will be considered to have received a taxable dividend in an amount equal to the fair market value of the gross amount of our units so received plus the amount of any cash received in lieu of fractional units, without reduction for any tax withheld (including any units withheld to satisfy withholding tax obligations). For further detail on the United States and Canadian federal income tax consequences of the receipt, holding and disposition of our units, see "Material Tax Considerations", which qualifies in its entirety the following discussion.

        Holders who are not resident in Canada will be subject to Canadian federal withholding tax at the rate of 25% on the amount of the special dividend received as a result of the spin-off, subject to reduction under the terms of an applicable income tax treaty or convention. To satisfy this withholding tax liability, Brookfield will withhold a portion of our units, and a portion of any cash distribution in lieu of fractional units, otherwise distributable. See "Material Tax Considerations — Canadian Federal Income Tax Considerations — Taxation of Non-Canadian Limited Partners" for further detail.

        Each of our company and the Holding LP will make a protective election to be classified as a partnership for U.S. federal tax purposes. An entity that is treated as a partnership for U.S. federal tax purposes incurs no U.S. federal income tax liability. Instead, each partner is required to take into account its allocable share of items of income, gain, loss, deduction, or credit of the partnership in computing its U.S. federal income tax liability, regardless of whether cash distributions are made. Distributions of cash by a partnership to a partner generally are not taxable unless the amount of cash distributed to a partner is in excess of the partner's adjusted basis in its partnership interest. You should refer to "Material Tax Considerations — U.S. Tax Considerations" for further detail on the United States federal income tax consequences of the receipt, holding and disposition of our units.

        Generally, our company and the Holding LP will incur no Canadian federal income tax liability, other than Canadian federal withholding taxes. A Canadian resident partner of our company must report in its Canadian federal income tax return, and will be subject to tax in respect of its share of each item of our company's income, gain, loss, deduction and credit for each fiscal period of our company ending in, or coincidentally with, its taxation year, even if the partner receives no distributions from our company in such taxation year. If you are a resident of Canada, you should refer to "Material Tax Considerations — Canadian Federal Income Tax Considerations — Taxation of Canadian Resident Limited Partners" for further detail on the Canadian federal income tax consequences of the receipt, holding and disposition of our units. If you are not a resident of Canada, you should refer to "Material Tax Considerations — Canadian Federal Income Tax Considerations — Taxation of Non-Canadian Limited Partners" for the Canadian federal income tax consequences of the receipt, holding and disposition of our units.

        See "Material Tax Considerations" for further detail.

Corporate Information

        Our company's principal and registered office is at 73 Front Street, 5th Floor, Hamilton HM 12, Bermuda. Our company does not directly own any real property. Our telephone number is +441 294-3304.

Risk Factors

        We are subject to a number of risks of which you should be aware. For a discussion of factors you should consider, we direct you to the risks described under the heading "Risk Factors".

 

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Summary of Selected Financial Information

        The following tables present selected financial data for the Business and should be read in conjunction with the combined carve-out financial statements of our company included elsewhere in this prospectus. The selected financial data for the Business as of December 31, 2015 and December 31, 2014 and for each of the years in the three years ended December 31, 2015 are derived from the combined carve-out financial statements of our company which are included elsewhere in this prospectus. The selected financial data for the Business as of December 31, 2013 and for the year ended December 31, 2012 are derived from combined carve-out financial statements of our company that are not included in this prospectus. The information included in this section should also be read in conjunction with our unaudited condensed combined pro forma financial statements, or Unaudited Pro Forma Financial Statements, as of December 31, 2015 and for the year ended December 31, 2015, included elsewhere in this prospectus. Presentation of selected financial information as of December 31, 2012 and December 31, 2011 and for the fiscal period ended December 31, 2011 has not been provided due to the fact that the entities which comprise the combined carve-out financial statements had not existed as a combined standalone entity and could not be provided without unreasonable effort or expense.

 
  Year Ended December 31,  
(US$ Millions)
  2015   2014   2013   2012  

Statement of Operating Results Data

                         

Revenues

  $ 6,753   $ 4,622   $ 4,884   $ 4,912  

Direct operating costs

    (6,132 )   (4,099 )   (4,440 )   (4,433 )

General and administrative expenses

    (224 )   (179 )   (199 )   (212 )

Depreciation and amortization expense

    (257 )   (147 )   (125 )   (117 )

Interest expense

    (65 )   (28 )   (27 )   (29 )

Equity accounted income, net

    4     26     26     14  

Impairment expense, net

    (95 )   (45 )   (4 )   (72 )

Gain on acquisitions and dispositions

    269         101     67  

Other income (expense), net

    70     13     (4 )   (20 )
                   

Income before income tax

    323     163     212     110  
                   

Current income tax (expense)

    (49 )   (27 )   (43 )   (35 )

Deferred income tax (expense)/recovery

    (5 )   9     45     5  
                   

Net income

  $ 269   $ 145   $ 214   $ 80  
                   

Net income attributable to parent company

  $ 208   $ 93   $ 184   $ 128  

Net income (loss) attributable to non-controlling interests

  $ 61   $ 52   $ 30   $ (48 )
                   

 

(US$ Millions)
  December 31,
2015
  December 31,
2014
  December 31,
2013
 

Statement of Financial Position Data

                   

Cash

  $ 354   $ 163   $ 195  

Total assets

    7,635     4,405     4,205  

Borrowings

    2,074     808     637  

Equity in net assets attributable to parent company

   
1,787
   
1,500
   
1,651
 

Non-controlling interests

    1,297     635     580  
               

Total equity in net assets

  $ 3,084   $ 2,135   $ 2,231  
               

 

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RISK FACTORS

        You should carefully consider the following factors in addition to the other information set forth in this prospectus. If any of the following risks actually occur, our business, financial condition and results of operations and the value of our units would likely suffer.

Risks Relating to Us and Our Company

Our company is a newly formed partnership with no separate operating history and the historical and pro forma financial information included herein does not reflect the financial condition or operating results we would have achieved during the periods presented, and therefore may not be a reliable indicator of our future financial performance.

        Our company was formed on January 18, 2016 and has only recently commenced its activities and has not generated any significant net income to date. Our lack of operating history will make it difficult to assess our ability to operate profitably and make distributions to unitholders. Although most of our assets and operating businesses have been under Brookfield's control prior to the formation of our company, their combined results have not previously been reported on a stand-alone basis and the historical and pro forma financial statements included in this prospectus may not be indicative of our future financial condition or operating results. We urge you to carefully consider the basis on which the historical and pro forma financial information included herein was prepared and presented.

The completion of new acquisitions can have the effect of significantly increasing the scale and scope of our operations, including operations in new geographic areas and industry sectors, and the Service Providers may have difficulty managing these additional operations. In addition, acquisitions involve risks to our business.

        A key part of our company's strategy involves seeking acquisition opportunities. For example, a number of our current operations have only recently been acquired in the past three years, including some since June 30, 2015. Acquisitions may increase the scale, scope and diversity of our operating businesses. We depend on the diligence and skill of Brookfield's and our professionals to effectively manage us, integrating acquired businesses with our existing operations. These individuals may have difficulty managing additional acquired businesses and may have other responsibilities within Brookfield's asset management business. If any such acquired businesses are not effectively integrated and managed, our existing business, financial condition and results of operations may be adversely affected.

        Future acquisitions will likely involve some or all of the following risks, which could materially and adversely affect our business, financial condition or results of operations: the difficulty of integrating the acquired operations and personnel into our current operations; potential disruption of our current operations; diversion of resources, including Brookfield's time and attention; the difficulty of managing the growth of a larger organization; the risk of entering markets in which we have little experience; the risk of becoming involved in labour, commercial or regulatory disputes or litigation related to the new enterprise; risk of environmental or other liabilities associated with the acquired business; and the risk of a change of control resulting from an acquisition triggering rights of third parties or government agencies under contracts with, or authorizations held by the operating business being acquired. While it is our practice to conduct extensive due diligence investigations into businesses being acquired, it is possible that due diligence may fail to uncover all material risks in the business being acquired, or to identify a change of control trigger in a material contract or authorization, or that a contractual counterparty or government agency may take a different view on the interpretation of such a provision to that taken by us, thereby resulting in a dispute.

We may acquire distressed companies and these acquisitions may subject us to increased risks, including the incurrence of additional legal or other expenses.

        As part of our acquisition strategy, we may acquire distressed companies. This could involve acquisitions of securities of companies in event-driven special situations, such as acquisitions, tender offers, bankruptcies, recapitalizations, spinoffs, corporate and financial restructurings, litigation or other liability impairments, turnarounds, management changes, consolidating industries and other catalyst-oriented situations. Acquisitions of this type involve substantial financial and business risks that can result in substantial or total losses. Among the problems involved in assessing and making acquisitions in troubled issuers is the fact that it frequently may

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be difficult to obtain information as to the condition of such issuer. If, during the diligence process, we fail to identify issues specific to a company or the environment in which the company operates, we may be forced to later write down or write off assets, restructure our operations, or incur impairment or other charges that may result in other reporting losses.

        As a consequence of our company's role as an acquirer of distressed companies, we may be subject to increased risk of incurring additional legal, indemnification or other expenses, even if we are not named in any action. In distressed situations, litigation often follows when disgruntled shareholders, creditors and other parties seek to recover losses from poorly performing investments. The enhanced litigation risk for distressed companies is further elevated by the potential that Brookfield or our company may have controlling or influential positions in these companies.

We operate in a highly competitive market for acquisition opportunities.

        Our acquisition strategy is dependent to a significant extent on Brookfield's ability to identify acquisition opportunities that are suitable for us. We face competition for acquisitions primarily from investment funds, operating companies acting as strategic buyers, commercial and investment banks and commercial finance companies. Many of these competitors are substantially larger and have considerably greater financial, technical and marketing resources than are available to us. Some of these competitors may also have higher risk tolerances or different risk assessments, which could allow them to consider a wider variety of acquisitions and to offer terms that we are unable or unwilling to match. To finance our acquisitions, we will need to compete for equity capital from institutional investors and other equity providers, including Brookfield, and our ability to consummate acquisitions will be dependent on such capital continuing to be available. Increases in interest rates could also make it more difficult to consummate acquisitions because our competitors may have a lower cost of capital, which may enable them to bid higher prices for assets. In addition, because of our affiliation with Brookfield, there is a higher risk that when we participate with Brookfield and others in joint ventures, partnerships and consortiums on acquisitions, we may become subject to antitrust or competition laws that we would not be subject to if we were acting alone. These factors may create competitive disadvantages for us with respect to acquisition opportunities.

        We cannot provide any assurance that the competitive pressures we face will not have a material adverse effect on our business, financial condition and results of operations or that Brookfield will be able to identify and make acquisitions on our behalf that are consistent with our objectives or that generate attractive returns for our unitholders. We may lose acquisition opportunities in the future if we do not match prices, structures and terms offered by competitors, if we are unable to access sources of equity or obtain indebtedness at attractive rates or if we become subject to antitrust or competition laws. Alternatively, we may experience decreased rates of return and increased risks of loss if we match prices, structures and terms offered by competitors.

We use leverage and such indebtedness may result in our company, the Holding LP or our operating businesses being subject to certain covenants which restrict our ability to engage in certain types of activities or to make distributions to equity.

        Many of our Holding Entities and operating businesses have entered into credit facilities or have incurred other forms of debt, including for acquisitions. The total quantum of exposure to debt within our company is significant, and we may become more leveraged in the future.

        Leveraged assets are more sensitive to declines in revenues, increases in expenses and interest rates and adverse economic, market and industry developments. A leveraged company's income and net assets also tend to increase or decrease at a greater rate than would otherwise be the case if money had not been borrowed. As a result, the risk of loss associated with a leveraged company, all other things being equal, is generally greater than for companies with comparatively less debt. In addition, the use of indebtedness in connection with an acquisition may give rise to negative tax consequences to certain investors. Leverage may also result in a requirement for short-term liquidity, which may force the sale of assets at times of low demand and/or prices for such assets. This may mean that we are unable to realize fair value for the assets in a sale.

        Our credit facilities also contain, and will contain in the future, covenants applicable to the relevant borrower and events of default. Covenants can relate to matters including limitations on financial indebtedness,

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dividends, acquisitions, or minimum amounts for interest coverage, adjusted EBITDA, cash flow or net worth. If an event of default occurs, or minimum covenant requirements are not satisfied, this can result in a requirement to immediately repay any drawn amounts or the imposition of other restrictions including a prohibition on the payment of distributions to equity.

Our company is a holding entity and currently we rely on the Holding LP and, indirectly, the Holding Entities and our operating businesses to provide us with the funds necessary to meet our financial obligations.

        Our company is a holding entity and its material assets consist solely of interests in the Holding Entities, through which we hold all of our interests in our operating businesses. Our company has no independent means of generating revenue. As a result, we depend on distributions and other payments from the Holding LP and, indirectly, the Holding Entities and our operating businesses to provide us with the funds necessary to meet our financial obligations. The Holding LP, the Holding Entities and our operating businesses are legally distinct from us and some of them are or may become restricted in their ability to pay dividends and distributions or otherwise make funds available to us pursuant to local law, regulatory requirements and their contractual agreements, including agreements governing their financing arrangements. Any other entities through which we may conduct operations in the future will also be legally distinct from us and may be similarly restricted in their ability to pay dividends and distributions or otherwise make funds available to us under certain conditions. The Holding LP, the Holding Entities and our operating businesses will generally be required to service their debt obligations before making distributions to us or their parent entities, as applicable, thereby reducing the amount of our cash flow available to our company to meet our financial obligations.

        Our company anticipates that the only distributions that it will receive in respect of our company's managing general partnership interests in the Holding LP will consist of amounts that are intended to assist our company to pay expenses as they become due and to make distributions to our unitholders in accordance with our company's distribution policy.

We may be subject to the risks commonly associated with a separation of economic interest from control or the incurrence of debt at multiple levels within an organizational structure.

        Our ownership and organizational structure is similar to structures whereby one company controls another company which in turn holds controlling interests in other companies; thereby, the company at the top of the chain may control the company at the bottom of the chain even if its effective equity position in the bottom company is less than a controlling interest. Brookfield is the sole shareholder of the BBP General Partner and, as a result of such ownership of the BBP General Partner, Brookfield is able to control the appointment and removal of the BBP General Partner's directors and, accordingly, exercises substantial influence over us. In turn, we often have a majority controlling interest or a significant influence in our operating businesses. Although Brookfield expects to have upon completion of the spin-off an effective equity interest in our business of approximately 78% as a result of ownership of our units, general partnership units, Redemption-Exchange Units and Special LP Units, over time Brookfield may reduce this interest while still maintaining its controlling interest, and, therefore, Brookfield may use its control rights in a manner that conflicts with the interests of our other unitholders. For example, despite the fact that we have a conflicts protocol in place, which addresses the requirement for independent approval and other requirements for transactions in which there is greater potential for a conflict of interest to arise, including transactions with affiliates of Brookfield, because Brookfield will be able to exert substantial influence over us, and, in turn, over our operating businesses, there is a greater risk of transfer of assets at non-arm's length values to Brookfield and its affiliates. In addition, debt incurred at multiple levels within the chain of control could exacerbate the separation of economic interest from controlling interest at such levels, thereby creating an incentive to leverage us and our operating businesses. Any such increase in debt would also make us more sensitive to declines in revenues, increases in expenses and interest rates and adverse market conditions. The servicing of any such debt would also reduce the amount of funds available to pay distributions to us and ultimately to our unitholders and could reduce total returns to unitholders.

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We may not be able to access the credit and capital markets at the times and in the amounts needed to satisfy capital expenditure requirements, to fund new acquisitions or otherwise.

        General economic and business conditions that impact the debt or equity markets could impact the availability of credit to, and cost of credit for us. We have revolving credit facilities and other short-term borrowings. The amount of interest charged on these will fluctuate based on changes in short-term interest rates. Any economic event that affects interest rates or the ability to refinance borrowings could materially adversely impact our financial condition.

        Some of our operations require significant capital expenditure. If we are unable to generate enough cash to finance necessary capital expenditures through operating cash flow, then we may be required to issue additional equity or incur additional indebtedness. The issue of additional equity would be dilutive to existing unitholders at the time. Any additional indebtedness would increase our leverage and debt payment obligations, and may negatively impact our business, financial condition and results of operations.

        In addition, in connection with our formation and the contribution of the Business to our company, Brookfield will receive approximately 46 million Redemption-Exchange Units. At any time after two years from the date of the spin-off, the holders of Redemption-Exchange Units will have the right to require the Holding LP to redeem all or a portion of the Redemption-Exchange Units for cash, subject to our company's right to acquire such interests (in lieu of redemption) in exchange for our units. Although the decision to exercise the exchange right and deliver units (or not to do so) is a decision that will be made solely by a majority of our independent directors, and therefore Brookfield will not be able to prevent us from delivering units in satisfaction of the redemption request, if our independent directors did not determine to satisfy the redemption request by delivering our units, we would be required to satisfy such redemption request using cash. To the extent we were unable to fund such cash payment from operating cash flow, we may be required to incur indebtedness or otherwise access the capital markets, including through the issuance of our units, to satisfy any shortfall which will depend on several factors, some of which are out of our control, including, among other things, general economic conditions, our results of operations and financial condition, restrictions imposed by the terms of any indebtedness that is incurred to finance our operations or to fund liquidity needs, levels of operating and other expenses and contingent liabilities.

        Our business relies on continued access to capital to fund new acquisitions and capital projects. While we aim to prudently manage our capital requirements and ensure access to capital is always available, it is possible we may overcommit ourselves or misjudge the requirement for capital or the availability of capital. Such a misjudgment could result in negative financial consequences or in extreme cases bankruptcy.

Changes in our credit ratings may have an adverse effect on our financial position and ability to raise capital.

        We cannot assure you that any credit rating assigned to us or any of our subsidiaries or their debt securities will remain in effect for any given period of time or that any rating will not be lowered or withdrawn entirely by the relevant rating agency. A lowering or withdrawal of such ratings may have an adverse effect on our financial position and ability to raise capital.

We are subject to foreign currency risk and our use of or failure to use derivatives to hedge certain financial positions may adversely affect the performance of our operations.

        A significant portion of our current operations are in countries where the U.S. dollar is not the functional currency. These operating businesses pay distributions in currencies other than the U.S. dollar, which we must convert to U.S. dollars prior to making distributions, and certain of our operating businesses have revenues denominated in currencies different from U.S. dollars, which is utilized in our financial reporting, thus exposing us to currency risk. Fluctuations in currency exchange rates or a significant depreciation in the value of certain foreign currencies could reduce the value of cash flows generated by our operating businesses or could make it more expensive for our customers to purchase our services, and could have a material adverse effect on our business, financial condition and results of operations.

        When managing our exposure to such market risks, we may use forward contracts, options, swaps, caps, collars and floors or pursue other strategies or use other forms of derivative instruments. However, a significant

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portion of this risk may remain unhedged. We may also choose to establish unhedged positions in the ordinary course of business. The success of any hedging or other derivative transactions that we enter into generally will depend on our ability to structure contracts that appropriately offset our risk position. As a result, while we may enter into such transactions in order to reduce our exposure to market risks, unanticipated market changes may result in poorer overall investment performance than if the derivative transaction had not been executed. Such transactions may also limit the opportunity for gain if the value of a hedged position increases.

        The Dodd-Frank Wall Street Reform and Consumer Protection Act, or the Dodd-Frank Act, and similar laws in other jurisdictions impose rules and regulations governing federal and other governmental oversight of the over-the-counter derivatives market and its participants. These regulations may impose additional costs and regulatory scrutiny on our company. We cannot predict the effect of changing derivatives legislation on our hedging costs, our hedging strategy or its implementation, or the composition of the risks we hedge.

Our company is not, and does not intend to become, regulated as an investment company under the Investment Company Act of 1940, or the Investment Company Act (and similar legislation in other jurisdictions) and if our company were deemed an "investment company" under the Investment Company Act, applicable restrictions could make it impractical for us to operate as contemplated.

        The Investment Company Act (and similar legislation in other jurisdictions) provides certain protections to investors and imposes certain restrictions on companies that are required to be regulated as investment companies. Among other things, such rules limit or prohibit transactions with affiliates, impose limitations on the issuance of debt and equity securities and impose certain governance requirements. Our company has not been and does not intend to become regulated as an investment company and our company intends to conduct its activities so it will not be deemed to be an investment company under the Investment Company Act (and similar legislation in other jurisdictions). In order to ensure that we are not deemed to be an investment company, we may be required to materially restrict or limit the scope of our operations or plans. We will be limited in the types of acquisitions that we may make, and we may need to modify our organizational structure or dispose of assets which we would not otherwise dispose. Moreover, if anything were to happen which causes our company to be deemed an investment company under the Investment Company Act, it would be impractical for us to operate as contemplated. Agreements and arrangements between and among us and Brookfield would be impaired, the type and number of acquisitions that we would be able to make as a principal would be limited and our business, financial condition and results of operations would be materially adversely affected. Accordingly, we would be required to take extraordinary steps to address the situation, such as the amendment or termination of our Master Services Agreement, the restructuring of our company and the Holding Entities, the amendment of our Limited Partnership Agreement or the dissolution of our company, any of which could materially adversely affect the value of our units. In addition, if our company were deemed to be an investment company under the Investment Company Act, it would be taxable as a corporation for U.S. federal income tax purposes, and such treatment could materially adversely affect the value of our units.

Our company is expected to be a "SEC foreign issuer" under Canadian securities regulations and a "foreign private issuer" under U.S. securities law. Therefore, we will be exempt from certain requirements of Canadian securities laws and from requirements applicable to U.S. domestic registrants listed on the NYSE.

        Although our company will become a reporting issuer in Canada, we expect we will be an "SEC foreign issuer" and exempt from certain Canadian securities laws relating to disclosure obligations and proxy solicitation, subject to certain conditions. Therefore, there may be less publicly available information in Canada about our company than would be available if we were a typical Canadian reporting issuer.

        Although our company is subject to the periodic reporting requirement of the U.S. Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder, or Exchange Act, the periodic disclosure required of foreign private issuers under the Exchange Act is different from periodic disclosure required of U.S. domestic registrants. Therefore, there may be less publicly available information about our company than is regularly published by or about other public limited partnerships in the United States. Our company is exempt from certain other sections of the Exchange Act to which U.S. domestic issuers are subject, including the requirement to provide our unitholders with information statements or proxy statements that comply with the Exchange Act. In addition, insiders and large unitholders of our company are not obligated to

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file reports under Section 16 of the Exchange Act, and we will be permitted to follow certain home country corporate governance practices instead of those otherwise required under the NYSE Listed Company Manual for domestic issuers. We currently intend to follow the same corporate practices as would be applicable to U.S. domestic limited partnerships. However, we may in the future elect to follow our home country law for certain of our corporate governance practices, as permitted by the rules of the NYSE, in which case our unitholders would not be afforded the same protection as provided under NYSE corporate governance standards. Following our home country governance practices as opposed to the requirements that would otherwise apply to a U.S. domestic limited partnership listed on the NYSE may provide less protection than is accorded to investors of U.S. domestic issuers.

Our failure to maintain effective internal controls could have a material adverse effect on our business in the future and the price of our units.

        As a public company, we will be subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, and stock exchange rules promulgated in response to the Sarbanes-Oxley Act. A number of our current operating subsidiaries are and potential future acquisitions will be private companies and their systems of internal controls over financial reporting may be less developed as compared to public company requirements. Any failure to maintain adequate internal controls over financial reporting or to implement required, new or improved controls, or difficulties encountered in their implementation, could cause material weaknesses or significant deficiencies in our internal controls over financial reporting and could result in errors or misstatements in our consolidated financial statements that could be material. If we or our independent registered public accounting firm were to conclude that our internal controls over financial reporting were not effective, investors could lose confidence in our reported financial information and the price of our units could decline. Our failure to achieve and maintain effective internal controls could have a material adverse effect on our business, our ability to access capital markets and investors' perception of us. In addition, material weaknesses in our internal controls could require significant expense and management time to remediate.

Risks Relating to Our Units

Our units have never been publicly traded and an active and liquid trading market for our units may not develop.

        Prior to the spin-off, there has not been a market for our units. We cannot predict the extent to which investor interest will lead to the development of an active and liquid trading market for our units or, if such a market develops, whether it will be maintained. We cannot predict the effects on the price of our units if a liquid and active trading market for our units does not develop. In addition, if such a market does not develop, relatively small sales of our units may have a significant negative impact on the price of our units.

Our unitholders do not have a right to vote on partnership matters or to take part in the management of our company.

        Under our Limited Partnership Agreement, our unitholders are not entitled to vote on matters relating to our company, such as acquisitions, dispositions or financing, or to participate in the management or control of our company. In particular, our unitholders do not have the right to remove the BBP General Partner, to cause the BBP General Partner to withdraw from our company, to cause a new general partner to be admitted to our company, to appoint new directors to the BBP General Partner's board of directors, to remove existing directors from the BBP General Partner's board of directors or to prevent a change of control of the BBP General Partner. In addition, except for certain fundamental matters and related party transactions, our unitholders' consent rights apply only with respect to certain amendments to our Limited Partnership Agreement. As a result, unlike holders of common stock of a corporation, our unitholders are not able to influence the direction of our company, including its policies and procedures, or to cause a change in its management, even if they are unsatisfied with the performance of our company. Consequently, our unitholders may be deprived of an opportunity to receive a premium for their units in the future through a sale of our company and the trading price of our units may be adversely affected by the absence or a reduction of a takeover premium in the trading price. Unitholders only have a right to vote under limited circumstances as described in "Description of Our Units and Our Limited Partnership Agreement".

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The market price of our units may be volatile.

        The market price of our units may be highly volatile and could be subject to wide fluctuations. Some of the factors that could negatively affect the price of our units include: general market and economic conditions, including disruptions, downgrades, credit events and perceived problems in the credit markets; actual or anticipated variations in our quarterly operating results or distributions on our units; actual or anticipated variations or trends in market interest rates; changes in our operating businesses or asset composition; write-downs or perceived credit or liquidity issues affecting our assets; market perception of our company, our business and our assets, including investor sentiment regarding diversified holding companies such as our company; our level of indebtedness and/or adverse market reaction to any indebtedness we incur in the future; our ability to raise capital on favourable terms or at all; loss of any major funding source; the termination of our Master Services Agreement or additions or departures of our or Brookfield's key personnel; changes in market valuations of similar companies and partnerships; speculation in the press or investment community regarding us or Brookfield; and changes in U.S. tax laws that make it impractical or impossible for our company to continue to be taxable as a partnership for U.S. federal income tax purposes. Securities markets in general have experienced extreme volatility that has often been unrelated to the operating performance of particular companies or partnerships. Any broad market fluctuations may adversely affect the trading price of our units.

We may issue additional units in the future, including in lieu of incurring indebtedness, which may dilute existing holders of our units. We may also issue securities that have rights and privileges that are more favourable than the rights and privileges accorded to our unitholders.

        Under our Limited Partnership Agreement, subject to the terms of any of our securities then outstanding, we may issue additional partnership securities, including units, preferred units and options, rights, warrants and appreciation rights relating to partnership securities for any purpose and for such consideration and on such terms and conditions as the BBP General Partner may determine. Subject to the terms of any of our securities then outstanding, the BBP General Partner's board of directors will be able to determine the class, designations, preferences, rights, powers and duties of any additional partnership securities, including any rights to share in our profits, losses and distributions, any rights to receive partnership assets upon our dissolution or liquidation and any redemption, conversion and exchange rights. Subject to the terms of any of our securities then outstanding, the BBP General Partner may use such authority to issue such additional securities. The sale or issuance of a substantial number of our units or other equity related securities of our company in the public markets, or the perception that such sales or issuances could occur, could depress the market price of our units and impair our ability to raise capital through the sale of additional units. In addition, at any time after two years from the date of the spin-off, the holders of Redemption-Exchange Units will have the right to require the Holding LP to redeem all or a portion of the Redemption-Exchange Units for cash, subject to our company's right to acquire such interests (in lieu of redemption) in exchange for the issuance of our units to such holders. We cannot predict the effect that future sales or issuances of our units or other equity-related securities would have on the market price of our units. Subject to the terms of any of our securities then outstanding, holders of units will not have any pre-emptive right or any right to consent to or otherwise approve the issuance of any securities or the terms on which any such securities may be issued.

Non-U.S. unitholders will be subject to foreign currency risk associated with our company's distributions.

        A significant number of our unitholders will reside in countries where the U.S. dollar is not the functional currency. Our distributions are denominated in U.S. dollars but are settled in the local currency of the unitholder receiving the distribution. For each non-U.S. unitholder, the value received in the local currency from the distribution will be determined based on the exchange rate between the U.S. dollar and the applicable local currency at the time of payment. As such, if the U.S. dollar depreciates significantly against the local currency of the non-U.S. unitholder, the value received by such unitholder in its local currency will be adversely affected.

U.S. investors in our units may find it difficult or impossible to enforce service of process and enforcement of judgments against us and directors and officers of the BBP General Partner and the Service Providers.

        We were established under the laws of Bermuda, and most of our subsidiaries are organized in jurisdictions outside of the United States. In addition, our executive officers and the experts identified in this prospectus are

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located outside of the United States. Certain of the directors and officers of the BBP General Partner and the Service Providers reside outside of the United States. A substantial portion of our assets are, and the assets of the directors and officers of the BBP General Partner and the Service Providers and the experts identified in this prospectus may be, located outside of the United States. It may not be possible for investors to effect service of process within the United States upon the directors and officers of the BBP General Partner and the Service Providers or the experts identified in this prospectus. It may also not be possible to enforce against us, the experts identified in this prospectus, or the directors and officers of the BBP General Partner and the Service Providers, judgments obtained in U.S. courts predicated upon the civil liability provisions of applicable securities law in the United States.

Canadian investors in our units may find it difficult or impossible to enforce service of process and enforcement of judgments against us and the directors and officers of the BBP General Partner and the Service Providers.

        We were established under the laws of Bermuda, and most of our subsidiaries are organized in jurisdictions outside of Canada. Certain of the directors and officers of the BBP General Partner and the Service Providers reside outside of Canada. A substantial portion of our assets are, and the assets of the directors and officers of the BBP General Partner and the Service Providers and the experts identified in this prospectus may be, located outside of Canada. It may not be possible for investors to effect service of process within Canada upon the directors and officers of the BBP General Partner and the Service Providers or the experts identified in this prospectus. It may also not be possible to enforce against us, the experts identified in this prospectus, or the directors and officers of the BBP General Partner and the Service Providers judgments obtained in Canadian courts predicated upon the civil liability provisions of applicable securities laws in Canada.

Risks Relating to Our Current Operations

Risks Relating to our Current Operations Generally

All of our operating businesses are highly cyclical and subject to general economic conditions and risks relating to the economy.

        Many industries, including the industries in which we operate, are impacted by adverse events in the broader economy and/or financial markets. A slowdown in the financial markets and/or the global economy or the local economies of the regions in which we operate, including, but not limited to, new home construction, employment rates, business conditions, inflation, fuel and energy costs, commodity prices, lack of available credit, the state of the financial markets, interest rates and tax rates may adversely affect our growth and profitability. For example, the slowdown in the growth of the Chinese economy and other emerging market economies and significant and recent declines in commodity factors could have a material adverse effect on our business, financial condition and results of operations, if such increased levels of volatility and market turmoil were to persist for an extended duration. These and other unforeseen adverse events in the global economy could negatively impact our operations and the trading price of our units could be further adversely impacted.

        The demand for products and services provided by our operating businesses are, in part, dependent upon and correlated to general economic conditions and economic growth of the regions applicable to the relevant asset. Poor economic conditions or lower economic growth in a region or regions may, either directly or indirectly, reduce demand for the products and/or services provided by our operating businesses. In particular, the sectors in which we operate are highly cyclical, and we are subject to cyclical fluctuations in global economic conditions and end-use markets. We are unable to predict the future course of industry variables or the strength, pace or sustainability of the global economic recovery and the effects of government intervention. Negative economic conditions, such as an economic downturn, a prolonged recovery period or disruptions in the financial markets, could have a material adverse effect on our company's business, financial condition or results or operations.

All of our operating businesses are subject to changes in government policy and legislation.

        Our operations are located in many different jurisdictions, each with its own government and legal system. Our financial condition and results of operations could be affected by changes in fiscal or other government policies, changes in monetary policy, as well as by regulatory changes or administrative practices, or other

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political or economic developments in the jurisdictions in which we operate, such as: interest rates; currency fluctuations; exchange controls and restrictions; inflation; liquidity of domestic financial and capital markets; policies relating to climate change or policies relating to tax; and other political, social, economic and environmental and occupational health and safety developments that may occur in or affect the countries in which our operating businesses are located or conduct business or the countries in which the customers of our operating businesses are located or conduct business or both.

        In the case of our industrial operations, we cannot predict the impact of future economic conditions, energy conservation measures, alternative energy requirements or governmental regulation, all of which could reduce the demand for the products and services provided by such businesses or the availability of commodities we rely upon to conduct our operations. It is difficult to predict government policies and what form of laws and regulations will be adopted or how they will be construed by the relevant courts, or to the extent which any changes may adversely affect us.

It can be very difficult or expensive to obtain the insurance we need for our business operations.

        We maintain insurance both as a corporate risk management strategy and in some cases to satisfy the requirements of contracts entered into in the course of our operations. Although in the past we have generally been able to cover our insurance needs, there can be no assurances that we can secure all necessary or appropriate insurance in the future, or that such insurance can be economically secured. We monitor the financial health of the insurance companies from which we procure insurance, but if any of our third party insurers fail, abruptly cancel our coverage or otherwise cannot satisfy their insurance requirements to us, then our overall risk exposure and operational expenses could be increased and some of our business operations could be interrupted.

Performance of our operating businesses may be harmed by future labour disruptions and economically unfavourable collective bargaining agreements.

        Several of our current operations have workforces that are unionized or that in the future may become unionized and, as a result, are or will be required to negotiate the wages, benefits and other terms with many of their employees collectively. If an operating business were unable to negotiate acceptable contracts with any of its unions as existing agreements expire, it could experience a significant disruption of its operations, higher ongoing labour costs and restrictions on its ability to maximize the efficiency of its operations, which could have the potential to adversely impact our financial condition.

        In addition, in some jurisdictions where we operate, labour forces have a legal right to strike which may have an impact on our operations, either directly or indirectly, for example if a critical upstream or downstream counterparty was itself subject to a labour disruption which impacted our business.

Our operations are exposed to occupational health and safety and accident risks.

        Our operations are highly exposed to the risk of accidents that may give rise to personal injury, loss of life, disruption to service and economic loss, including, for example, resulting from related litigation. Some of the tasks undertaken by employees and contractors are inherently dangerous and have the potential to result in serious injury or death.

        We are subject to increasingly stringent laws and regulations governing health and safety matters. Occupational health and safety legislation and regulations differ in each jurisdiction. Any breach of these obligations, or serious accidents involving our employees, contractors or members of the public could expose us or our operating businesses to adverse regulatory consequences, including the forfeit or suspension of operating licenses, potential litigation, claims for material financial compensation, reputational damage, fines or other legislative sanction, which have the potential to adversely impact our financial condition. Furthermore, where we do not control a business, we have a limited ability to influence their health and safety practices and outcomes.

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We are subject to litigation risks that could result in significant liabilities that could adversely affect our operations.

        We are at risk of becoming involved in disputes and possible litigation, the extent of which cannot be ascertained. Any material or costly dispute or litigation could adversely affect the value of the assets or future financial performance of our company. We could be subject to various legal proceedings concerning disputes of a commercial nature, or to claims in the event of bodily injury or material damage. The final outcome of any proceeding could have a negative impact on the business, financial condition or results of operations of our company.

        In addition, under certain circumstances, our company may itself commence litigation. There can be no assurance that litigation, once begun, would be resolved in our favour.

        We will also be exposed to risk of litigation by third parties or government regulators if our management is alleged to have committed an act or acts of gross negligence, willful misconduct or dishonesty or breach of contract or organizational documents or to violate applicable law. In such actions, we would likely be obligated to bear legal, settlement and other costs (which may exceed our available insurance coverage).

We may have operations in jurisdictions with less developed legal systems, which could create potential difficulties in obtaining effective legal redress.

        Some of our operations are located in jurisdictions with less developed legal systems than those in more established economies. In these jurisdictions, our company could be faced with potential difficulties in obtaining effective legal redress; a higher degree of discretion on the part of governmental authorities; a lack of judicial or administrative guidance on interpreting applicable rules and regulations; inconsistencies or conflicts between and within various laws, regulations, decrees, orders and resolutions; and relative inexperience of the judiciary and courts in such matters.

        In addition, in some jurisdictions, the commitment of local business people, government officials and agencies and the judicial system to abide by legal requirements and negotiated agreements could be uncertain, creating particular concerns with respect to permits, approvals and licenses required or desirable for, or agreements entered into in connection with, businesses in any such jurisdiction. These may be susceptible to revision or cancellation and legal redress may be uncertain or delayed. There can be no assurance that joint ventures, licenses, permits or approvals (or applications for licenses, permits or approvals) or other legal arrangements will not be adversely affected by the actions of government authorities or others and the effectiveness of and enforcement of such arrangements in these jurisdictions cannot be assured.

We do not control all of the businesses in which we own interests and therefore we may not be able to realize some or all of the benefits that we expect to realize from those interests.

        We do not have control of certain of the businesses in which we own interests and we may take non-controlling positions in other businesses in the future. Such businesses may make financial or other decisions that we do not agree with. Because we do not have the ability to exercise control over such businesses, we may not be able to realize some or all of the benefits that we expect to realize from our ownership interests in them, including, for example, expected distributions. In addition, we must rely on the internal controls and financial reporting controls of such businesses and their failure to maintain effective controls or comply with applicable standards may adversely affect us.

From time to time, we may have significant interests in public companies, and changes in the market prices of the stock of such public companies, particularly during times of increased market volatility, could have a negative impact on our financial condition and results of operations.

        From time to time, we may hold significant interests in public companies, and changes in the market prices of the stock of such public companies could have a material impact on our financial condition and results of operations. Global securities markets have been highly volatile, and continued volatility may have a material negative impact on our consolidated financial position and results of operations.

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We are exposed to the risk of environmental damage and costs associated with compliance with environmental laws.

        Certain of our operating businesses are involved in using, handling or transporting substances that are toxic, combustible or otherwise hazardous to the environment and may be in close proximity to environmentally sensitive areas or densely populated communities. If a leak, spill or other environmental incident occurred, it could result in substantial fines or penalties being imposed by regulatory authorities, revocation of licenses or permits required to operate the business or the imposition of more stringent conditions in those licenses or permits, or legal claims for compensation (including punitive damages) by affected stakeholders. For example, such risks are present in our Western Australian operations, which consist of offshore drilling in the Indian Ocean. In addition, some of our operating businesses may be subject to regulations or rulings made by environmental agencies that conflict with existing obligations we have under concession or other permitting agreements. Resolution of such conflicts may lead to uncertainty and increased risk of delays or cost overruns on projects. In addition to fines, these laws and regulations sometimes require evaluation and registration or the installation of costly pollution control or safety equipment or costly changes in operations to limit pollution or decrease the likelihood of injuries. All of these could require us to incur costs or become the basis of new or increased liabilities that could be material and could have the potential to significantly impact the value or financial performance of our company.

        Specifically, certain of our current industrial manufacturing operations are subject to increasingly stringent environmental laws and regulations relating to our current and former properties, neighboring properties and our current raw materials, products and operations. For example, we have experienced some level of regulatory scrutiny at most of our current and former graphite electrode facilities and, in some cases, have been required to take corrective or remedial actions and incur related costs in the past, and may experience further regulatory scrutiny, and may be required to take further corrective or remedial actions and incur additional costs in the future.

We are exposed to the risk of increasingly onerous environmental legislation and the broader impacts of climate change.

        With an increasing global focus and public sensitivity to environmental sustainability and environmental regulation becoming more stringent, we could be subject to further environmental related responsibilities and associated liability. For example, many jurisdictions in which our company operates and invests are considering implementing, or have implemented, schemes relating to the regulation of carbon emissions. As a result, there is a risk that demand for some of the commodities supplied by certain of our operations will be reduced. The nature and extent of future regulation in the various jurisdictions in which our operations are situated is uncertain, but is expected to become more complex and stringent.

        It is difficult to assess the impact of any such changes on our company. These changes may result in increased costs to our operations that may not be able to be passed onto customers and may have an adverse impact on prospects for growth of some of our businesses. To the extent such regimes (such as carbon emissions schemes or other carbon emissions regulations) become applicable to our operations (and the costs of such regulations are not able to be fully passed on to consumers), our financial performance may be impacted due to costs applied to carbon emissions and increased compliance costs.

        We are also subject to a wide range of laws and regulations relating to the protection of the environment and pollution. Standards are set by these laws and regulations regarding certain aspects of environmental quality and reporting, provide for penalties and other liabilities for the violation of such standards, and establish, in certain circumstances, obligations to remediate and rehabilitate current and former facilities and locations where our operations are, or were, conducted. These laws and regulations may have a detrimental impact on our company's financial performance through increased compliance costs or otherwise. Any breach of these obligations, or even incidents relating to the environment that do not amount to a breach, could adversely affect the results of our operating businesses and their reputations and expose them to claims for financial compensation or adverse regulatory consequences.

        For example, we may become responsible for costs associated with abandoning and reclaiming wells, facilities and pipelines which we use for production of oil and gas reserves. Abandonment and reclamation of these facilities and the associated costs are often referred to as "decommissioning". We have not established any cash reserve account for these potential costs in respect of any of our properties. If decommissioning is required

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before economic depletion of our properties or if our estimates of the costs of decommissioning exceed the value of the reserves remaining at any particular time to cover such decommissioning costs, we may have to draw on funds from other sources to satisfy such costs. The use of other funds to satisfy such decommissioning costs could impair our ability to focus capital investment in other areas of our business.

        Our operations may also be exposed directly or indirectly to the broader impacts of climate change, including extreme weather events, export constraints on commodities, increased resource prices and restrictions on energy and water usage.

Some of our current operations are structured as joint ventures, partnerships and consortium arrangements, and we intend to continue to operate in this manner in the future, which will reduce Brookfield's and our control over our operations and may subject us to additional obligations.

        An integral part of our strategy is to participate with institutional investors in Brookfield sponsored or co-sponsored consortiums for single asset acquisitions and as a partner in or alongside Brookfield sponsored or co-sponsored partnerships that target acquisitions that suit our profile. Such arrangements involve risks not present where a third party is not involved, including the possibility that partners or co-venturers might become bankrupt or otherwise fail to fund their share of required capital contributions. Additionally, partners or co-venturers might at any time have economic or other business interests or goals different from us and Brookfield. We generally owe fiduciary duties to our partners in our joint venture and partnership arrangements.

        Joint ventures, partnerships and consortium investments generally provide for a reduced level of control over an acquired company because governance rights are shared with others. Accordingly, decisions relating to the underlying operations, including decisions relating to the management and operation and the timing and nature of any exit, are often made by a majority vote of the investors or by separate agreements that are reached with respect to individual decisions. For example, when we participate with institutional investors in Brookfield-sponsored or co-sponsored consortiums for asset acquisitions and as a partner in or alongside Brookfield sponsored or co-sponsored partnerships, there is often a finite term to the investment, which could lead to the business being sold prior to the date we would otherwise choose. In addition, such operations may be subject to the risk that business, financial or management decisions are made with which we do not agree or the management of the operating business at issue may take risks or otherwise act in a manner that does not serve our interests. Because we may not have the ability to exercise sole control over such operations, we may not be able to realize some or all of the benefits that we believe will be created from our and Brookfield's involvement. If any of the foregoing were to occur, our business, financial condition and results of operations could suffer as a result.

        In addition, because some of our current operations are structured as joint ventures, partnerships or consortium arrangements, the sale or transfer of interests in some of our operations are subject to rights of first refusal or first offer, tag along rights or drag along rights and some agreements provide for buy-sell or similar arrangements.

We rely on the use of technology, which may not be able to accommodate our growth or may increase in cost.

        We operate in businesses that are dependent on information systems and other technology, such as computer systems used for information storage, processing, administrative and commercial functions as well as the machinery and other equipment used in certain parts of our operations. In addition, our businesses rely on telecommunication services to interface with their business networks and customers. The information and embedded systems of key business partners and regulatory agencies are also important to our operations. We rely on this technology functioning as intended. Our information systems and technology may not continue to be able to accommodate our growth, and the cost of maintaining such systems may increase from its current level. Such a failure to accommodate growth, or an increase in costs related to such information systems, could have a material adverse effect on us.

        We rely heavily on our financial, accounting, communications and other data processing systems. Our information technology systems may be subject to cyber terrorism intended to obtain unauthorized access to our proprietary information, destroy data or disable, degrade or sabotage our systems, often through the

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introduction of computer viruses, cyber-attacks and other means, and could originate from a wide variety of sources, including internal or unknown third parties. Further, machinery and equipment used by our operating businesses may fail due to wear and tear, latent defect, design or operator errors or early obsolescence, among other things.

        If our information systems and other technology are compromised, do not operate or are disabled, such could have a material adverse effect on our business prospects, financial condition, results of operations and cash flow.

We may suffer a significant loss resulting from fraud, bribery, corruption or other illegal acts, inadequate or failed internal processes or systems, or from external events.

        Brookfield, our company and our operating businesses are subject to a number of laws and regulations governing payments and contributions to public officials or other third parties, including restrictions imposed by the U.S. Foreign Corrupt Practices Act of 1977 and similar laws in non-U.S. jurisdictions, such as the U.K. Bribery Act 2010 and the Canadian Corruption of Foreign Public Officials Act.

        Different laws that are applicable to us and our operating businesses may contain conflicting provisions, making our compliance more difficult. The policies and procedures we have implemented to protect against non-compliance with anti-bribery and corruption legislation may be inadequate. If we fail to comply with such laws and regulations, we could be exposed to claims for damages, financial penalties, reputational harm, restrictions on our operations and other liabilities, which could negatively affect our operating results and financial condition. In addition, we may be subject to successor liability for violations under these laws or other acts of bribery committed by our operating businesses.

Risks Relating to Our Business Services Operations

Our construction operations are vulnerable to the cyclical nature of the construction market.

        The demand for our construction services is dependent upon the existence of projects with engineering, procurement, construction and management needs. For example, a substantial portion of the revenues from our construction operations derives from residential, commercial and office projects in Australia, the United Kingdom, Canada, India and the Middle East. Capital expenditures by our clients may be influenced by factors such as prevailing economic conditions and expectations about economic trends, technological advances, consumer confidence, domestic and international political, military, regulatory and economic conditions and other similar factors.

Our revenue and earnings from our construction operations are largely dependent on the award of new contracts which we do not directly control.

        A substantial portion of the revenue and earnings of our construction operations is generated from large-scale project awards. The timing of project awards is unpredictable and outside of our control. Awards often involve complex and lengthy negotiations and competitive bidding processes. These processes can be impacted by a wide variety of factors including a client's decision to not proceed with the development of a project, governmental approvals, financing contingencies and overall market and economic conditions. We may not win contracts that we have bid upon due to price, a client's perception of our ability to perform and/or perceived technology advantages held by others. Many of our competitors may be inclined to take greater or unusual risks or agree to terms and conditions in a contract that we might not deem acceptable. Because a significant portion of our revenue is generated from large projects, the results of our construction operations can fluctuate quarterly and annually depending on whether and when large project awards occur and the commencement and progress of work under large contracts already awarded. As a result, we are subject to the risk of losing new awards to competitors or the risk that revenue may not be derived from awarded projects as quickly as anticipated.

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We may experience reduced profits or losses under contracts if costs increase above estimates.

        Generally, our construction operations are performed under contracts that include cost and schedule estimates in relation to our services. Inaccuracies in these estimates may lead to cost overruns that may not be paid by our clients, thereby resulting in reduced profits or in losses. If a contract is significant or there are one or more events that impact a contract or multiple contracts, cost overruns could have a material impact on our reputation or our financial results, negatively impacting the financial condition, results of operations or cash flow of our construction operations. A portion of our ongoing construction projects are in fixed-price contracts, where we bear a significant portion of the risk for cost overruns. Reimbursable contract types, such as those that include negotiated hourly billing rates, may restrict the kinds or amounts of costs that are reimbursable, therefore exposing us to risk that we may incur certain costs in executing these contracts that are above our estimates and not recoverable from our clients. If we fail to accurately estimate the resources and time necessary for these types of contracts, or fail to complete these contracts within the timeframes and costs we have agreed upon, there could be a material impact on the financial results as well as reputation of our construction operations. Risks under our construction contracts which could result in cost overruns, project delays or other problems can also include:

    difficulties related to the performance of our clients, partners, subcontractors, suppliers or other third parties;

    changes in local laws or difficulties or delays in obtaining permits, rights of way or approvals;

    unanticipated technical problems, including design or engineering issues;

    insufficient or inadequate project execution tools and systems needed to record, track, forecast and control cost and schedule;

    unforeseen increases in, or failures to, properly estimate the cost of raw materials, components, equipment, labour or the inability to timely obtain them;

    delays or productivity issues caused by weather conditions;

    incorrect assumptions related to productivity, scheduling estimates or future economic conditions; and

    project modifications creating unanticipated costs or delays.

        These risks tend to be exacerbated for longer-term contracts because there is an increased risk that the circumstances under which we based our original cost estimates or project schedules will change with a resulting increase in costs. In many of these contracts, we may not be able to obtain compensation for additional work performed or expenses incurred, and if a project is not executed on schedule, we may be required to pay liquidated damages. In addition, these losses may be material and can, in some circumstances, equal or exceed the full value of the contract. In such circumstances, the financial condition, results of operations and cash flow of our construction operations could be negatively impacted.

We enter into performance guarantees which may result in future payments.

        In the ordinary course of our construction operations, we enter into various agreements providing performance assurances and guarantees to clients on behalf of certain unconsolidated and consolidated partnerships, joint ventures and other jointly executed contracts. These agreements are entered into primarily to support the project execution commitments of these entities. The performance guarantees have various expiration dates ranging from mechanical completion of the project being constructed to a period extending beyond contract completion in certain circumstances. Any future payments under a performance guarantee could negatively impact the financial condition, results of operations and cash flow of our construction business.

There are risks associated with the residential real estate industry in Canada and the United States.

        The performance of our residential real estate brokerage services is dependent upon receipt of royalties, which in turn is dependent on the level of residential real estate transactions. The real estate industry is affected by all of the factors that affect the economy in general, and in addition may be affected by the aging network of real estate agents and brokers across Canada and the United States. In addition, there is pressure on the rate of

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commissions charged to the consumer and internet use by real estate consumers has led to a questioning of the value of traditional residential real estate services. Finally, changes to mortgage and lending rules in Canada that are contemplated from time to time have the potential to negatively impact residential housing prices and/or the number of residential real estate transactions in Canada, either or both of which could in turn reduce commissions and therefore royalties.

There are risks associated with our facilities management operations.

        A general decline in the value and performance of commercial real estate and rental rates can lead to a reduction in management fees, a significant portion of which are generally based on the value of and revenue produced by the properties to which we provide services. Moreover, there is significant competition on an international, regional and local level for the provision of facilities management services. Depending on the service, we face competition from other residential real estate service providers, institutional lenders, insurance companies, investment banking firms, accounting firms, technology firms, consulting firms, firms providing outsourcing of various types and companies that self-provide their residential real estate services with in-house capabilities. Finally, our ability to conduct our facilities management services may be adversely impacted by disruptions to the infrastructure that supports our business and the communities in which they are located. Such disruptions could include disruptions to electrical, communications, information technology, transportation or other services used in the course of providing our facilities management services.

Risks Related to our Industrial Operations

Substantial declines in the prices of the resources we produce have reduced the revenues of our industrial operations, and sustained prices at those or lower levels would reduce our revenue and adversely affect the operating results and cash flows of our industrial operations.

        The results of our industrial operations are substantially dependent upon the prices we receive for the resources we produce. Those prices depend on factors beyond our control. Recently, commodity prices have declined significantly. Sustained depressed levels or future declines of the price of resources such as oil, gas, limestone and palladium and other metals may adversely affect the operating results and cash flows of our industrial operations.

Our derivative risk management activities could result in financial losses.

        In the past, commodity prices have been extremely volatile, and we expect this volatility to continue. To mitigate the effect of commodity price volatility on the results of our industrial operations, our strategy is to enter into derivative arrangements covering a portion of our resource production. These derivative arrangements are subject to mark-to-market accounting treatment, and the changes in fair value of the contracts will be reported in our company's statements of operations each quarter, which may result in significant non-cash gains or losses. These derivative contracts may also expose our company to risk of financial loss in certain circumstances, including when production is less than the contracted derivative volumes, the counterparty to the derivative contract defaults on its contract obligations or the derivative contracts limit the benefit our industrial operations would otherwise receive from increases in commodity prices.

Exploration and development may not result in commercially productive assets.

        Exploration and development involves numerous risks, including the risk that no commercially productive asset will result from such activities. The cost of exploration and development is often uncertain and may depart from our expectations due to unexpected geological conditions, equipment failures or accidents, adverse weather conditions, regulatory restrictions on access to land and the cost and availability of personnel required to complete our exploration and development activities. The exploration and development activities of our industrial operations may not be successful and, if unsuccessful, such failure could have an adverse effect on our company's future results of operations and financial condition.

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Our oil and gas operations are subject to all the risks normally incidental to oil and gas exploration, development and production.

        Our oil and gas operations are subject to all the risks normally incidental to oil and gas development and production, including:

    blowouts, cratering, explosions and fires;

    adverse weather effects;

    environmental hazards such as gas leaks, oil spills, pipeline and vessel ruptures and unauthorized discharges of gasses, brine, well stimulation and completion fluids or other pollutants into the surface and subsurface environment;

    high costs, shortages or delivery delays of equipment, labour or other services or water and sand for hydraulic fracturing;

    facility or equipment malfunctions, failures or accidents;

    title problems;

    pipe or cement failures or casing collapses;

    compliance with environmental and other governmental requirements;

    lost or damaged oilfield workover and service tools;

    unusual or unexpected geological formations or pressure or irregularities in formations;

    natural disasters; and

    the availability of critical materials, equipment and skilled labour.

        Our exposure to risks related to our oil and gas operations may increase as our drilling activity expands and we seek to directly provide fracture stimulation, water distribution and disposal and other services internally. Any of these risks could result in substantial losses to our company due to injury or loss of life, damage to or destruction of wells, production facilities or other property, environmental damage, regulatory investigations and penalties and suspension of operations.

        Drilling for oil and gas also involves numerous risks, including the risk that we will not encounter commercially productive oil or gas reservoirs. The wells we participate in may not be productive and we may not recover all or any portion of our investment in those wells. The costs of drilling, completing and operating wells are often uncertain, and drilling operations may be curtailed, delayed or canceled as a result of a variety of factors including, but not limited to:

    unexpected drilling conditions;

    pressure or irregularities in formations;

    equipment failures or accidents;

    fires, explosions, blow-outs and surface cratering;

    marine risks such as capsizing, collisions and hurricanes;

    other adverse weather conditions; and

    increase in cost of, or shortages or delays in the delivery of equipment.

        Future drilling activities may not be successful and, if unsuccessful, this failure could have an adverse effect on our future results of operations and financial condition. While all drilling, whether developmental or exploratory, involves these risks, exploratory drilling involves greater risks of dry holes or failure to find commercial quantities of hydrocarbons.

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Estimates of oil and gas reserves and resources are uncertain and may vary substantially from actual production.

        There are numerous uncertainties associated with estimating quantities of proved reserves and probable reserves and in projecting future rates of production and timing of expenditures. The reserve and resource information herein represents estimates prepared by our internal staff of petroleum engineers at December 31, 2015 (except those estimates set out in Appendix A, which were prepared by McDaniel, GLJ and RISC, as applicable, at December 31, 2015). Petroleum engineering is not an exact science. Information relating to our oil and gas reserves is based upon engineering estimates which may ultimately prove to be inaccurate. Estimates of economically recoverable oil and natural gas reserves and of future net cash flows necessarily depend upon a number of variable factors and assumptions, such as historical production from the area compared with production from other producing areas, assumptions concerning commodity prices, the quality, quantity and interpretation of available relevant data, future site restoration and abandonment costs, the assumed effects of regulations by governmental agencies and assumptions concerning future oil and gas prices, future operating costs, royalties, severance and excise taxes, capital expenditures and workover and remedial costs, all of which may in fact vary considerably from actual results. For these reasons, estimates of the economically recoverable quantities of oil and gas attributable to any particular group of properties, classifications of such reserves based on risk of recovery and estimates of the future net cash flows expected therefrom prepared by different engineers or by the same engineers at different times may vary substantially. Actual production, revenues and expenditures with respect to our reserves will likely vary from estimates, and such variances may be material.

        The present value of future net revenues from our reserves is not necessarily the same as the current market value of our estimated oil and gas reserves. We base the estimated discounted future net revenue from our reserves on, among other things, prices and costs required by applicable regulatory requirements, expected capital expenditures, applicable royalties and operating costs and other factors. However, actual future net revenues from our oil and natural gas properties also will be affected by factors such as:

    the actual prices we receive for oil and gas;

    the actual cost of development and production expenses;

    the amount and timing of actual production;

    supply of and demand for oil and gas; and

    changes in governmental regulations or taxation.

        The timing of both our production and our incurrence of costs in connection with the development and production of oil and gas properties will affect the timing of actual future net revenues from our reserves, and thus their actual present value. In addition, the discount factor we use when calculating discounted future net cash flows may not be the most appropriate discount factor based on interest rates in effect from time to time and risks associated with us or the oil and gas industry in general.

        As of December 31, 2015, approximately 6% of our estimated proved reserves were undeveloped. Recovery of undeveloped reserves requires significant capital expenditures and may require successful drilling operations. The reserve data assumes that we can and will make these expenditures and conduct these operations successfully, but these assumptions may not be accurate, and this may not occur. Our actual production, revenues and expenditures with respect to reserves will likely be different from estimates and the differences may be material.

The marketability of our oil and gas production is dependent upon compressors, gathering lines, pipelines and other facilities, certain of which we do not control. When these facilities are unavailable, our operations can be interrupted and our revenues reduced.

        The marketability of our oil and gas production depends in part upon the availability, proximity and capacity of oil and gas pipelines owned by third parties. In general, we do not control these transportation facilities and our access to them may be limited or denied. A significant disruption in the availability of these transportation facilities or compression and other production facilities could adversely impact our ability to deliver to market or produce our oil and gas and thereby result in our inability to realize the full economic potential of our production. If, in the future, we are unable, for any sustained period, to implement acceptable

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delivery or transportation arrangements or encounter compression or other production related difficulties, we will be required to shut in or curtail production from the field. Any such shut in or curtailment, or an inability to obtain favorable terms for delivery of the oil and gas produced from the field, would adversely affect our financial condition and results of operations.

        If any of the third party pipelines and other facilities and service providers upon which we depend to move production to market become partially or fully unavailable to transport or process our production, or if quality specifications or physical requirements such as compression are altered by such third parties so as to restrict our ability to transport our production on those pipelines or facilities, our revenues could be adversely affected. Restrictions on our ability to move our oil and gas to market may have several other adverse effects, including fewer potential purchasers (thereby potentially resulting in a lower selling price) or, in the event we were unable to market and sustain production from a particular lease for an extended time, possible loss of a lease due to lack of production.

Our metals operations are subject to all the risks normally incidental to metals mining and processing.

        Our metals operations are subject to all the risks normally incidental to metals mining and processing, including:

    metallurgical and other processing problems;

    geotechnical problems;

    unusual and unexpected rock formations;

    ground or slope failures or underground cave-ins;

    environmental contamination;

    industrial accidents;

    fires;

    flooding and periodic interruptions due to inclement or hazardous weather conditions or other acts of nature;

    organized labour disputes or work slow-downs;

    mechanical equipment failure and facility performance problems;

    the availability of critical materials, equipment and skilled labour; and

    effective management of tailings facilities.

        Any of these risks could result in substantial losses to our company due to injury or loss of life, damage to or destruction of properties or production facilities, environmental damage, regulatory investigations and penalties and suspension of operations.

Our industrial manufacturing operations are dependent on supplies of raw materials and results of operations could deteriorate if that supply is substantially disrupted for an extended period.

        Raw material supply factors such as allocations, economic cyclicality, seasonality, pricing, quality, timeliness of delivery, transportation and warehousing costs may affect the raw material sourcing decisions made by our company. In the event of significant unanticipated increase in demand for our products, our company may in the future be unable to manufacture certain products in a quantity sufficient to meet customer demand in any particular period without an adequate supply of raw materials.

        The various raw materials used in our industrial operations are sourced and traded throughout the world and are subject to pricing volatility. Although we try to manage our exposure to raw material price volatility through the pricing of our products, there can be no assurance that the industry dynamics will allow us to continue to reduce our exposure by passing on raw material price increases to our customers.

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Risks Relating to Our Relationship with Brookfield

Brookfield exercises substantial influence over our company and we are highly dependent on the Service Providers.

        Brookfield is the sole shareholder of the BBP General Partner. As a result of its ownership of the BBP General Partner, Brookfield is able to control the appointment and removal of the BBP General Partner's directors and, accordingly, exercises substantial influence over our company and over the Holding LP, for which our company is the managing general partner. Our company and the Holding LP do not have any employees and depend on the management and administration services provided by the Service Providers. Brookfield personnel and support staff that provide services to us are not required to have as their primary responsibility the management and administration of our company or the Holding LP, or to act exclusively for either of us. Any failure to effectively manage our current operations or to implement our strategy could have a material adverse effect on our business, financial condition and results of operations.

Brookfield has no obligation to source acquisition opportunities for us and we may not have access to all acquisitions that Brookfield identifies.

        Our ability to grow depends on Brookfield's ability to identify and present us with acquisition opportunities. Brookfield established our company to be Brookfield's flagship public company for its business services and industrial operations, but Brookfield has no obligation to source acquisition opportunities for us. In addition, Brookfield has not agreed to commit to us any minimum level of dedicated resources for the pursuit of acquisitions. There are a number of factors which could materially and adversely impact the extent to which suitable acquisition opportunities are made available from Brookfield, including:

    it is an integral part of Brookfield's (and our) strategy to pursue acquisitions through consortium arrangements with institutional investors, strategic partners or financial sponsors and to form partnerships to pursue such acquisitions on a specialized or global basis. Although Brookfield has agreed with us that it will not enter any such arrangements that are suitable for us without giving us an opportunity to participate in them, there is no minimum level of participation to which we will be entitled;

    the same professionals within Brookfield's organization that are involved in acquisitions that are suitable for us are responsible for the consortiums and partnerships referred to above, as well as having other responsibilities within Brookfield's broader asset management business. Limits on the availability of such individuals could result in a limitation on the number of acquisition opportunities sourced for us;

    Brookfield will only recommend acquisition opportunities that it believes are suitable for us. Our focus is on assets where we believe that our operations-oriented strategy can be deployed to create value in our business services and industrial operations. Accordingly, opportunities where Brookfield cannot play an active role in influencing the underlying business or managing the underlying assets that are not consistent with our acquisition strategy may not be suitable for us, even though they may be attractive from a purely financial perspective. Legal, regulatory, tax and other commercial considerations will likewise be an important consideration in determining whether an opportunity is suitable and will limit our ability to participate in certain acquisitions and may limit our ability to have more than 50% of our assets concentrated in a single jurisdiction; and

    in addition to structural limitations, the question of whether a particular acquisition is suitable is highly subjective and is dependent on a number of factors including our liquidity position at the relevant time, the risk profile of the opportunity, its fit with the balance of our operations and other factors. If Brookfield determines that an opportunity is not suitable for us, it may still pursue such opportunity on its own behalf, or on behalf of a Brookfield sponsored partnership or consortium such as Brookfield Property Partners, Brookfield Infrastructure Partners and Brookfield Renewable Partners.

        In making these determinations, Brookfield may be influenced by factors that result in a misalignment or conflict of interest. See "Relationship with Brookfield — Conflicts of Interest and Fiduciary Duties."

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We rely on related parties for a portion of our revenues, particularly in respect of our construction services operations.

        We may enter into contracts for service with related parties, including Brookfield. For example, our construction services business provides construction services to properties owned and operated by Brookfield. We are subject to risks as a result of our reliance on these related parties, including the risk that the business terms of our arrangements with them are not as fair to us and that our management is subject to conflicts of interest that may not be resolved in our favor. In addition, if our transactions with these related parties cease, it could have a material adverse effect on our company's business, financial condition or results or operations.

The departure of some or all of Brookfield's professionals could prevent us from achieving our objectives.

        We depend on the diligence, skill and business contacts of Brookfield's professionals and the information and opportunities they generate during the normal course of their activities. Our future success will depend on the continued service of these individuals, who are not obligated to remain employed with Brookfield. Brookfield has experienced departures of key professionals in the past and may do so in the future, and we cannot predict the impact that any such departures will have on our ability to achieve our objectives. The departure of a significant number of Brookfield's professionals for any reason, or the failure to appoint qualified or effective successors in the event of such departures, could have a material adverse effect on our ability to achieve our objectives. Our Limited Partnership Agreement and our Master Services Agreement do not require Brookfield to maintain the employment of any of its professionals or to cause any particular professionals to provide services to us or on our behalf.

Control of the BBP General Partner may be transferred to a third party without unitholder consent.

        The BBP General Partner may transfer its general partnership interest to a third party in a merger or consolidation or in a transfer of all or substantially all of its assets without the consent of our unitholders. Furthermore, at any time, the shareholder of the BBP General Partner may sell or transfer all or part of its shares in the BBP General Partner without the approval of our unitholders. If a new owner were to acquire ownership of the BBP General Partner and to appoint new directors or officers of its own choosing, it would be able to exercise substantial influence over our company's policies and procedures and exercise substantial influence over our management and the types of acquisitions that we make. Such changes could result in our company's capital being used to make acquisitions in which Brookfield has no involvement or in making acquisitions that are substantially different from our targeted acquisitions. Additionally, our company cannot predict with any certainty the effect that any transfer in the ownership of the BBP General Partner would have on the trading price of our units or our company's ability to raise capital or make acquisitions in the future, because such matters would depend to a large extent on the identity of the new owner and the new owner's intentions with regard to our company. As a result, the future of our company would be uncertain and our company's business, financial condition and results of operations may suffer.

Brookfield may increase its ownership of our company and the Holding LP relative to other unitholders.

        Following the completion of the spin-off, Brookfield will hold approximately 51% of the issued and outstanding interests in the Holding LP through Special LP Units and Redemption-Exchange Units. The Redemption-Exchange Units are redeemable for cash or exchangeable for our units in accordance with the Redemption-Exchange Mechanism, which could result in Brookfield eventually owning approximately 78% of our issued and outstanding units (including other issued and outstanding units that Brookfield will own following completion of the spin-off).

        Brookfield may also reinvest incentive distributions in exchange for Redemption-Exchange Units or our units. Additional units of the Holding LP acquired, directly or indirectly, by Brookfield are redeemable for cash or exchangeable for our units in accordance with the Redemption-Exchange Mechanism. See "Description of the Holding LP Limited Partnership Agreement — Redemption-Exchange Mechanism". Brookfield may also purchase additional units of our company in the market. Any of these events may result in Brookfield increasing its ownership of our company.

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Our Master Services Agreement and our other arrangements with Brookfield do not impose on Brookfield any fiduciary duties to act in the best interests of our unitholders.

        Our Master Services Agreement and our other arrangements with Brookfield do not impose on Brookfield any duty (statutory or otherwise) to act in the best interests of the Service Recipients, nor do they impose other duties that are fiduciary in nature. As a result, the BBP General Partner, a wholly-owned subsidiary of Brookfield Asset Management, in its capacity as the BBP General Partner, has sole authority to enforce the terms of such agreements and to consent to any waiver, modification or amendment of their provisions, subject to approval by a majority of our independent directors in accordance with our conflicts protocol.

        In addition, the Bermuda Limited Partnership Act of 1883, or Bermuda Limited Partnership Act, under which our company and the Holding LP were established, does not impose statutory fiduciary duties on a general partner of a limited partnership in the same manner that certain corporate statutes, such as the CBCA, impose fiduciary duties on directors of a corporation. In general, under applicable Bermudian legislation, a general partner has certain limited duties to its limited partners, such as the duty to render accounts, account for private profits and not compete with the partnership in business. In addition, Bermudian common law recognizes that a general partner owes a duty of utmost good faith to its limited partners. These duties are, in most respects, similar to duties imposed on a general partner of a limited partnership under U.S. and Canadian law. However, to the extent that the BBP General Partner owes any such fiduciary duties to our company and unitholders, these duties have been modified pursuant to our Limited Partnership Agreement as a matter of contract law. We have been advised by Bermudian counsel that such modifications are not prohibited under Bermudian law, subject to typical qualifications as to enforceability of contractual provisions, such as the application of general equitable principles. This is similar to Delaware law which expressly permits modifications to the fiduciary duties owed to partners, other than an implied contractual covenant of good faith and fair dealing.

        Our Limited Partnership Agreement contains various provisions that modify the fiduciary duties that might otherwise be owed to our company and our unitholders, including when conflicts of interest arise. Specifically, our Limited Partnership Agreement states that no breach of our Limited Partnership Agreement or a breach of any duty, including fiduciary duties, may be found for any matter that has been approved by a majority of the independent directors of the BBP General Partner. In addition, when resolving conflicts of interest, our Limited Partnership Agreement does not impose any limitations on the discretion of the independent directors or the factors which they may consider in resolving any such conflicts. The independent directors of the BBP General Partner can therefore take into account the interests of third parties, including Brookfield and, where applicable, any Brookfield managed consortia or partnership, when resolving conflicts of interest and may owe fiduciary duties to such third parties, managed consortium or partnerships. Additionally, any fiduciary duty that is imposed under any applicable law or agreement is modified, waived or limited to the extent required to permit the BBP General Partner to undertake any affirmative conduct or to make any decisions, so long as such action is reasonably believed to be in, or not inconsistent with, the best interests of our company.

        In addition, our Limited Partnership Agreement provides that the BBP General Partner and its affiliates do not have any obligation under our Limited Partnership Agreement, or as a result of any duties stated or implied by law or equity, including fiduciary duties, to present business or acquisition opportunities to our company, the Holding LP, any Holding Entity or any other holding entity established by us. They also allow affiliates of the BBP General Partner to engage in activities that may compete with us or our activities. Additionally, any failure by the BBP General Partner to consent to any merger, consolidation or combination will not result in a breach of our Limited Partnership Agreement or any other provision of law. Our Limited Partnership Agreement prohibits our limited partners from advancing claims that otherwise might raise issues as to compliance with fiduciary duties or applicable law. These modifications to the fiduciary duties are detrimental to our unitholders because they restrict the remedies available for actions that might otherwise constitute a breach of fiduciary duty and permit conflicts of interest to be resolved in a manner that is not in the best interests of our company or the best interests of our unitholders. See "Relationship with Brookfield — Conflicts of Interest and Fiduciary Duties".

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Our organizational and ownership structure may create significant conflicts of interest that may be resolved in a manner that is not in the best interests of our company or the best interests of our unitholders.

        Our organizational and ownership structure involves a number of relationships that may give rise to conflicts of interest between our company and our unitholders, on the one hand, and Brookfield, on the other hand. In certain instances, the interests of Brookfield may differ from the interests of our company and our unitholders, including with respect to the types of acquisitions made, the timing and amount of distributions by our company, the redeployment of returns generated by our operations, the use of leverage when making acquisitions and the appointment of outside advisors and service providers, including as a result of the reasons described under "Relationship with Brookfield — Conflicts of Interest and Fiduciary Duties".

        In addition, the Service Providers, affiliates of Brookfield, provide management services to us pursuant to our Master Services Agreement. Pursuant to our Master Services Agreement, we pay a quarterly base management fee to the Service Providers equal to 0.3125% (1.25% annually) of the total capitalization of our company. For purposes of calculating the base management fee, the total capitalization of our company is equal to the quarterly volume-weighted average trading price of a unit on the principal stock exchange for our units (based on trading volumes) multiplied by the number of units outstanding at the end of the quarter (assuming full conversion of the Redemption-Exchange Units into units), plus the value of securities of the other Service Recipients that are not held by us, plus all outstanding third party debt with recourse to a Service Recipient, less all cash held by such entities. This relationship may give rise to conflicts of interest between us and our unitholders, on the one hand, and Brookfield, on the other, as Brookfield's interests may differ from the interests of our company and our unitholders.

        The arrangements we have with Brookfield may create an incentive for Brookfield to take actions which would have the effect of increasing distributions and fees payable to it, which may be to the detriment of us and our unitholders. For example, because the base management fee is calculated based on the market value of our company, it may create an incentive for Brookfield to increase or maintain the market value of our company over the near-term when other actions may be more favourable to us or our unitholders. Similarly, Brookfield may take actions to decrease distributions on our units or defer acquisitions in order to increase the market value of our company in the near-term when making such distributions or acquisitions may be more favourable to us or our unitholders.

Our arrangements with Brookfield were negotiated in the context of an affiliated relationship and may contain terms that are less favourable than those which otherwise might have been obtained from unrelated parties.

        The terms of our arrangements with Brookfield were effectively determined by Brookfield in the context of the spin-off. While the BBP General Partner's independent directors are aware of the terms of these arrangements and have approved the arrangements on our behalf, they did not negotiate the terms. These terms, including terms relating to compensation, contractual and fiduciary duties, conflicts of interest and Brookfield's ability to engage in outside activities, including activities that compete with us, our activities and limitations on liability and indemnification, may be less favourable than otherwise might have resulted if the negotiations had involved unrelated parties. Under our Limited Partnership Agreement, persons who acquire our units and their transferees will be deemed to have agreed that none of those arrangements constitutes a breach of any duty that may be owed to them under our Limited Partnership Agreement or any duty stated or implied by law or equity.

The BBP General Partner may be unable or unwilling to terminate our Master Services Agreement.

        Our Master Services Agreement provides that the Service Recipients may terminate the agreement only if: the Service Providers default in the performance or observance of any material term, condition or covenant contained in the agreement in a manner that results in material harm to the Service Recipients and the default continues unremedied for a period of 30 days after written notice of the breach is given to the Service Providers; the Service Providers engage in any act of fraud, misappropriation of funds or embezzlement against any Service Recipient that results in material harm to the Service Recipients; the Service Providers are grossly negligent in the performance of their duties under the agreement and such negligence results in material harm to the Service Recipients; or upon the happening of certain events relating to the bankruptcy or insolvency of the Service Providers. The BBP General Partner cannot terminate the agreement for any other reason, including if the

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Service Providers or Brookfield experience a change of control, and there is no fixed term to the agreement. In addition, because the BBP General Partner is an affiliate of Brookfield, it likely will be unwilling to terminate our Master Services Agreement, even in the case of a default. If the Service Providers' performance does not meet the expectations of investors, and the BBP General Partner is unable or unwilling to terminate our Master Services Agreement, the market price of our units could suffer. Furthermore, the termination of our Master Services Agreement would terminate our company's rights under the Relationship Agreement and our Licensing Agreement. See "Relationship with Brookfield — Relationship Agreement" and "Relationship with Brookfield — Licensing Agreement".

The liability of the Service Providers is limited under our arrangements with it and we have agreed to indemnify the Service Providers against claims that they may face in connection with such arrangements, which may lead them to assume greater risks when making decisions relating to us than they otherwise would if acting solely for their own account.

        Under our Master Services Agreement, the Service Providers have not assumed any responsibility other than to provide or arrange for the provision of the services described in our Master Services Agreement in good faith and will not be responsible for any action that the BBP General Partner takes in following or declining to follow its advice or recommendations. In addition, under our Limited Partnership Agreement, the liability of the BBP General Partner and its affiliates, including the Service Providers, is limited to the fullest extent permitted by law to conduct involving bad faith, fraud or willful misconduct or, in the case of a criminal matter, action that was known to have been unlawful. The liability of the Service Providers under our Master Services Agreement is similarly limited, except that the Service Providers are also liable for liabilities arising from gross negligence. In addition, our company has agreed to indemnify the Service Providers to the fullest extent permitted by law from and against any claims, liabilities, losses, damages, costs or expenses incurred by them or threatened in connection with our business, investments and activities or in respect of or arising from our Master Services Agreement or the services provided by the Service Providers, except to the extent that such claims, liabilities, losses, damages, costs or expenses are determined to have resulted from the conduct in respect of which such persons have liability as described above. These protections may result in the Service Providers tolerating greater risks when making decisions than otherwise would be the case, including when determining whether to use and the extent of leverage in connection with acquisitions. The indemnification arrangements to which the Service Providers are a party may also give rise to legal claims for indemnification that are adverse to our company and our unitholders.

Risks Related to Taxation

General

Changes in tax law and practice may have a material adverse effect on the operations of our company, the Holding Entities and the operating businesses and, as a consequence, the value of our assets and the net amount of distributions payable to our unitholders.

        Our structure, including the structure of the Holding Entities and the operating businesses, is based on prevailing taxation law and practice in the local jurisdictions in which we operate. Any change in tax legislation (including in relation to taxation rates) and practice in these jurisdictions could adversely affect these entities, as well as the net amount of distributions payable to our unitholders. Taxes and other constraints that would apply to our operating businesses in such jurisdictions may not apply to local institutions or other parties, and such parties may therefore have a significantly lower effective cost of capital and a corresponding competitive advantage in pursuing such acquisitions.

Our company's ability to make distributions depends on it receiving sufficient cash distributions from its underlying operations, and we cannot assure our unitholders that our company will be able to make cash distributions to them in amounts that are sufficient to fund their tax liabilities.

        Our Holding Entities and operating businesses may be subject to local taxes in each of the relevant territories and jurisdictions in which they operate, including taxes on income, profits or gains and withholding taxes. As a result, our company's cash available for distribution is indirectly reduced by such taxes, and the post-tax return to our unitholders is similarly reduced by such taxes. We intend for future acquisitions to be

39


assessed on a case-by-case basis and, where possible and commercially viable, structured so as to minimize any adverse tax consequences to our unitholders as a result of making such acquisitions.

        In general, a unitholder that is subject to income tax in Canada or the United States must include in income its allocable share of our company's items of income, gain, loss and deduction (including, so long as it is treated as a partnership for tax purposes, our company's allocable share of those items of the Holding LP) for each of our company's fiscal years ending with or within such unitholder's tax year. See "Material Tax Considerations — Canadian Federal Income Tax Considerations" and "Material Tax Considerations — U.S. Tax Considerations". However, the cash distributed to a unitholder may not be sufficient to pay the full amount of such unitholder's tax liability in respect of its investment in our company, because each unitholder's tax liability depends on such unitholder's particular tax situation and the tax treatment of the underlying activities or assets of our company. If our company is unable to distribute cash in amounts that are sufficient to fund our unitholders' tax liabilities, each of our unitholders will still be required to pay income taxes on its share of our company's taxable income.

Our unitholders may be subject to non-U.S., state and local taxes and return filing requirements as a result of owning our units.

        Based on our expected method of operation and the ownership of our operating businesses indirectly through corporate Holding Entities, we do not expect any unitholder, solely as a result of owning our units, to be subject to any additional income taxes imposed on a net basis or additional tax return filing requirements in any jurisdiction in which we conduct activities or own property. However, our method of operation and current structure may change, and there can be no assurance that our unitholders, solely as a result of owning our units, will not be subject to certain taxes, including non-U.S., state and local income taxes, unincorporated business taxes and estate, inheritance or intangible taxes imposed by the various jurisdictions in which we do business or own property now or in the future, even if our unitholders do not reside in any of these jurisdictions. Consequently, our unitholders may also be required to file non-U.S., state and local income tax returns in some or all of these jurisdictions. Further, our unitholders may be subject to penalties for failure to comply with these requirements. It is the responsibility of each unitholder to file all U.S. federal, non-U.S., state and local tax returns that may be required of such unitholder.

Our unitholders may be exposed to transfer pricing risks.

        To the extent that our company, the Holding LP, the Holding Entities or the operating businesses enter into transactions or arrangements with parties with whom they do not deal at arm's length, including Brookfield, the relevant tax authorities may seek to adjust the quantum or nature of the amounts received or paid by such entities if they consider that the terms and conditions of such transactions or arrangements differ from those that would have been made between persons dealing at arm's length. This could result in more tax (and penalties and interest) being paid by such entities, and therefore the return to investors could be reduced. For Canadian tax purposes, a transfer pricing adjustment may in certain circumstances result in additional income being allocated to a unitholder with no corresponding cash distribution or in a dividend being deemed to be paid by a Canadian-resident to a non-arm's length non-resident, which deemed dividend is subject to Canadian withholding tax.

        The BBP General Partner believes that the base management fee and any other amount that is paid to the Service Providers will be commensurate with the value of the services being provided by the Service Providers and comparable to the fees or other amounts that would be agreed to in an arm's-length arrangement. However, no assurance can be given in this regard. If the relevant tax authority were to assert that an adjustment should be made under the transfer pricing rules to an amount that is relevant to the computation of the income of the Holding LP or our company, such assertion could result in adjustments to amounts of income (or loss) allocated to our unitholders by our company for tax purposes. In addition, we might also be liable for transfer pricing penalties in respect of transfer pricing adjustments unless reasonable efforts were made to determine, and use, arm's-length transfer prices. Generally, reasonable efforts in this regard are only considered to be made if contemporaneous documentation has been prepared in respect of such transactions or arrangements that support the transfer pricing methodology.

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The U.S. Internal Revenue Service, or IRS, or Canada Revenue Agency, or CRA, may not agree with certain assumptions and conventions that our company uses in order to comply with applicable U.S. and Canadian federal income tax laws or that our company uses to report income, gain, loss, deduction and credit to our unitholders.

        Our company will apply certain assumptions and conventions in order to comply with applicable tax laws and to report income, gain, deduction, loss and credit to a unitholder in a manner that reflects such unitholder's beneficial ownership of partnership items, taking into account variation in ownership interests during each taxable year because of trading activity. However, these assumptions and conventions may not be in compliance with all aspects of the applicable tax requirements. A successful IRS or CRA challenge to such assumptions or conventions could adversely affect the amount of tax benefits available to our unitholders and could require that items of income, gain, deduction, loss, or credit, including interest deductions, be adjusted, reallocated or disallowed in a manner that adversely affects our unitholders. See "Material Tax Considerations — Canadian Federal Income Tax Considerations" and "Material Tax Considerations — U.S. Tax Considerations."

Our unitholders who receive units pursuant to the spin-off may need to fund their income tax liability with cash from other sources or by selling our units.

        A unitholder who receives our units pursuant to the spin-off generally will be considered to have received a taxable distribution in an amount equal to the fair market value of the gross amount of our units received, without reduction for any tax withheld. Neither Brookfield Asset Management nor our company has any obligation to distribute cash to pay any taxes owed by a unitholder as a result of the spin-off and neither Brookfield Asset Management nor our company has any intention to do so. Accordingly, a unitholder may need to satisfy any U.S. federal income tax or Canadian federal income tax liability resulting from the receipt of our units with cash from such unitholder's own funds or by selling all or a portion of the units received. Each unitholder should consult its own tax adviser regarding the U.S. federal income tax consequences and Canadian federal income tax consequences to such unitholder of receiving our units pursuant to the spin-off.

United States

The IRS may disagree with our valuation of the spin-off distribution.

        Our unitholders that are subject to income tax in the United States will be considered to receive a taxable distribution as a result of the spin-off equal to the fair market value of the gross amount of our units received by them in the spin-off plus the amount of cash received in lieu of fractional units, without reduction for any tax withheld. We will use the five day volume-weighted average of the trading price of our units on the principal stock exchange for our units based on trading volumes for the five trading days immediately following the spin-off as the fair market value of our units for these purposes, but this amount is not binding on the IRS. The IRS may disagree with this valuation, and this could result in increased tax liability to such unitholders. Neither Brookfield Asset Management nor our company has any obligation to distribute cash to pay any taxes owed by a unitholder as a result of the spin-off and neither Brookfield Asset Management nor our company has any intention to do so. Accordingly, a unitholder may need to satisfy any U.S. federal income tax resulting from the receipt of our units with cash from such unitholder's own funds or by selling all or a portion of the units received.

If our company or the Holding LP were to be treated as a corporation for U.S. federal income tax purposes, the value of our units might be adversely affected.

        The value of our units to unitholders will depend in part on the treatment of our company and the Holding LP as partnerships for U.S. federal income tax purposes. However, in order for our company to be treated as a partnership for U.S. federal income tax purposes, 90% or more of our company's gross income for every taxable year must consist of qualifying income, as defined in Section 7704 of the U.S. Internal Revenue Code of 1986, as amended, or the U.S. Internal Revenue Code, and our company must not be required to register, if it were a U.S. corporation, as an investment company under the Investment Company Act and related rules. Although the BBP General Partner intends to manage our company's affairs so that our company will not need to be registered as an investment company if it were a U.S. corporation and so that it will meet the 90% test described above in each taxable year, our company may not meet these requirements, or current law may change so as to cause, in either event, our company to be treated as a corporation for U.S. federal income tax

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purposes. If our company (or the Holding LP) were treated as a corporation for U.S. federal income tax purposes, adverse U.S. federal income tax consequences could result for our unitholders and our company (or the Holding LP, as applicable), as described in greater detail in "Material Tax Considerations — U.S. Tax Considerations — Partnership Status of Our Company and the Holding LP."

We may be subject to U.S. backup withholding tax or other U.S. withholding taxes if any unitholder fails to comply with U.S. tax reporting rules or if the IRS or other applicable state or local taxing authority does not accept our withholding methodology, and such excess withholding tax cost will be an expense borne by our company and, therefore, by all of our unitholders on a pro rata basis.

        We may become subject to U.S. "backup" withholding tax or other U.S. withholding taxes with respect to any unitholder who fails to timely provide our company (or the applicable clearing agent or other intermediary) with an IRS Form W-9 or IRS Form W-8, as the case may be, or if the withholding methodology we use is not accepted by the IRS or other applicable state or local taxing authority. See "Material Tax Considerations — U.S. Tax Considerations — Administrative Matters — Withholding and Backup Withholding". To the extent that any unitholder fails to timely provide the applicable form (or such form is not properly completed), or should the IRS or other applicable state or local taxing authority not accept our withholding methodology, our company might treat such U.S. backup withholding taxes or other U.S. withholding taxes as an expense, which would be borne indirectly by all of our unitholders on a pro rata basis. As a result, our unitholders that fully comply with their U.S. tax reporting obligations may bear a share of such burden created by other unitholders that do not comply with the U.S. tax reporting rules.

Tax-exempt organizations may face certain adverse U.S. tax consequences from owning our units.

        The BBP General Partner intends to use commercially reasonable efforts to structure the activities of our company and the Holding LP, respectively, to avoid generating income connected with the conduct of a trade or business (which income generally would constitute "unrelated business taxable income", or UBTI, to the extent allocated to a tax-exempt organization). However, neither our company nor the Holding LP is prohibited from incurring indebtedness, and no assurance can be provided that neither our company nor the Holding LP will generate UBTI attributable to debt-financed property in the future. In particular, UBTI includes income attributable to debt-financed property, and neither our company nor the Holding LP is prohibited from financing the acquisition of property with debt. The potential for income to be characterized as UBTI could make our units an unsuitable investment for a tax-exempt organization. Each tax-exempt organization should consult its own tax adviser to determine the U.S. federal income tax consequences of an investment in our units.

If our company were engaged in a U.S. trade or business, non-U.S. persons would face certain adverse U.S. tax consequences from owning our units.

        The BBP General Partner intends to use commercially reasonable efforts to structure the activities of our company and the Holding LP to avoid generating income treated as effectively connected with a U.S. trade or business, including effectively connected income attributable to the sale of a "United States real property interest", as defined in the U.S. Internal Revenue Code. If our company were deemed to be engaged in a U.S. trade or business, or to realize gain from the sale or other disposition of a U.S. real property interest, Non-U.S. Holders (as defined in "Material Tax Considerations — U.S. Tax Considerations") generally would be required to file U.S. federal income tax returns and could be subject to U.S. federal withholding tax at the highest marginal U.S. federal income tax rates applicable to ordinary income. See "Material Tax Considerations — U.S. Tax Considerations — Consequences to Non-U.S. Holders".

To meet U.S. federal income tax and other objectives, our company and the Holding LP may acquire assets through U.S. and non-U.S. Holding Entities that are treated as corporations for U.S. federal income tax purposes, and such Holding Entities may be subject to corporate income tax.

        To meet U.S. federal income tax and other objectives, our company and the Holding LP may acquire assets through U.S. and non-U.S. Holding Entities that are treated as corporations for U.S. federal income tax purposes, and such Holding Entities may be subject to corporate income tax. Consequently, items of income, gain, loss, deduction or credit realized in the first instance by the operating businesses will not flow, for

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U.S. federal income tax purposes, directly to the Holding LP, our company or our unitholders, and any such income or gain may be subject to a corporate income tax, in the United States or other jurisdictions, at the level of the Holding Entity. Any such additional taxes may adversely affect our company's ability to maximize its cash flow.

Our unitholders taxable in the United States may be viewed as holding an indirect interest in an entity classified as a "passive foreign investment company" for U.S. federal income tax purposes.

        U.S. Holders may face adverse U.S. tax consequences arising from the ownership of a direct or indirect interest in a "passive foreign investment company", or PFIC. In general, gain realized by U.S. Holders from the sale of stock of a PFIC is subject to tax at ordinary income rates, and an interest charge generally applies. Alternatively, U.S. Holders making certain elections with respect to their direct or indirect interest in a PFIC may be required to recognize taxable income prior to the receipt of cash relating to such income. See "Material Tax Considerations — U.S. Tax Considerations — Consequences to U.S. Holders — Passive Foreign Investment Companies". Based on our organizational structure, as well as our expected income and assets, the BBP General Partner currently believes that a U.S. Holder is unlikely to be regarded as owning an interest in a PFIC solely by reason of owning our units for the taxable year ending December 31, 2015. However, there can be no assurance that a future entity in which our company acquires an interest will not be classified as a PFIC with respect to a U.S. Holder, because PFIC status is a factual determination that depends on the assets and income of a given entity and must be made on an annual basis. Each U.S. Holder should consult its own tax adviser regarding the implication of the PFIC rules for an investment in our units.

Tax gain or loss from the disposition of our units could be more or less than expected.

        If a U.S. Holder sells units that it holds, then it generally will recognize gain or loss for U.S. federal income tax purposes equal to the difference between the amount realized and its adjusted tax basis in such units. Prior distributions to a unitholder in excess of the total net taxable income allocated to such unitholder will have decreased such unitholder's tax basis in our units. Therefore, such excess distributions will increase a unitholder's taxable gain or decrease such unitholder's taxable loss when our units are sold, and may result in a taxable gain even if the sale price is less than the original cost. A portion of the amount realized, whether or not representing gain, could be ordinary income to such unitholder.

Our company structure involves complex provisions of U.S. federal income tax law for which no clear precedent or authority may be available. The tax characterization of our company structure is also subject to potential legislative, judicial, or administrative change and differing interpretations, possibly on a retroactive basis.

        The U.S. federal income tax treatment of our unitholders depends in some instances on determinations of fact and interpretations of complex provisions of U.S. federal income tax law for which no clear precedent or authority may be available. Unitholders should be aware that the U.S. federal income tax rules, particularly those applicable to partnerships, are constantly under review by the Congressional tax-writing committees and other persons involved in the legislative process, the IRS, the Treasury Department and the courts, frequently resulting in changes which could adversely affect the value of our units or cause our company to change the way it conducts its activities. For example, changes to the U.S. federal tax laws and interpretations thereof could make it more difficult or impossible for our company to be treated as a partnership that is not taxable as a corporation for U.S. federal income tax purposes, change the character or treatment of portions of our company's income, reduce the net amount of distributions available to our unitholders or otherwise affect the tax considerations of owning our units. In addition, our company's organizational documents and agreements permit the BBP General Partner to modify our limited partnership agreement, without the consent of our unitholders, to address such changes. These modifications could have a material adverse impact on our unitholders. See "Material Tax Considerations — U.S. Tax Considerations — Administrative Matters — New Legislation or Administrative or Judicial Action".

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Our company's delivery of required tax information for a taxable year may be subject to delay, which could require a unitholder who is a U.S. taxpayer to request an extension of the due date for such unitholder's income tax return.

        Our company has agreed to use commercially reasonable efforts to provide U.S. tax information (including IRS Schedule K-1 information needed to determine a unitholder's allocable share of our company's income, gain, losses and deductions) no later than 90 days after the close of each calendar year. However, providing this U.S. tax information to our unitholders will be subject to delay in the event of, among other reasons, the late receipt of any necessary tax information from lower-tier entities. It is therefore possible that, in any taxable year, a unitholder will need to apply for an extension of time to file such unitholder's tax returns. In addition, unitholders that do not ordinarily have U.S. federal tax filing requirements will not receive a Schedule K-1 and related information unless such unitholders request it within 60 days after the close of each calendar year. See "Material Tax Considerations — U.S. Tax Considerations — Administrative Matters — Information Returns and Audit Procedures".

The sale or exchange of 50% or more of our units will result in the constructive termination of our company for U.S. federal income tax purposes.

        Our company will be considered to have been terminated for U.S. federal income tax purposes if there is a sale or exchange of 50% or more of our units within a 12-month period. A constructive termination of our company would, among other things, result in the closing of its taxable year for U.S. federal income tax purposes for all of our unitholders and could result in the possible acceleration of income to certain of our unitholders and certain other consequences that could adversely affect the value of our units. However, the BBP General Partner does not expect a constructive termination, should it occur, to have a material impact on the computation of the future taxable income generated by our company for U.S. federal income tax purposes. See "Material Tax Considerations — U.S. Tax Considerations — Administrative Matters — Constructive Termination".

If the IRS makes an audit adjustment to our income tax returns for taxable years beginning after December 31, 2017, it may assess and collect any taxes (including penalties and interest) resulting from such audit adjustment directly from us, which could adversely affect our unitholders.

        Under the Bipartisan Budget Act of 2015, for taxable years beginning after December 31, 2017, if the IRS makes an audit adjustment to our income tax returns, it may assess and collect any taxes (including penalties and interest) resulting from such audit adjustment directly from our company instead of unitholders (as under prior law). We may be permitted to elect to have the BBP General Partner and our unitholders take such audit adjustment into account in accordance with their interests in us during the taxable year under audit. However, there can be no assurance that we will choose to make such election or that it will be available in all circumstances, and the manner in which the election is made and implemented has yet to be determined. If we do not make the election, we may be required to pay taxes, penalties or interest as a result of an audit adjustment. As a result, our current unitholders might bear some or all of the cost of the tax liability resulting from such audit adjustment, even if our current unitholders did not own our units during the taxable year under audit. The foregoing considerations also apply with respect to our company's interest in the Holding LP. These rules do not apply to our company or the Holding LP for taxable years beginning on or before December 31, 2017.

Under the Foreign Account Tax Compliance provisions of the Hiring Incentives to Restore Employment Act of 2010, or FATCA, certain payments made or received by our company may be subject to a 30% federal withholding tax, unless certain requirements are met.

        Under FATCA, a 30% withholding tax may apply to certain payments of U.S.-source income made to our company, the Holding LP, the Holding Entities or the operating businesses, or by our company to a unitholder, unless certain requirements are met, as described in greater detail in "Material Tax Considerations — U.S. Tax Considerations — Administrative Matters — Foreign Account Tax Compliance". The 30% withholding tax may also apply to certain payments made on or after January 1, 2019 that are attributable to U.S.-source income or that constitute gross proceeds from the disposition of property that could produce U.S.-source dividends or interest. To ensure compliance with FATCA, information regarding certain unitholders' ownership of our units

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may be reported to the IRS or to a non-U.S. governmental authority. Unitholders should consult their own tax advisers regarding the consequences under FATCA of an investment in our units.

Canada

The Canada Revenue Agency may disagree with our valuation of the spin-off dividend.

        Our unitholders that are subject to income tax in Canada will be considered to receive a dividend upon the spin-off in an amount equal to the fair market value of the gross amount of our units received upon the spin-off plus the amount of any cash received in lieu of fractional units. We will use the volume-weighted average trading price of our units on the TSX or NYSE (as applicable) for the five trading days immediately following the spin-off as the fair market value of our units for these purposes but this amount is not binding on the CRA. The CRA may disagree with this valuation and this could result in increased tax liability to such unitholders. Neither Brookfield nor our company has any obligation to distribute cash to pay any taxes owed by a unitholder as a result of the spin-off and neither Brookfield nor our company has any intention to do so. Accordingly, a unitholder may need to satisfy any Canadian federal income tax liability resulting from the receipt of our units with cash from such unitholder's own funds or by selling all or a portion of the units received.

If the subsidiaries that are corporations, or Non-Resident Subsidiaries, and that are not resident or deemed to be resident in Canada for purposes of the Income Tax Act (Canada) (together with the regulations thereunder the "Tax Act") and that are "controlled foreign affiliates" (as defined in the Tax Act and referred to herein as "CFAs") in which the Holding LP directly holds an equity interest earn income that is "foreign accrual property income" (as defined in the Tax Act and referred to herein as "FAPI"), our unitholders may be required to include amounts allocated from our company in computing their income for Canadian federal income tax purposes even though there may be no corresponding cash distribution.

        Certain of the Non-Resident Subsidiaries in which the Holding LP directly holds an equity interest are expected to be CFAs of the Holding LP. If any CFA of the Holding LP or any direct or indirect subsidiary thereof that is itself a CFA of the Holding LP, or Indirect CFA, earns income that is characterized as FAPI in a particular taxation year of the CFA or Indirect CFA, the FAPI allocable to the Holding LP must be included in computing the income of the Holding LP for Canadian federal income tax purposes for the fiscal period of the Holding LP in which the taxation year of that CFA or Indirect CFA ends, whether or not the Holding LP actually receives a distribution of that FAPI. Our company will include its share of such FAPI of the Holding LP in computing its income for Canadian federal income tax purposes and our unitholders will be required to include their proportionate share of such FAPI allocated from our company in computing their income for Canadian federal income tax purposes. As a result, our unitholders may be required to include amounts in their income for Canadian federal income tax purposes even though they have not and may not receive an actual cash distribution of such amounts. The Tax Act contains anti-avoidance rules to address certain foreign tax credit generator transactions, or Foreign Tax Credit Generator Rules. Under the Foreign Tax Credit Generator Rules, the "foreign accrual tax" (as defined in the Tax Act) applicable to a particular amount of FAPI included in the Holding LP's income in respect of a particular "foreign affiliate" as defined in the Tax Act of the Holding LP may be limited in certain specified circumstances. See "Material Tax Considerations — Canadian Federal Income Tax Considerations".

The Canadian federal income tax consequences to our unitholders could be materially different in certain respects from those described in this prospectus if our company or the Holding LP is a "SIFT partnership" as defined in the Tax Act.

        Under the rules in the Tax Act applicable to a "SIFT partnership", or the SIFT Rules, certain income and gains earned by a "SIFT partnership" will be subject to income tax at the partnership level at a rate similar to a corporation, and allocations of such income and gains to its partners will be taxed as a dividend from a "taxable Canadian corporation". In particular, a "SIFT partnership" will be required to pay a tax on the total of its income from businesses carried on in Canada, income from "non-portfolio properties" as defined in the Tax Act other than taxable dividends, and taxable capital gains from dispositions of "non-portfolio properties". "Non-portfolio properties" include, among other things, equity interests or debt of corporations, trusts or partnerships that are resident in Canada, and of non-resident persons or partnerships the principal source of income of which is one or any combination of sources in Canada (other than an "excluded subsidiary entity" as

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defined in the Tax Act), that are held by the "SIFT partnership" and have a fair market value that is greater than 10% of the equity value of such entity, or that have, together with debt or equity that the "SIFT partnership" holds of entities affiliated (within the meaning of the Tax Act) with such entity, an aggregate fair market value that is greater than 50% of the equity value of the "SIFT partnership". The tax rate that is applied to the above mentioned sources of income and gains is set at a rate equal to the "net corporate income tax rate", plus the "provincial SIFT tax rate", each as defined in the Tax Act.

        A partnership will be a "SIFT partnership" throughout a taxation year if at any time in the taxation year (i) it is a "Canadian resident partnership" as defined in the Tax Act, (ii) "investments", as defined in the Tax Act, in the partnership are listed or traded on a stock exchange or other public market and (iii) it holds one or more "non-portfolio properties". For these purposes, a partnership will be a "Canadian resident partnership" at a particular time if (a) it is a "Canadian partnership" as defined in the Tax Act at that time, (b) it would, if it were a corporation, be resident in Canada (including, for greater certainty, a partnership that has its central management and control located in Canada) or (c) it was formed under the laws of a province. A "Canadian partnership" for these purposes is a partnership all of whose members are resident in Canada or are partnerships that are "Canadian partnerships".

        Under the SIFT Rules, our company and the Holding LP could each be a "SIFT partnership" if it is a "Canadian resident partnership". However, the Holding LP would not be a "SIFT partnership" if our company is a "SIFT partnership" regardless of whether the Holding LP is a "Canadian resident partnership" on the basis that the Holding LP would be an "excluded subsidiary entity". Our company and the Holding LP will be a "Canadian resident partnership" if the central management and control of these partnerships is located in Canada. This determination is a question of fact and is expected to depend on where the BBP General Partner is located and exercises central management and control of the partnerships. Based on the place of its incorporation, governance and activities, the BBP General Partner does not expect that its central management and control will be located in Canada such that the SIFT Rules should not apply to our company or to the Holding LP at any relevant time. However, no assurance can be given in this regard. If our company or the Holding LP is a "SIFT partnership", the Canadian federal income tax consequences to our unitholders could be materially different in certain respects from those described in "Material Tax Considerations-Canadian Federal Income Tax Considerations". In addition, there can be no assurance that the SIFT Rules will not be revised or amended in the future such that the SIFT Rules will apply.

Unitholders may be required to include imputed amounts in their income for Canadian federal income tax purposes in accordance with section 94.1 of the Tax Act.

        Section 94.1 of the Tax Act contains rules relating to interests in entities that are not resident or deemed to be resident in Canada for purposes of the Tax Act or not situated in Canada, other than a CFA of the taxpayer, or Non-Resident Entities, that could in certain circumstances cause income to be imputed to unitholders for Canadian federal income tax purposes, either directly or by way of allocation of such income imputed to our company or to the Holding LP. See "Material Tax Considerations — Canadian Federal Income Tax Considerations."

Our units may or may not continue to be "qualified investments" under the Tax Act for registered plans.

        Provided that our units are listed on a "designated stock exchange" as defined in the Tax Act (which includes the NYSE and the TSX), our units will be "qualified investments" under the Tax Act for a trust governed by a registered retirement saving plan, or RRSP, deferred profit sharing plan, registered retirement income fund, or RRIF, registered education saving plan, registered disability saving plan and a tax-free savings account, or TFSA. However, there can be no assurance that our units will be listed or continue to be listed on a designated stock exchange. There can also be no assurance that tax laws relating to qualified investments will not be changed. Taxes may be imposed in respect of the acquisition or holding of non-qualified investments by such registered plans and certain other taxpayers and with respect to the acquisition or holding of "prohibited investments" as defined in the Tax Act by a RRSP, RRIF or TFSA.

        Generally, our units will not be a "prohibited investment" for a trust governed by a RRSP, RRIF or TFSA, provided that the holder of the TFSA or the annuitant under the RRSP or RRIF, as the case may be, deals at

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arm's length with our company for purposes of the Tax Act and does not have a "significant interest", as defined in the Tax Act for purposes of the prohibited investment rules, in our company. Unitholders who will hold our units in a TFSA, RRSP, or RRIF should consult with their own tax advisors regarding the application of the foregoing prohibited investment rules having regard to their particular circumstances.

Unitholders' foreign tax credits for Canadian federal income tax purposes will be limited if the Foreign Tax Credit Generator Rules apply in respect of the foreign "business-income tax" or "non-business-income tax", each as defined in the Tax Act, paid by our company or the Holding LP to a foreign country.

        Under the Foreign Tax Credit Generator Rules, the foreign "business-income tax" or "non-business-income tax" for Canadian federal income tax purposes for any taxation year may be limited in certain circumstances. If the Foreign Tax Credit Generator Rules apply, the allocation to a unitholder of foreign "business-income tax" or "non-business-income tax" paid by our company or the Holding LP, and therefore, such unitholder's foreign tax credits for Canadian federal income tax purposes, will be limited. See "Material Tax Considerations — Canadian Federal Income Tax Considerations".

Unitholders who are not and are not deemed to be resident in Canada for purposes of the Tax Act and who do not use or hold, and are not deemed to use or hold, their units of our company in connection with a business carried on in Canada, or Non-Canadian Limited Partners, may be subject to Canadian federal income tax with respect to any Canadian source business income earned by our company or the Holding LP if our company or the Holding LP were considered to carry on business in Canada.

        If our company or the Holding LP were considered to carry on a business in Canada for purposes of the Tax Act, Non-Canadian Limited Partners would be subject to Canadian federal income tax on their proportionate share of any Canadian source business income earned or considered to be earned by our company, subject to the potential application of the safe harbour rule in section 115.2 of the Tax Act and any relief that may be provided by any relevant income tax treaty or convention.

        The BBP General Partner intends to manage the affairs of our company and the Holding LP, to the extent possible, so that they do not carry on business in Canada and are not considered or deemed to carry on business in Canada for purposes of the Tax Act. Nevertheless, because the determination of whether our company or the Holding LP is carrying on business and, if so, whether that business is carried on in Canada, is a question of fact that is dependent upon the surrounding circumstances, the CRA might contend successfully that either or both of our company and the Holding LP carries on business in Canada for purposes of the Tax Act.

        If our company or the Holding LP is considered to carry on business in Canada or is deemed to carry on business in Canada for the purposes of the Tax Act, Non-Canadian Limited Partners that are corporations would be required to file a Canadian federal income tax return for each year in which they are a Non-Canadian Limited Partner regardless of whether relief from Canadian taxation is available under an applicable income tax treaty or convention. Non-Canadian Limited Partners who are individuals would only be required to file a Canadian federal income tax return for any taxation year in which they are allocated income from our company from carrying on business in Canada that is not exempt from Canadian taxation under the terms of an applicable income tax treaty or convention.

Non-Canadian Limited Partners may be subject to Canadian federal income tax on capital gains realized by our company or the Holding LP on dispositions of "taxable Canadian property" as defined in the Tax Act.

        A Non-Canadian Limited Partner will be subject to Canadian federal income tax on its proportionate share of capital gains realized by our company or the Holding LP on the disposition of "taxable Canadian property" other than "treaty protected property" as defined in the Tax Act. "Taxable Canadian property" includes, but is not limited to, property that is used or held in a business carried on in Canada and shares of corporations that are not listed on a "designated stock exchange" if more than 50% of the fair market value of the shares is derived from certain Canadian properties during the 60-month period immediately preceding the particular time. Property of our company and the Holding LP generally will be "treaty-protected property" to a Non-Canadian Limited Partner if the gain from the disposition of the property would, because of an applicable income tax treaty or convention, be exempt from tax under the Tax Act. The BBP General Partner does not

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expect our company and the Holding LP to realize capital gains or losses from dispositions of "taxable Canadian property". However, no assurance can be given in this regard. Non-Canadian Limited Partners will be required to file a Canadian federal income tax return in respect of a disposition of "taxable Canadian property" by our company or the Holding LP unless the disposition is an "excluded disposition" for the purposes of section 150 of the Tax Act. However, Non-Canadian Limited Partners that are corporations will still be required to file a Canadian federal income tax return in respect of a disposition of "taxable Canadian property" that is an "excluded disposition" for the purposes of section 150 of the Tax Act if tax would otherwise be payable under Part I of the Tax Act by such Non-Canadian Limited Partners in respect of the disposition but is not because of an applicable income tax treaty or convention (otherwise than in respect of a disposition of "taxable Canadian property" that is "treaty-protected property" of the corporation). In general, an "excluded disposition" is a disposition of property by a taxpayer in a taxation year where: (a) the taxpayer is a non-resident of Canada at the time of the disposition; (b) no tax is payable by the taxpayer under Part I of the Tax Act for the taxation year; (c) the taxpayer is not liable to pay any amounts under the Tax Act in respect of any previous taxation year (other than certain amounts for which the CRA holds adequate security); and (d) each "taxable Canadian property" disposed of by the taxpayer in the taxation year is either: (i) "excluded property" as defined in subsection 116(6) of the Tax Act; or (ii) is property in respect of the disposition of which a certificate under subsection 116(2), (4) or (5.2) of the Tax Act has been issued by the CRA. Non-Canadian Limited Partners should consult their own tax advisors with respect to the requirements to file a Canadian federal income tax return in respect of a disposition of "taxable Canadian property" by our company or the Holding LP.

Non-Canadian Limited Partners may be subject to Canadian federal income tax on capital gains realized on the disposition of our units if our units are "taxable Canadian property".

        Any capital gain arising from the disposition or deemed disposition of our units by a Non-Canadian Limited Partner will be subject to taxation in Canada, if, at the time of the disposition or deemed disposition, our units are "taxable Canadian property" of the Non-Canadian Limited Partner, unless our units are "treaty-protected property" to such Non-Canadian Limited Partner. In general, our units will not constitute "taxable Canadian property" of any Non-Canadian Limited Partner at the time of disposition or deemed disposition, unless (a) at any time in the 60-month period immediately preceding the disposition or deemed disposition, more than 50% of the fair market value of our units was derived, directly or indirectly (excluding through a corporation, partnership or trust, the shares or interests in which were not themselves "taxable Canadian property"), from one or any combination of: (i) real or immovable property situated in Canada; (ii) "Canadian resource property" as defined in the Tax Act; (iii) "timber resource property" as defined in the Tax Act; and (iv) options in respect of, or interests in, or for civil law rights in, such property, whether or not such property exists, or (b) our units are otherwise deemed to be "taxable Canadian property". Since our company's assets will consist principally of units of the Holding LP, our units would generally be "taxable Canadian property" at a particular time if the units of the Holding LP held by our company derived, directly or indirectly (excluding through a corporation, partnership or trust, the shares or interests in which were not themselves "taxable Canadian property"), more than 50% of their fair market value from properties described in (i) to (iv) above, at any time in the 60-month period preceding the particular time. The BBP General Partner does not expect our units to be "taxable Canadian property" of any Non-Canadian Limited Partner at any time but no assurance can be given in this regard. See "Material Tax Considerations — Canadian Federal Income Tax Considerations". Even if our units constitute "taxable Canadian property", units of our company will be "treaty protected property" if the gain on the disposition of our units is exempt from tax under the Tax Act under the terms of an applicable income tax treaty or convention. If our units constitute "taxable Canadian property", Non-Canadian Limited Partners will be required to file a Canadian federal income tax return in respect of a disposition of our units unless the disposition is an "excluded disposition" (as discussed above). If our units constitute "taxable Canadian property", Non-Canadian Limited Partners should consult their own tax advisors with respect to the requirement to file a Canadian federal income tax return in respect of a disposition of our units.

Non-Canadian Limited Partners may be subject to Canadian federal income tax reporting and withholding tax requirements on the disposition of "taxable Canadian property".

        Non-Canadian Limited Partners who dispose of "taxable Canadian property", other than "excluded property" and certain other property described in subsection 116(5.2) of the Tax Act, (or who are considered to

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have disposed of such property on the disposition of such property by our company or the Holding LP), are obligated to comply with the procedures set out in section 116 of the Tax Act and obtain a certificate pursuant to the Tax Act. In order to obtain such certificate, the Non-Canadian Limited Partner is required to report certain particulars relating to the transaction to CRA not later than 10 days after the disposition occurs. The BBP General Partner does not expect our units to be "taxable Canadian property" and does not expect our company or the Holding LP to dispose of property that is "taxable Canadian property" but no assurance can be given in these regards.

Payments of dividends or interest (other than interest not subject to Canadian federal withholding tax) by residents of Canada to the Holding LP will be subject to Canadian federal withholding tax and we may be unable to apply a reduced rate taking into account the residency or entitlement to relief under an applicable income tax treaty or convention of our unitholders.

        Our company and the Holding LP will be deemed to be a non-resident person in respect of certain amounts paid or credited or deemed to be paid or credited to them by a person resident or deemed to be resident in Canada, including dividends or interest. Dividends or interest (other than interest not subject to Canadian federal withholding tax) paid or deemed to be paid by a person resident or deemed to be resident in Canada to the Holding LP will be subject to withholding tax under Part XIII of the Tax Act at the rate of 25%. However, the CRA's administrative practice in similar circumstances is to permit the rate of Canadian federal withholding tax applicable to such payments to be computed by looking through the partnership and taking into account the residency of the partners (including partners who are resident in Canada) and any reduced rates of Canadian federal withholding tax that any non-resident partners may be entitled to under an applicable income tax treaty or convention, provided that the residency status and entitlement to treaty benefits can be established. In determining the rate of Canadian federal withholding tax applicable to amounts paid by the Holding Entities to the Holding LP, the BBP General Partner expects the Holding Entities to look-through the Holding LP and our company to the residency of the partners of our company (including partners who are resident in Canada) and to take into account any reduced rates of Canadian federal withholding tax that non-resident partners may be entitled to under an applicable income tax treaty or convention in order to determine the appropriate amount of Canadian federal withholding tax to withhold from dividends or interest paid to the Holding LP. However, there can be no assurance that the CRA will apply its administrative practice in this context. If the CRA's administrative practice is not applied and the Holding Entities withhold Canadian federal withholding tax from applicable payments on a look-through basis, the Holding Entities may be liable for additional amounts of Canadian federal withholding tax plus any associated interest and penalties. Under the Canada-United States Tax Convention (1980), or the Treaty, a Canadian resident payer is required in certain circumstances to look-through fiscally transparent partnerships, such as our company and the Holding LP, to the residency and Treaty entitlements of their partners and take into account the reduced rates of Canadian federal withholding tax that such partners may be entitled to under the Treaty.

        While the BBP General Partner expects the Holding Entities to look-through our company and the Holding LP in determining the rate of Canadian federal withholding tax applicable to amounts paid or deemed to be paid by the Holding Entities to the Holding LP, we may be unable to accurately or timely determine the residency of our unitholders for purposes of establishing the extent to which Canadian federal withholding taxes apply or whether reduced rates of withholding tax apply to some or all of our unitholders. In such a case, the Holding Entities will withhold Canadian federal withholding tax from all payments made to the Holding LP that are subject to Canadian federal withholding tax at the rate of 25%. Canadian resident unitholders will be entitled to claim a credit for such taxes against their Canadian federal income tax liability but Non-Canadian Limited Partners will need to take certain steps to receive a refund or credit in respect of any such Canadian federal withholding taxes withheld equal to the difference between the withholding tax at a rate of 25% and the withholding tax at the reduced rate they are entitled to under an applicable income tax treaty or convention. See "Material Tax Considerations — Canadian Federal Income Tax Considerations" for further detail. Unitholders should consult their own tax advisors concerning all aspects of Canadian federal withholding taxes.

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

        This prospectus contains certain forward-looking statements. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. Forward-looking statements in this prospectus include statements regarding the anticipated benefits of the spin-off, the quality of our assets, our anticipated financial performance, our company's future growth prospects, our ability to make distributions and the amount of such distributions, the listing and liquidity of our units and our company's access to capital. In some cases, you can identify forward-looking statements by terms such as "anticipate", "believe", "could", "estimate", "expect", "intend", "may", "plan", "potential", "should", "will" and "would" or the negative of those terms or other comparable terminology.

        The forward-looking statements are based on our beliefs, assumptions and expectations of our future performance, taking into account all information currently available to us. These beliefs, assumptions and expectations can change as a result of many possible events or factors, not all of which are known to us or within our control. If a change occurs, our business, financial condition, liquidity and results of operations may vary materially from those expressed in our forward-looking statements. The following factors, among others, could cause our actual results to vary from our forward-looking statements:

    changes in the general economy;

    general economic and business conditions that could impact our ability to access capital markets and credit markets;

    the cyclical nature of most of our operations;

    exploration and development may not result in commercially productive assets;

    actions of competitors;

    foreign currency risk;

    our ability to derive fully anticipated benefits from future or existing acquisitions, joint ventures, investments or dispositions;

    actions or potential actions that could be taken by our co-venturers, partners, fund investors or co-tenants;

    risks commonly associated with a separation of economic interest from control;

    failure to maintain effective internal controls;

    actions or potential actions that could be taken by Brookfield;

    the departure of some or all of Brookfield's key professionals;

    the threat of litigation;

    changes to legislation and regulations;

    possible environmental liabilities and other possible liabilities;

    our ability to obtain adequate insurance at commercially reasonable rates;

    our financial condition and liquidity;

    volatility in oil and gas prices;

    capital expenditures required in connection with finding, developing or acquiring additional reserves;

    downgrading of credit ratings and adverse conditions in the credit markets;

    changes in financial markets, foreign currency exchange rates, interest rates or political conditions;

    the general volatility of the capital markets and the market price of our units; and

    other factors described in this prospectus, including those set forth under "Risk Factors", "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Business".

        Statements relating to "reserves" are deemed to be forward-looking statements as they involve the implied assessment, based on certain estimates and assumptions, that the reserves described herein can be profitably produced in the future. Except as required by applicable law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise. We qualify any and all of our forward-looking statements by these cautionary factors. Please keep this cautionary note in mind as you read this prospectus.

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THE SPIN-OFF

Background to and Purpose of the Spin-Off

        The goal of Brookfield Asset Management is to establish itself as the asset manager of choice for investors in alternative asset classes, principally property, renewable energy, infrastructure and private equity. In 2007, Brookfield Asset Management established Brookfield Infrastructure Partners L.P. as its primary entity to own and operate infrastructure assets on a global basis. In 2011, Brookfield Asset Management established Brookfield Renewable Partners L.P. as its primary entity to own and operate renewable energy assets on a global basis. In 2013, Brookfield Asset Management created Brookfield Property Partners L.P. as its primary entity to own, operate and invest in office, retail, multifamily, industrial, hotel and triple net lease assets. Our company will be the flagship public entity through which Brookfield owns and operates its business services and industrial operations.

GRAPHIC


Interests shown are approximate and on a fully-exchanged basis.

        The spin-off is intended to achieve the following objectives for Brookfield:

    Create a company with significant market capitalization that will provide an attractive currency to source and execute large-scale transactions outside of property, renewable energy and infrastructure, thereby broadening the spectrum of opportunities available to Brookfield.

    Delineate and emphasize the scale and value of our business services and industrial operations for shareholders of Brookfield Asset Management.

    Provide greater transparency from Brookfield as a global alternative asset manager.

Mechanics of the Spin-Off

        Brookfield Asset Management intends to make a special dividend of our units to holders of its Class A limited voting shares and Class B limited voting shares, pursuant to which holders of Class A limited voting shares and Class B limited voting shares of Brookfield Asset Management will be entitled to receive one (1) of our units (less any units withheld to satisfy withholding tax obligations) for every fifty (50) Class A limited voting shares or Class B limited voting shares held as of the record date of the special dividend.

        Based on approximately one (1) billion Class A limited voting shares and Class B limited voting shares of Brookfield Asset Management that we expect to be outstanding on the record date for the spin-off, Brookfield Asset Management intends to make a special dividend of approximately 20 million units of our company to holders of Brookfield Asset Management's Class A limited voting shares and Class B limited voting shares. Immediately after the spin-off, Brookfield will hold approximately 24 million of our units or approximately 55% of our outstanding units, and approximately 46 million Redemption-Exchange Units that, taken together and on a fully exchanged basis, represent approximately 78% of the units of our company.

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        Brookfield's interest in our company on the closing date of the spin-off will consist of a combination of our units, general partnership units, Redemption-Exchange Units and Special LP Units. The ownership of our units and Redemption-Exchange Units discussed above is based on the current value of the operating businesses to be contributed to our company prior to the spin-off, which may be different at the closing of the spin-off. As a result, the percentage of our units to be held by holders of Brookfield Asset Management's Class A limited voting shares and Class B limited voting shares, and the corresponding percentage of our units to be held by Brookfield Asset Management, in each case on the closing date of the spin-off, may be different than as set forth above. However, Brookfield's effective equity interest in our business, on a fully exchanged basis, will be approximately 78% on the closing date of the spin-off.

        Holders of Brookfield Asset Management's Class A limited voting shares or Class B limited voting shares will not be required to pay for the units to be received upon completion of the spin-off or tender or surrender Class A limited voting shares or Class B limited voting shares of Brookfield Asset Management or take any other action in connection with the spin-off. No vote of Brookfield Asset Management's shareholders will be required for the spin-off. If a holder owns Brookfield Asset Management Class A limited voting shares or Class B limited voting shares as of the close of business on the record date of the special dividend, which is expected to be June 2, 2016, a certificate reflecting the holder's ownership of our units will be mailed to the holder, or the holder's brokerage account will be credited for our units, on or about June 23, 2016. The number of Class A limited voting shares and Class B limited voting shares of Brookfield Asset Management that a holder owns will not change as a result of the spin-off. Brookfield Asset Management's Class A limited voting shares and Class B limited voting shares will continue to be traded on the NYSE under the symbol "BAM", on the TSX under the symbol "BAM.A" and on the NYSE Euronext under the symbol "BAMA".

        No holder will be entitled to receive any fractional interests in our units. Holders who would otherwise be entitled to a fractional unit will receive a cash payment. Brookfield Asset Management will use the volume-weighted average of the trading price of our units for the five trading days immediately following the spin-off to determine the value of our units for the purpose of calculating the cash payable in lieu of any fractional interests. It is currently anticipated that, immediately following the spin-off, holders of Class A limited voting shares and Class B limited voting shares of Brookfield Asset Management will hold units of our company representing in the aggregate an effective economic interest in our business of approximately 22% and Brookfield will hold a combination of our units, general partnership units, Redemption-Exchange Units and Special LP Units representing an effective equity interest in our company of approximately 78%. Although Brookfield intends to maintain a significant interest in our company, Brookfield expects its interest to be reduced from this level over time through mergers, treasury issuances or secondary sales.

        Limited partners who acquire our units pursuant to the spin-off will be considered to have received a taxable dividend for Canadian federal income tax purposes in an amount equal to the fair market value of the gross amount of our units so received (as determined by reference to the five day volume-weighted average of the trading price of our units following closing of the spin-off) plus the amount of any cash received in lieu of fractional units, without reduction for any tax withheld (including any units withheld to satisfy tax obligations). Non-Canadian resident limited partners will be subject to Canadian federal withholding tax at the rate of 25% on the amount of the special dividend, subject to reduction under terms of an applicable income tax treaty or convention.

        Limited partners who are taxable in the United States and who acquire our units pursuant to the spin-off generally will be considered to have received a taxable distribution for U.S. federal income tax purposes equal to the fair market value of the gross amount of our units so received plus the amount of any cash received in lieu of fractional units, without reduction for the amount of any tax withheld. A limited partner who is taxable in the United States may be subject to U.S. "backup" withholding tax if such limited partner fails to timely provide Brookfield Asset Management (or the relevant intermediary) with a properly completed IRS Form W-9. U.S. backup withholding tax is not an additional tax, and any amounts withheld under the backup withholding rules will be allowed as a credit against a limited partner's U.S. federal income tax liability (or as a refund if in excess of such liability) provided the required information is timely furnished to the IRS.

        To satisfy the withholding tax liabilities of non-Canadian registered shareholders of Brookfield Asset Management, Brookfield Asset Management will withhold a portion of our units otherwise distributable and a

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portion of any cash distribution in lieu of fractional units otherwise distributable. Brookfield Asset Management will purchase these withheld units at a price equal to the fair market value of our units determined by reference to the five day volume-weighted average of the trading price of our units following closing of the spin-off. The proceeds of this sale of the withheld units together with the amount of any cash withheld from any cash distribution in lieu of fractional units will be remitted to the Canadian federal government or the U.S. federal government (as applicable) in satisfaction of the withholding tax liabilities described above. For non-Canadian beneficial shareholders, these withholding tax obligations will be satisfied in the ordinary course through arrangements with their broker or other intermediary. See "Material Tax Considerations" which qualifies in its entirety the foregoing discussion.

        Neither Brookfield nor our company has any obligation to distribute cash to pay any taxes owed by a unitholder as a result of the spin-off and neither Brookfield nor our company has any intention to do so. Accordingly, a unitholder may need to satisfy any United States federal income tax or Canadian federal income tax liability resulting from the receipt of our units with cash from such unitholder's own funds or by selling all or a portion of the units received.

Transaction Agreements

        Prior to the spin-off, we will acquire our assets and operations from Brookfield pursuant to separate securities purchase agreements and other agreements. These transfer agreements will each contain representations and warranties and related indemnities to us from Brookfield, including representations and warranties concerning: (i) organization and good standing; (ii) authorization, execution, delivery and enforceability of the agreement and all agreements executed in connection therewith; and (iii) title to the securities being transferred to us. The transfer agreements will not contain representations and warranties or indemnities relating to the underlying assets and operations. We will obtain customary approvals from the Bermuda Monetary Authority to form new subsidiary companies and/or partnerships prior to the spin-off to facilitate the acquisition of our initial assets and operations.

        In consideration for causing the Holding LP to acquire the Business, Brookfield will receive units of our company, Redemption-Exchange Units and Special LP Units representing, in aggregate, an effective equity interest in our business of approximately 78%.

        As a result of holding Special LP Units, Brookfield will be entitled to receive from Holding LP incentive distributions calculated as (a) 20% of the growth in the market value of our units quarter-over-quarter (but only after the market value exceeds the "Incentive Distribution Threshold" being initially $25.00 and adjusted at the beginning of each quarter to be equal to the greater of (i) our unit's market value for the previous quarter and (ii) the Incentive Distribution Threshold at the end of the previous quarter) multiplied by (b) the number of units outstanding at the end of the quarter (assuming full conversion of the Redemption-Exchange Units into units). For any quarter in which our company determines that there is insufficient cash to pay the incentive distribution, our company may elect to pay all or a portion of this distribution in Redemption-Exchange Units or may elect to defer all or a portion of the amount distributable for payment from available cash in future quarters. We believe these arrangements will create an incentive for Brookfield to manage our company in a way that helps us achieve our goal of creating value for our unitholders both through capital appreciation while providing a modest distribution yield. For a further explanation of the incentive distributions, see "Description of the Holding LP Limited Partnership Agreement — Distributions" and "Relationship with Brookfield — Incentive Distributions."

        Our company and Brookfield have determined that it is advisable for our company to have control over certain of the entities through which we hold our operating businesses. Accordingly, our company has entered into voting agreements to provide us, through the BBP General Partner, with voting rights over the entities through which we hold certain of our operating businesses. See "Relationships with Brookfield — Voting Agreements".

Trading Prior to the Distribution Date

        We anticipate that trading in our units will begin on a "when-issued" basis as early as two trading days prior to the record date for the special dividend and continue up to and including the distribution date.

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"When-issued" trading in the context of a spin-off refers to a sale or purchase made conditionally on or before the distribution date because the securities of the spun-off entity have not yet been distributed. If you own Class A limited voting shares or Class B limited voting shares of Brookfield Asset Management at the close of business on the record date, you will be entitled to receive units in the special dividend. You may trade this entitlement to receive our units, without Class A limited voting shares or Class B limited voting shares of Brookfield Asset Management you own, on the "when-issued" market. We expect "when-issued" trades of our units to settle within four days after the distribution date. On the first trading day following the distribution date, we expect that "when-issued" trading of our units will end and "regular-way" trading will begin.

        We also anticipate that, as early as two trading days prior to the record date and continuing up to and including the distribution date, there will be two markets in Class A limited voting shares of Brookfield Asset Management: a "regular-way" market and an "ex-distribution" market. Class A limited voting shares of Brookfield Asset Management that trade on the regular-way market will trade with an entitlement to receive our units in the special dividend. Shares that trade on the ex-distribution market will trade without an entitlement to receive our units in the special dividend. Therefore, if you sell Class A limited voting shares of Brookfield Asset Management in the regular-way market up to and including the distribution date, you will be selling your right to receive our units in the special dividend. However, if you own Class A limited voting shares of Brookfield Asset Management at the close of business on the record date and sell those shares on the ex-distribution market up to and including the distribution date, you will still receive our units that you would otherwise be entitled to receive in the special dividend.

        We have been approved to list our units on the NYSE under the symbol "BBU" and on the TSX under the symbol "BBU.UN". Listing of our units on the TSX is subject to our company fulfilling all of the requirements of the TSX. If "when-issued" trading occurs, the listing for our units is expected to be under a trading symbol different from our regular-way trading symbol. We will announce our "when-issued" trading symbol when and if it becomes available. If the spin-off does not occur, all "when-issued" trading will be null and void.

54



USE OF PROCEEDS

        No consideration will be paid for the units distributed in the spin-off and accordingly the spin-off will not generate any proceeds.


DISTRIBUTION POLICY

        The BBP General Partner will have sole authority to determine whether our company will make distributions and the amount and timing of these distributions. The BBP General Partner intends to adopt a distribution policy pursuant to which our company intends to make quarterly cash distributions in an initial amount currently anticipated to be $0.25 per unit on an annualized basis. Each limited partner will receive its pro rata share of the distributions made to all limited partners and, therefore, Brookfield also will be entitled to receive distributions in respect of the units it owns following the spin-off. This level of distributions is not intended to grow as our company intends to reinvest its capital. Brookfield will also be entitled to receive distributions from the Holding LP in respect of the Redemption-Exchange Units it owns. In general, quarterly cash distributions by the company will be made from distributions received by the company on its Managing General Partner Units in the Holding LP. Distributions of available cash (if any) by the Holding LP will be made in accordance with the Holding LP Limited Partnership Agreement, which generally provides for distributions to be made by the Holding LP to all owners of the Holding LP's partnership interests (including the Managing General Partner Units owned by us and the Special LP Units and Redemption-Exchange Units owned by Brookfield) on a pro rata basis. However, if available cash in a quarter is not sufficient to pay the quarterly distribution amount, currently expected to be $0.0625 per unit, to the owners of all the Holding LP interests, then the company can elect to defer distributions on the Redemption-Exchange Units and accrue such deficiency for payment from available cash in future quarters. See "Description of the Holding LP Limited Partnership Agreement — Distributions".

        Our ability to make distributions will depend on several factors, some of which are out of our control, including, among other things, general economic conditions, our results of operations and financial condition, the amount of cash that is generated by our operations, restrictions imposed by the terms of any indebtedness that is incurred to finance our operations and acquisitions or to fund liquidity needs, levels of operating and other expenses and contingent liabilities and other factors that the BBP General Partner deems relevant.

        Our company's ability to make distributions will also be subject to additional risks and uncertainties, including those set forth in this prospectus under "Risk Factors". In addition, the BBP General Partner will not be permitted to cause our company to make a distribution if we do not have sufficient cash on hand to make the distribution, if the distribution would render our company insolvent or if, in the opinion of the BBP General Partner, the distribution would leave us with insufficient funds to meet any future or contingent obligations.


LISTING OF OUR UNITS

        We have been approved to list our units on the NYSE under the symbol "BBU" and on the TSX under the symbol "BBU.UN". Listing of our units on the TSX is subject to our company fulfilling all of the requirements of the TSX.

55



CAPITALIZATION

        The following table sets forth our cash and capitalization as of December 31, 2015 on an actual basis and on a pro forma basis to give effect to the spin-off as well as the other transactions referred to in the Unaudited Pro Forma Financial Statements included elsewhere in this prospectus, as though they had occurred on December 31, 2015.

        This information should be read in conjunction with Management's Discussion and Analysis of Financial Condition and Results of Operations, and the Unaudited Pro Forma Financial Statements included elsewhere in this prospectus.

 
  As of
December 31, 2015
 
(US$ Millions)
  Actual   Pro Forma  

Cash

  $ 354   $ 619  

Borrowings

    2,074     2,074  

Equity in net assets

             

Non-controlling interests:

             

Interests of others in consolidated subsidiaries

    1,297     1,297 (1)

Redemption-Exchange Units and preferred shares held by parent

        1,054 (1)
           

Total non-controlling interests

    1,297     2,351  

Equity in net assets attributable to parent company

    1,787      

Limited and general partnership units

        998  
           

Total equity in net assets

  $ 3,084   $ 3,349  
           

(1)
Our pro forma total equity of approximately $3.3 billion as of December 31, 2015 is comprised of (a) interests of others in consolidated subsidiaries in the amount of approximately $1.30 billion, (b) the Redemption-Exchange Units of the Holding LP held by Brookfield in the amount of approximately $789 million received in exchange for net assets contributed, (c) the additional Redemption-Exchange Units of the Holding LP subscribed for by Brookfield in the amount of $250 million, (d) the preferred shares of three of our subsidiaries subscribed for by Brookfield in the amount of $15 million, and (e) our limited and general partnership units in the amount of approximately $998 million held by public holders and Brookfield. The Redemption-Exchange Units provide Brookfield the direct economic benefits and exposures to the underlying performance of the Holding LP and accordingly to the variability of the distributions as outlined in the Holding LP Limited Partnership Agreement, whereas our unitholders have indirect access to the economic benefits and exposures of the Holding LP through direct ownership interest in our company, which owns a direct interest in the Holding LP. Accordingly, the Redemption-Exchange Units are presented as non-controlling interests rather than equity of parent company in the Unaudited Pro Forma Financial Statements. The limited and general partnership units issued by our company of approximately $998 million are presented as the equity of parent company. Brookfield will subscribe for $5 million of preferred shares of CanHoldco and two of our other subsidiaries, which preferred shares will be entitled to vote with the equity interests of the applicable entity.

At any time after two years from the date of closing of the spin-off, Brookfield will have the right to require the Holding LP to redeem all or a portion of the Redemption-Exchange Units for cash, subject to our company's right to acquire such interests for our units. After presentation for redemption, Brookfield will receive, subject to our company's right to acquire such interests (in lieu of redemption) in exchange for units of our company, for each unit that is presented, cash in an amount equal to the market value of one of our units multiplied by the number of units to be redeemed. Upon its receipt of the redemption notice, our company will have a right to elect, at its sole discretion, to acquire all (but not less than all) Redemption-Exchange Units presented to the Holding LP for redemption in exchange for units of our company on a one for one basis. If we elect not to exchange the Redemption-Exchange Units for units of our company, the Redemption-Exchange Units are required to be redeemed for cash. See "Description of the Holding LP Limited Partnership Agreement".

56



UNAUDITED PRO FORMA FINANCIAL STATEMENTS

        To effect the spin-off, Brookfield will contribute separate legal entities comprising the Business and, in consideration, our company and certain of its subsidiaries will issue to Brookfield $789 million in Redemption-Exchange Units and $998 million in limited and general partnership interests. In addition, Brookfield will subscribe for an additional $250 million in Redemption-Exchange Units and subscribe for a total of $15 million of preferred shares of three of our subsidiaries. Prior to the completion of the spin-off, we expect to enter into a credit agreement with Brookfield providing for two, three-year revolving credit facilities. One will constitute an operating credit facility that will permit borrowings of up to $200 million for working capital purposes and the other will constitute an acquisition facility that will permit borrowings of up to $300 million for purposes of funding our acquisitions and investments. We expect that no amounts will be drawn under these credit facilities as of the date of the spin-off.

        Immediately following the spin-off, our company's sole direct investment will be a managing general partnership interest in the Holding LP. It is currently anticipated that immediately following the spin-off, holders of Class A limited voting shares and Class B limited voting shares of Brookfield Asset Management will hold units of our company representing in the aggregate an effective equity interest in our company of approximately 22% and Brookfield will hold a combination of our units, general partnership units, Redemption-Exchange Units and Special LP Units, representing an effective equity interest in our company of approximately 78%. As a result of holding the Special LP Units, Brookfield will be entitled to receive incentive distributions from the Holding LP. On an unexchanged basis the holders of Brookfield Asset Management's Class A and Class B limited voting shares will own approximately 20 million of the issued and outstanding limited partnership units of our company with Brookfield holding the remaining 24 million limited partnership units and four general partnership units.

        These unaudited condensed combined carve-out pro forma financial statements, or the Unaudited Pro Forma Financial Statements, represent the Business to be acquired by our company prior to the spin-off and have been prepared to illustrate the effects of the following transactions, which we refer to as the Transactions:

    The acquisition of GrafTech International Ltd., or the GrafTech Acquisition, in August 2015.

    The acquisition of oil and gas assets located in the Clearwater region of Central Alberta, Canada, or the Clearwater Acquisition, in January 2015.

    The issuance of $15 million in preferred shares of three of our subsidiaries to Brookfield.

    The issuance of $250 million in Redemption-Exchange Units subscribed for by Brookfield.

    The issuance of $789 million in Redemption-Exchange Units in exchange for net assets contributed by Brookfield.

    The issuance of approximately $998 million in limited partnership and general partner units of our company in exchange for net assets contributed by Brookfield.

    Annual management fees to be paid by our company to Brookfield pursuant to the Master Services Agreement.

        The information under "Unaudited Condensed Combined Carve-Out Pro Forma Statement of Operating Results" gives effect to the Transactions as if they had been consummated on January 1, 2015. The information under "Unaudited Condensed Combined Carve-Out Pro Forma Statement of Financial Position" gives effect to the Transactions as if they had been consummated on December 31, 2015.

        All financial data in the Unaudited Pro Forma Financial Statements is presented in U.S. dollars and has been prepared in accordance with IFRS. The Unaudited Pro Forma Financial Statements have been derived by the application of pro forma adjustments to the historical audited financial statements of our company and to give effect to the Transactions.

        The historical financial information has been adjusted in the Unaudited Pro Forma Financial Statements to give effect to pro forma adjustments that are (1) directly attributable to the Transactions, (2) factually

57


supportable and (3) with respect to the Unaudited Pro Forma Condensed Combined Carve-Out Statement of Income, expected to have a continuing impact on the combined results of the Business.

        The Unaudited Pro Forma Financial Statements are based on preliminary estimates, accounting judgments and currently available information and assumptions that management believes are reasonable. The notes to the Unaudited Pro Forma Financial Statements provide a detailed discussion of how such adjustments were derived and presented in the Unaudited Pro Forma Financial Statements. The Unaudited Pro Forma Financial Statements should be read in conjunction with "Capitalization", "Selected Historical Financial Information", "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the combined carve-out financial statements of our company and related notes thereto included elsewhere in this prospectus. The Unaudited Pro Forma Financial Statements have been prepared for illustrative purposes only and are not necessarily indicative of our financial position or results of operations had the Transactions for which we are giving pro forma effect actually occurred on the dates or for the periods indicated, nor is such pro forma financial information necessarily indicative of the results to be expected for any future period. A number of factors may affect our results.

58



UNAUDITED CONDENSED COMBINED CARVE-OUT
PRO FORMA STATEMENT OF FINANCIAL POSITION

 
   
  Pro forma adjustments    
   
 
US$ MILLIONS
As of December 31, 2015
  Predecessor
entities
  Preferred
shares
  Redemption-
Exchange
Units
  Limited and
general
partnership
units
  Other   Total pro
forma
adjustments
  Pro forma  
 
   
  (3)
  (4)
  (5)
  (6)
   
   
 

Assets

                                           

Cash

  $ 354   $ 15   $ 250               $ 265   $ 619  

Financial assets

    388                                 388  

Accounts receivable, net

    1,568                                 1,568  

Inventory, net

    442                                 442  

Other assets

    283                                 283  
                               

Current assets

    3,035     15     250             265     3,300  

Financial assets

    21                                 21  

Accounts receivable, net

    67                                 67  

Other assets

    23                                 23  

Property, plant and equipment

    2,364                                 2,364  

Deferred income tax assets

    64                                 64  

Intangible assets

    445                                 445  

Equity accounted investments

    492                                 492  

Goodwill

    1,124                                 1,124  
                               

Total assets

  $ 7,635   $ 15   $ 250   $   $   $ 265   $ 7,900  
                               

Liabilities and equity in net assets

                                           

Liabilities

                                           

Accounts payable and other

  $ 1,984                           $   $ 1,984  

Borrowings

    511                                 511  
                               

Current liabilities

    2,495                         2,495  

Accounts payable and other

    391                                 391  

Borrowings

    1,563                                 1,563  

Deferred income tax liability

    102                                 102  
                               

Total liabilities

    4,551                         4,551  
                               

Equity in net assets

                                           

Non-controlling interests

                                           

Interests of others in consolidated subsidiaries

    1,297                                 1,297  

Redemption-exchange units and preferred shares held by the parent

          15     1,039                 1,054     1,054  
                               

Total non-controlling interests

    1,297     15     1,039             1,054     2,351  

Equity in net assets attributable to parent company

    1,787           (789 )   (998 )         (1,787 )    

Limited and general partnership units

                    998           998     998  
                               

Total equity in net assets

    3,084     15     250             265     3,349  
                               

Total liabilities and equity in net assets

  $ 7,635   $ 15   $ 250   $   $   $ 265   $ 7,900  
                               

59



UNAUDITED CONDENSED COMBINED CARVE-OUT
PRO FORMA STATEMENT OF OPERATING RESULTS

 
   
  Pro forma adjustments    
   
 
US$ MILLIONS
Year ended December 31, 2015
  Predecessor
entities
  GrafTech
acquisition
  Clearwater
acquisition
  Preferred
shares
  Redemption-
Exchange
Units
  Limited and
general
partnership
units
  Other   Total pro
forma
adjustments
  Pro
forma
 
 
   
  (1)
  (2)
  (3)
  (4)
  (5)
  (6)
   
   
 

Revenues

  $ 6,753   $ 438   $ 7                           $ 445   $ 7,198  

Direct operating costs

    (6,132 )   (360 )   (3 )                           (363 )   (6,495 )

General and administrative expenses

    (224 )   (62 )                           (20 )   (82 )   (306 )

Depreciation and amortization expense

    (257 )   (52 )   (3 )                           (55 )   (312 )

Interest expense

    (65 )   (31 )                                 (31 )   (96 )

Equity accounted income, net

    4                                           4  

Impairment expense, net

    (95 )   (35 )                                 (35 )   (130 )

Gain on acquisitions and dispositions

    269         (171 )                           (171 )   98  

Other income (expenses), net

    70     (1 )                                 (1 )   69  
                                       

Income before income tax

    323     (103 )   (170 )               (20 )   (293 )   30  

Income tax (expense) recovery

                                                       

Current

    (49 )   (4 )                         12     8     (41 )

Deferred

    (5 )   (4 )                           3     (1 )   (6 )
                                       

Net income (loss)

  $ 269   $ (111 ) $ (170 ) $   $   $   $ (5 ) $ (286 ) $ (17 )

Attributable to:

                                                       

Non-controlling interests:

                                                       

Interests of others in consolidated subsidiaries

    61     (64 )   (102 )                           (166 )   (105 )

Redemption-Exchange Units and preferred shares held by the parent

          (24 )   (35 )         106           (3 )   44     44  
                                       

Total non-controlling interests

    61     (88 )   (137 )       106         (3 )   (122 )   (61 )

Net income attributable to parent company

    208                       (106 )   (102 )         (208 )    

Limited and general partnership units

        (23 )   (33 )               102     (2 )   44     44  
                                       

  $ 269   $ (111 ) $ (170 ) $   $   $   $ (5 ) $ (286 ) $ (17 )
                                       

Net income per unit:

                                                       

Basic

                                                  $ 1.00  

Diluted

                                                  $ 1.00  
                                                       

60



NOTES TO THE UNAUDITED CONDENSED COMBINED CARVE-OUT
PRO FORMA FINANCIAL STATEMENTS

(1)   Acquisition of GrafTech International Ltd.

    In August 2015, our company participated with institutional investors to acquire GrafTech International Ltd. ("GrafTech"). GrafTech is a domestic U.S. registrant filing on Form 10-K with the SEC for all periods presented, and as such GrafTech prepares its financial statements in accordance with U.S. GAAP and the audit was conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States). Our company has a 40% economic interest and a 100% voting interest in GrafTech, which provides our company with control over GrafTech. Accordingly, our company consolidates GrafTech for financial statement purposes.

    The GrafTech Acquisition was accounted for using the acquisition method under IFRS 3, Business combinations, or IFRS 3, with our company being identified as the accounting acquirer. Acquisition related costs were $23 million in the year ended December 31, 2015. A preliminary purchase price allocation has been completed for this acquisition, which is included in our company's Combined Carve-Out Financial Statements as of and for the year ended December 31, 2015. The final fair value and purchase price allocation may differ from this preliminary determination.

    The historical financial statements of GrafTech were prepared in accordance with U.S. GAAP. There are measurement differences between U.S. GAAP and IFRS, which have been adjusted for in the table below.

    In connection with the GrafTech Acquisition, the following tables reflect the pro forma adjustments made to give effect to the acquisition as if it had occurred on January 1, 2015 for the Unaudited Condensed Combined Carve-Out Pro forma Statement of Operating Results for the year ended December 31, 2015. For the Unaudited Condensed Combined Carve-Out Pro Forma Statement of Operating Results for the year ended December 31, 2015, GrafTech's results from operations have only been considered up to the date of acquisition as the remainder of the results have been included in our company's Combined Carve-out Statement of Operating Results.

 
US$ MILLIONS
Year ended December 31, 2015(1)
  GrafTech
historical
results
  Notes   GAAP
adjustments
  Notes   Pro forma
adjustments
  Pro forma
results for
GrafTech
 
 

Revenues

  $ 438       $       $   $ 438  
 

Direct operating costs

    (361 ) (a) (b)     1             (360 )
 

General and administrative expenses(2)

    (85 )         (f)     23     (62 )
 

Depreciation and amortization expense

    (45 )         (c) (d)     (7)     (52 )
 

Interest expense(3)

    (27 )         (g)     (4)     (31 )
 

Impairment expense, net

    (35 )                   (35 )
 

Other income (expense), net

    (1 )                   (1 )
                             
 

Income before income tax

    (116 )       1         12     (103 )
 

Income tax (expense) recovery

                                 
 

Current

    (4 )                   (4 )
 

Deferred

              (e)     (4)     (4 )
                             
 

Net income (loss)

  $ (120 )     $ 1       $ 8   $ (111 )
                             

(1)
Represents results from operations from January 1, 2015 to the date of acquisition as the remainder of the results are included in our company's Combined Carve-out Statement of Operating Results.

(2)
Includes research and development expenses, selling and administrative expenses and rationalizations per GrafTech's financial statements for the year ended December 31, 2015.

(3)
Includes interest expense net of interest income per GrafTech's financial statements for the year ended December 31, 2015.

61



NOTES TO THE UNAUDITED CONDENSED COMBINED CARVE-OUT
PRO FORMA FINANCIAL STATEMENTS (Continued)

(1)   Acquisition of GrafTech International Ltd. (Continued)

    Explanatory notes:

    (a)
    GrafTech contributes to a defined benefit plan. The accounting for retirement benefit plans differs under U.S. GAAP and IFRS and results in differences in the measurement of net benefit expense and actuarial gains and losses. These measurement differences resulted in a $0.5 million decrease in direct operating costs for the year ended December 31, 2015. Under U.S. GAAP, GrafTech presented actuarial gains and losses in profit and loss. Under IFRS, all actuarial gains and losses are recognized in other comprehensive income. This difference resulted an immaterial increase in direct operating costs and general and administrative expenses for the year ended December 31, 2015.

    (b)
    Under U.S. GAAP, GrafTech elected to record stock based compensation expense for its graded vesting stock awards using the straight-line method. IFRS requires the use of the accelerated method for recording stock based compensation expense. Using the accelerated method, the compensation expense recorded would decrease by $0.5 million for the year ended December 31, 2015.

    (c)
    As a part of the acquisition, fair value adjustments applied to property, plant and equipment, or PP&E, resulted in an increase to the carrying value of PP&E by $17 million. If the acquisition had occurred on January 1, 2015, the depreciation expense for the year ended December 31, 2015 would have been increased by less than $1 million.

    (d)
    As a part of the acquisition, fair value adjustments applied to intangible assets resulted in an increase to the carrying value of intangible assets by $93 million. The additional amortization expense related to the increase in carrying value was $7 million for the year ended December 31, 2015.

    (e)
    GrafTech's statutory tax rate of 35% has been applied to these pro-forma adjustments.

    (f)
    To reverse acquisition related costs of $23 million for the year ended December 31, 2015 incurred by GrafTech, as they do not have a continuing impact on the combined company's financial results.

    (g)
    Acquisition debt of $354 million was incurred in relation to the GrafTech Acquisition; the stated interest rate applicable to this debt was LIBOR plus 1.4% which is used to calculate the pro forma interest expense of $4 million for the year ended December 31, 2015.

      The effect of a 1/8 percent variance in interest rate would result in a $1 million increase/decrease in annual interest expense.

(2)   Clearwater Acquisition

    In January 2015, our company participated with institutional investors to acquire oil and gas assets located in the Clearwater region of central Alberta, Canada. The Clearwater Acquisition was accounted for using the acquisition method of accounting under IFRS 3 with our company being identified as the accounting acquirer.

    Acquisition-related costs were immaterial in the year ended December 31, 2015. A preliminary purchase price allocation has been completed for this acquisition and is included in our company's Combined Carve-Out Financial Statements as of and for the year ended December 31, 2015. The final fair value determination and purchase price allocation may differ from this preliminary determination.

    In connection with the Clearwater Acquisition, the following tables reflect pro forma adjustments made to give effect to the acquisition had it occurred on January 1, 2015 for the Unaudited Condensed Combined Carve-Out Pro Forma Statement of Operating Results for the year ended December 31, 2015. The Unaudited Condensed Combined Carve-Out Pro Forma Statements of Operating Results of the Clearwater Acquisition may not be indicative of future results, however management believes that the adjustments provide a reasonable basis for presenting the significant effects of the acquisition. For the Unaudited Condensed Combined Carve-Out Pro Forma Statement of Operating Results for the year ended December 31, 2015. Clearwater's results from operations have only been considered

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NOTES TO THE UNAUDITED CONDENSED COMBINED CARVE-OUT
PRO FORMA FINANCIAL STATEMENTS (Continued)

(2)   Clearwater Acquisition (Continued)

    up to the date of acquisition as the remainder of the results have been considered in our company's Combined Carve-out Statement of Operating Results.

 
US$ MILLIONS
Year ended December 31, 2015(1)
  Historical
results(2)
  Pro forma
adjustments
  Notes   Pro forma
results for
Clearwater
 
 

Revenues

  $ 7             $ 7  
 

Direct operating expenses

    (3 )             (3 )
                     
 

Revenues in excess of direct operating expenses

    4             4  
 

Depreciation and amortization expense

        (3 ) (a)     (3 )
 

Gain on acquisition (net of deferred tax)

        (171 ) (b)     (171 )
                     
 

Adjusted income

  $ 4   $ (174 )     $ (170 )
                     

(1)
Represents results from operations from January 1, 2015 to the date of acquisition as the remainder of the results are included in our company's Combined Carve-out Statement of Operating Results.

(2)
Translated at an average foreign exchange rate of $0.83.

Explanatory notes:

(a)
As a part of the acquisition, the fair value of PP&E acquired was estimated to be $806 million. If the acquisition had occurred on January 1, 2015, the depletion expense for the year ended December 31, 2015 would have been increased by approximately $3 million.

(b)
To eliminate the acquisition gain of $171 million that was recorded in connection with the Clearwater acquisition in the year ended December 31, 2015, as this gain does not have a continuing impact on the combined company's financial results.

(3)   Issuance of $15 million in Preferred Shares

    Brookfield will subscribe for an aggregate of $15 million of preferred shares of three of our subsidiaries. The preferred shares are entitled to receive a cumulative preferential cash dividend equal to 5% of their redemption value as and when declared by the board of the directors of the applicable entity and are redeemable at the option of the applicable entity at any time after the twentieth anniversary of their issuance.

    Our company and its subsidiaries are not obligated to redeem the preferred shares and accordingly, they have been determined to be equity of the applicable entities and are reflected as a $15 million increase in non-controlling interest in the Unaudited Condensed Combined Carve-Out Pro Forma Statement of Financial Position. The impact of the related dividends on the Unaudited Condensed Combined Carve-Out Pro Forma Statement of Operating Results for the year ended December 31, 2015 is immaterial.

(4)   Issuance of Redemption-Exchange Units

    The Holding LP will issue Redemption-Exchange Units to Brookfield that may, at the request of the holder beginning two years from the date of closing of this transaction, require the Holding LP to redeem all or a portion of the holder's units for cash in an amount equal to the market value of our company's units multiplied by the number of units to be redeemed (subject to certain adjustments). This right is subject to our company's right, at its sole discretion, to elect to acquire any unit so presented to the Holding LP in exchange for one of our company's units (subject to certain customary adjustments). If our company elects not to exchange the Redemption-Exchange Units for units of our company, the Redemption-Exchange Units are required to be redeemed for cash. The Redemption-Exchange Units provide Brookfield with the direct economic benefits and exposures to the underlying performance of the Holding LP and accordingly to the variability of the distributions of the Holding LP, whereas our company's unitholders have indirect access to the economic benefits and exposures of the Holding LP through direct ownership interest in our company which owns a direct interest in the Holding LP. Accordingly, the Redemption-Exchange Units have been presented as redeemable/exchangeable operating partnership units held by parent within non-controlling interests rather than equity of the parent company in the Unaudited Condensed Combined Carve-Out Pro Forma Statement of Financial Position. The Redemption-Exchange Units do not entail a contractual obligation on the part of our company to deliver cash and can be settled by our company, at its sole discretion, by issuing a fixed number of its own equity instruments on a one-for-one basis. The Redemption-Exchange Units are issued capital of the Holding LP, a subsidiary of our company, and as a result are not adjusted for changes in market value.

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NOTES TO THE UNAUDITED CONDENSED COMBINED CARVE-OUT
PRO FORMA FINANCIAL STATEMENTS (Continued)

(5)   Issuance of general and limited partnership units

    On completion of the formation of our company, total partnership equity will include the general and limited partnership units. Total non-controlling interests will be comprised of (a) interests of others in consolidated subsidiaries and (b) the Redemption-Exchange Units and preferred shares held by Brookfield. Our company expects to issue 44 million limited partnership units upon completion of the spin-off.

    In addition to general and limited partnership units, we will issue a nominal amount of special limited partnership units which will entitle Brookfield to receive incentive distributions calculated as (a) 20% of the growth in the market value of our units quarter-over-quarter (but only after the market value exceeds the "Incentive Distribution Threshold" being initially $25.00 and adjusted at the beginning of each quarter to be equal to the greater of (i) our unit's market value for the previous quarter and (ii) the Incentive Distribution Threshold at the end of the previous quarter) multiplied by (b) the number of units outstanding at the end of the quarter (assuming full conversion of the Redemption-Exchange Units into units). For any quarter in which our company determines that there is insufficient cash to pay the incentive distribution, our company may elect to pay all or a portion of this distribution in Redemption-Exchange Units or may elect to defer all or a portion of the amount distributable for payment from available cash in future quarters.

    Based on approximately 44 million outstanding limited/general partnership units and 46 million Redemption-Exchange Units, if and when distributions on Special LP Units are declared by our company and the market value of the units increased by 10% in a quarter (after exceeding the Incentive Distribution Threshold of $25.00), then Brookfield would be entitled to receive incentive distributions of approximately $45 million which would be recorded in equity.

(6)   Other pro forma adjustments

    (i)
    Management fees

      Management fees are based on 1.25% of market value. The Unaudited Condensed Combined Carve-Out Pro Forma Statement of Operating Results reflect a charge of $20 million for the year ended December 31, 2015 with the associated tax effects of $5 million, representing an estimate of the annual management fee based on the pro forma carrying value of preferred shares, Redemption-Exchange Units and limited partnership units that would be paid by our company for services rendered in connection with the Master Services Agreement. The quarterly management fee will be based on the capitalization of our company and derived from our quarterly volume weighted trading price. A 10% decrease in our capitalization would result in a pre-tax annual decrease in management fees of approximately $3 million.

    (ii)
    Tax impacts

      The adjustment to reflect the tax effects of the pro forma adjustments made to the Unaudited Pro Forma Condensed Combined Carve-Out Statement of Operating Results is calculated at the average statutory rates in effect in each significant jurisdiction for the time periods presented which is approximately 26.5%. The tax impacts of the reorganization after giving effect to certain elements of the transaction as though they occurred on January 1, 2015 is a decrease in current tax expense of $7 million for the year ended December 31, 2015 and a decrease in deferred tax expense of $3 million for the year ended December 31, 2015.

(7)   Pro forma earnings per unit

    The unaudited pro forma weighted average number of basic units and basic earnings per unit for the year ended December 31, 2015 assume that approximately 44 million limited partnership units and four general partner units of our company will be issued as part of the spin-off.

    An increase of one million in the number of units that will be issued as part of the spin-off will decrease basic and diluted earnings per unit from $1.00 to $0.98 for the year ended December 31, 2015.

    Redemption-Exchange Units issued as part of the spin-off will amount to approximately 46 million units and can be exchanged into limited partnership units on a one to one basis. Redemption-Exchange Units do not have a dilutive impact on basic earnings per unit as they have the same economic characteristics as limited partnership units and participate in earnings pro-rata to limited partnership unitholders.

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SELECTED HISTORICAL FINANCIAL INFORMATION

        The following tables present selected financial data for the Business and should be read in conjunction with the combined carve-out financial statements of our company included elsewhere in this prospectus. The selected financial data for the Business as of December 31, 2015 and December 31, 2014 and for each of the years in the three years ended December 31, 2015 are derived from the combined carve-out financial statements of our company which are included elsewhere in this prospectus. The selected financial data for the Business as of December 31, 2013 and for the year ended December 31, 2012 are derived from combined carve-out financial statements of our company, that are not included in this prospectus. The information included in this section should also be read in conjunction with our unaudited condensed combined pro forma financial statements, or Unaudited Pro Forma Financial Statements, as of December 31, 2015 included elsewhere in this prospectus. Presentation of selected financial information as of December 31, 2012 and December 31, 2011 and for the fiscal period ended December 31, 2011 has not been provided due to the fact that the entities which comprise the combined carve-out financial statements had not existed as a combined standalone entity and could not be provided without unreasonable effort or expense.

 
  Year Ended December 31,  
(US$ Millions)
  2015   2014   2013   2012  

Statement of Operating Results Data

                         

Revenues

  $ 6,753   $ 4,622   $ 4,884   $ 4,912  

Direct operating costs

    (6,132 )   (4,099 )   (4,440 )   (4,433 )

General and administrative expenses

    (224 )   (179 )   (199 )   (212 )

Depreciation and amortization expense

    (257 )   (147 )   (125 )   (117 )

Interest expense

    (65 )   (28 )   (27 )   (29 )

Equity accounted income, net

    4     26     26     14  

Impairment expense, net

    (95 )   (45 )   (4 )   (72 )

Gain on acquisitions and dispositions

    269         101     67  

Other income (expense), net

    70     13     (4 )   (20 )
                   

Income before income tax

    323     163     212     110  
                   

Current income tax (expense)

    (49 )   (27 )   (43 )   (35 )

Deferred income tax (expense)/recovery

    (5 )   9     45     5  
                   

Net income

  $ 269   $ 145   $ 214   $ 80  
                   

Net income attributable to parent company

  $ 208   $ 93   $ 184   $ 128  

Net income (loss) attributable to non-controlling interests

  $ 61   $ 52   $ 30   $ (48 )
                   

 

(US$ Millions)
  December 31,
2015
  December 31,
2014
  December 31,
2013
 

Statement of Financial Position Data

                   

Cash and cash equivalents

  $ 354   $ 163   $ 195  

Total assets

    7,635     4,405     4,205  

Borrowings

    2,074     808     637  

Equity in net assets attributable to parent company

   
1,787
   
1,500
   
1,651
 

Non-controlling interests

    1,297     635     580  
               

Total equity in net assets

  $ 3,084   $ 2,135   $ 2,231  
               

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BUSINESS

Overview

        Our company is a business services and industrials company, focused on owning and operating high-quality businesses that are either low-cost producers and/or benefit from high barriers to entry. We will be Brookfield's primary vehicle for business services and industrial operations. Our principal business services include construction services, residential real estate services and facilities management. Our principal industrial operations are comprised of oil and gas exploration and production, palladium and aggregates mining, bath and shower products manufacturing, the production of graphite electrodes and the manufacturing and supply of engineered precast systems and pipe products. Prior to the spin-off, we will acquire from Brookfield our initial operations, which we refer to as the Business.

        The charts below provide a breakdown of total assets of $7.6 billion as of December 31, 2015 and revenue of $6.8 billion for the year ended December 31, 2015 by operating segment and region.(1)

GRAPHIC

GRAPHIC

        We seek to build value through enhancing the cash flows of our businesses, pursuing an operations-oriented acquisition strategy and opportunistically recycling capital generated from operations and dispositions into our existing platforms, new acquisitions and investments. We look to ensure that each of our businesses has a clear, concise business strategy built on its competitive advantages, while focusing on profitability, sustainable operating, product margins and cash flows. We emphasize downside protection by utilizing business plans that do not rely exclusively on top-line growth or excessive leverage.

        We plan to grow by acquiring positions of control or significant influence in businesses at attractive valuations and by enhancing earnings of the businesses we operate. In addition to pursuing accretive acquisitions within our current platforms, we will opportunistically pursue transactions to build new platforms or make investments where our expertise, or the broader Brookfield platforms, provide insight into global demand for goods and commodities to source acquisitions that are not available or obvious to competitors. We may partner with others, primarily institutional capital, to make acquisitions that we may not otherwise be able to make on our own. Accordingly, an integral part of our strategy is to participate with institutional investors in Brookfield sponsored or co-sponsored consortiums for single asset acquisitions and as a partner in or alongside Brookfield

   


(1)
We have made acquisitions within our industrials business in 2015 that are not fully reflected in revenues for the periods presented, including the acquisition of our graphite electrode production operations in August 2015. In addition, we equity account for our Western Australia oil and gas operations, which were acquired in June 2015, therefore total revenues do not include revenues from these assets for the entire period presented.

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sponsored or co-sponsored partnerships that target acquisitions that suit our profile. Brookfield has a strong track record of leading such consortiums and partnerships and actively managing underlying assets to improve performance. Brookfield has agreed that it will not sponsor such arrangements that are suitable for us in the business services and industrial operations sectors unless we are given an opportunity to participate. See "Relationship with Brookfield — Relationship Agreement".

Business Services Operations

        Our business services operations are comprised principally of construction services, including construction management and contracting services, and residential real estate services and facilities management.

Construction Services

        Our construction services business is a leading international contractor with a focus on high-quality construction, primarily on large-scale, complex landmark buildings and social infrastructure. Construction projects are generally delivered through contracts whereby we take responsibility for design, program, procurement and construction for a defined price. Our business is based on a subcontractor model where we engage reputable specialists to perform specific scopes of work and whose obligations mirror those contained within the main construction contract. A smaller part of the business is construction management whereby we charge a fee for coordination of the sub-trades employed by the client. Founded in Perth, Australia in 1962, our construction services business was acquired by Brookfield as part of the privatization of Multiplex Group in 2007. Some of our landmark projects include One St. George Wharf in London, King Street Wharf in Sydney and Emirates Towers in Dubai. Today, we operate in Australia, Europe and the Middle East across a broad range of sectors, including: commercial, residential, social infrastructure, retail and mixed use properties.

        The table below provides a breakdown of revenues for our construction services segment by region for each of the years in the three year period ended December 31, 2015.

 
  Year Ended December 31,  
(US$ Millions)
  2015   2014   2013  

Australia

  $ 2,011   $ 1,903   $ 2,460  

United Kingdom

    963     481     479  

Middle East

    688     444     258  

Other

    171     198     88  
               

Total

  $ 3,833   $ 3,026   $ 3,285  
               

        We believe the financial strength and stability of our construction services business and the mature and robust risk management processes we have adopted position us to effectively service our current client base and attract new clients. Historically, approximately two thirds of our work has been competitively tendered, with the balance being staged or direct negotiations. We identify opportunities from a number of different sources: for example, through invitations to tender, direct request from clients and/or their consultants and internal business development. We review available contracts and decide which contracts to pursue based on different factors including, size, duration, experience, geographic location, margins and risk associated with the contract. Generally, we are required to post between 5% and 10% of contract value as performance security under our contracts. The guarantees and bonds issued to clients are typically secured by indemnities against subcontractors. Repeat clients represent approximately 58% of our project value under contract. At December 31, 2015, our backlog of construction projects was approximately $7.3 billion, with a weighted average remaining project life of 1.4 years.

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        The charts below provide a breakdown of backlog for our construction services segment by sector and geography as of December 31, 2015.

GRAPHIC

        Our clients benefit from our ability to share knowledge and resources across our business, as well as Brookfield's broader platforms, applying international best-practice initiatives and our experience to their projects. In addition, we seek to execute each project using a tailored approach that also includes our commitment to safety and quality and the benefit of a deep supplier and subcontractor network. Our client base includes both private and public sector entities, which combined with our geographical spread provides some protection against market fluctuations driven by economic cycles.

        We believe we are well positioned to pursue profitable growth in our key geographic areas of focus. Growth prospects differ from region to region. In Australia, we have strong market positions in Sydney, Melbourne and Perth but have opportunities for growth in Brisbane and in other large regional centers. We currently have a small footprint in the engineering and infrastructure sector, and the Australian government's commitment of A$42 billion to land-transport infrastructure projects presents a further opportunity. In Europe, we believe our most compelling growth opportunity is to increase our market share in U.K. private sector work, primarily in the commercial and residential spaces, as well as future opportunities in social infrastructure and other European cities. In the Middle East, we believe our growth opportunities will be primarily driven by sector expansion and geographical growth into regions in which we are not currently active.

        Other markets that we have been strategically targeting are Canada and India. Our first project in Canada was in 2010 when we secured the contract to oversee the completion of the Trump International Hotel & Residential Tower project in Toronto. Since then we have secured other projects covering the commercial, hotel and residential sectors. We are now leveraging our global experience to assist local developers with how to best integrate construction considerations into early development plans. We have been assessing the Indian market and have maintained a very small presence there for many years. In 2014, we entered into a strategic partnership with a local co-partner to jointly pursue high-quality, large, complex buildings projects for sophisticated private developers across India. Our partner is one of India's fastest growing infrastructure companies and our company combines their significant local presence and credentials with our international construction expertise with a goal to deliver state of the art construction technology, world class design management and high quality construction delivery to the Indian market.

        We believe we are well-positioned to capitalize on these growth opportunities for the following principal reasons:

    Our large and diverse, global construction business.  Since 1962, our business has delivered in excess of 850 projects across diverse sectors and geographies and for a varied client base. Our projects under contract at December 31, 2015 were valued at $13.0 billion consisting of 96 projects. Our global platform provides us with access to leading edge construction techniques and technologies and a deep supply chain network. The size, geographical spread and sector spread of our global business limits our exposure to concentration risk, whether this is client, project, subcontractor or country risk.

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    Our strong market position, extensive experience and proven track record.  We have received numerous industry awards for innovative design which demonstrates our ability to deliver leading solutions to fit our clients' needs. A strong market position in our principal regions, Australia, the Middle East and Europe, allows us to attract top talent and secure competitive pricing from our subcontractors. We have long-standing and positive relationships with many subcontractors across the regions in which we operate. This allows us to be more selective in the projects we bid and consequently increases the likelihood of tender and delivery success. We are conscious of our market share in any given region and what is sustainable given market dynamics and resource availability.

    Our strong risk management culture.  We aim to outperform in all aspects of construction, including commercial and operational risk management, to deliver both a safe and rewarding project. Governance of risk commences at a very early stage and involves all levels of the business. Any commitment to bid on a project requires agreement through a formal credit committee process, and robust credit charters are in place for each region, identifying standard acceptable commercial risk profiles. As part of our disciplined approach, we maintain and document strong, consistent project controls across all regions, including through the use of a project communication application, review of subcontractor financial strength, appropriate subcontractor security and comprehensive insurance reviews.

    Our track record is underpinned by our high level of contracted revenue. With our balance sheet supplying us the necessary financial capabilities and our focus on cost, schedule, safety and quality, we are able to consistently complete complex projects. Our repeated delivery of successful outcomes for clients facilitates the replacement of our projects under contract. We believe that our ability to withstand changing economic cycles is testament to the strength and proficiency of our business and team.

Other Business Services

        In addition to construction services, we provide a variety of other business services, principally related to residential real estate and facilities management, where the broader Brookfield platform provides a competitive advantage. Our focus is on building high-quality platforms where quality of service and/or a global footprint are competitive differentiators. In keeping with our overall strategy, we seek to pursue accretive acquisitions to grow our existing platforms and create new ones and to opportunistically make investments where our operating footprint provides us with an advantage in doing so.

        Our business services are typically defined by medium to long-term contracts, which include the services to be performed and the margin to be earned to perform such services. While we still retain overall timing risk, volume of services risk and performance risk, there is limited risk to the actual margin earned to provide the services. The result is stable long-term margins which allow management to focus on the successful performance of services and generating new business. Our business services activities are seasonal in nature and affected by the general level of economic activity and related volume of services purchased by our clients.

        Many of our clients consist of corporations and government agencies. These customers are often large credit-worthy counterparties thereby reducing risks to cash flow streams. The goodwill that we have created with our customers gives us the ability to generate future business through the cross-selling of other services, particularly in connection with global clients where consistency of performance on a global basis can be important.

        The charts below provide a breakdown of revenues for our other business services segment by region and business unit for the year ended December 31, 2015.

GRAPHIC

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        The table below provides a breakdown of revenues for our other business services segment by region in each of the three year period ended December 31, 2015.

 
  Year Ended December 31,  
(US$ Millions)
  2015   2014   2013  

United States

  $ 564   $ 623   $ 763  

Canada

    771     167     188  

Australia

    274     7     16  

United Kingdom

    58     46     37  

Other

    24     15     13  
               

Total

  $ 1,691   $ 858   $ 1,017  
               

Residential Real Estate Services

        We are a leading full service provider of relocation and related consulting services to individuals and institutions on a global basis. With offices in Asia, Europe, North America and South America, and nearly 2,000 employees, we have the expertise and resources to provide globally integrated, customizable services to our clients. Client contracts are typically executed for three to five year terms. We identify opportunities from different sources, including through relationships with current and former clients, subscriber services, suppliers and other partners within the industry and through internal business development. With the number of suppliers involved in an employee's relocation or assignment, effective supply chain management is crucial to the overall success of a company's mobility program. We maintain a network of independent suppliers that enables us to support our clients and their transferred employees around the world. Our dedicated supply chain management team is focused on supplier selection, training and performance and handles the screening, selection, monitoring and managing of our supplier network. A portion of our business service activity is seasonal in nature and is affected by the general level of economic activity and related volume of services purchased by our clients. For example, most moves typically occur in the spring and summer months, during school year breaks and we also experience peaks in activity from some government clients corresponding with the start of their fiscal year.

        We also provide services to residential real estate brokers through franchise arrangements under a number of brands in Canada, including the nationally recognized brand Royal Lepage, and in the United States through a joint venture with Berkshire Hathaway, operating under the brand name Berkshire Hathaway Home Services, which was established in 2012. We also directly operate residential brokerages in select cities in Canada and provide valuations services to financial institutions in Canada where we process an average of 180,000 residential property appraisals per year.

Facilities Management

        Our facilities management business originated in Canada as a joint venture between Brookfield and Johnson Controls. In 2013, the joint venture was expanded to include Australia and New Zealand as a result of the merger by Brookfield of its facilities management operations, which were acquired in conjunction with the acquisition of Multiplex Inc. in 2007, with Johnson Controls facilities management business. In 2014, we were awarded a large government contract to provide integrated facilities management services for 7 years, excluding three 2-year extension options. We will be managing approximately 50 million square feet of real estate under this contract. In addition, we have successfully on-boarded over 1,000 employees in the past year as a result of recent contract wins. In the first half of 2015, Brookfield acquired the balance of the joint venture together with institutional partners in its private equity fund such that the business is now owned by us alongside institutional partners and consolidated into our results.

        Within our facilities management business we provide design and project management, professional services and strategic workplace consulting to customers from sectors that range from government, military, financial institutions, utilities, industrial and corporate offices. Our contract expirations range from month-to-month to 28 years. We seek to provide a cost effective outsourcing alternative for integrated facilities management, or IFM, services to our customers by leveraging our scale, expertise and self-perform capabilities. We manage over 250 million square feet of real estate across Canada and Australia with the goal of delivering services that drive sustainable cost reductions for our clients. We believe that we are differentiated from our

70


competitors as a result of 20 years of developed best practices in our core competency of being a "hard facilities management" provider via our mobile fleet of technicians and in-house expertise and our integrated technology platform that allows customers to obtain real time insight into all aspects of their facilities. Our IFM business benefits from high retention rates, which we believe demonstrates our ability to add value to our customers.

        These businesses have largely been built on an "outsourcing" model — providing services that are often deemed non-core to the operations of our customers' business. We believe that there is a growing trend where organizations are increasingly looking to outsource their real estate facilities management services, which therefore provides several opportunities for new business and expansion.

Industrial Operations

        Our industrial operations leverage the history and pedigree of Brookfield as an owner and operator of capital intensive and/or commodity-related businesses. Our industrial operations business has been built using the acquisition strategy that we have adopted for our business generally and is principally comprised of Canadian oil and gas exploration and production, principally through our coal-bed methane, or CBM, platform in Alberta, Canada; offshore Western Australia oil and gas exploration and production (acquired in June 2015), specialty metal and aggregates mining operations in Canada and select industrial manufacturing operations comprised principally of the global production of graphite electrodes, the manufacturing of infrastructure support products such as pre-cast concrete products and corrugated pipe and other drainage products in Canada and the manufacturing of bath and shower products in North America.

        The table below provides a breakdown of revenues for our industrial operations by region in each of the three year period ended December 31, 2015(1).

 
  Year Ended
December 31
 
(US$ Millions)
Total
  2015   2014   2013  

Canada

  $ 775   $ 557   $ 418  

United States

    277     175     159  

Europe

    117     6     5  

Other

    60          
               

Total

  $ 1,229   $ 738   $ 582  
               

        The charts below provide a breakdown of revenues and assets for our industrial operations segment by business unit for the year ended and as of December 31, 2015.(1)

GRAPHIC

   


(1)
We have made acquisitions within our industrials business in 2015 that are not fully reflected in revenues for the period presented, including the acquisition of our graphite electrode production operations in August 2015. In addition, we equity account for our Western Australia oil and gas operations, which were acquired in June 2015, therefore total revenues do not include revenues from these assets for the entire period presented.

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Oil and Gas Operations(1)(2)

        Our global oil and gas properties produce approximately 108,000 boe/d(3) of which 53,000 boe/d is from our Canadian properties, and 55,000 boe/d(3) is from our Australian properties. 93% of production from our Canadian properties is natural gas and 65% of production from our Australian properties is contracted offshore natural gas.

Canadian Oil and Gas Operations

        Our CBM properties are characterized by long-life, low-decline reserves located at shallow depths and are low-risk with low-cost drilling and production with little to no associated water. We believe this ensures an ability to generate cash flow even in a low underlying commodity price environment. Our operating costs in our CBM platform are currently estimated at $0.95 per Mcf of natural gas. Our CBM platform includes over 7,000 miles of gathering pipelines and a significant number of facilities with the capacity to process over 500 MMcf/d of natural gas.

        Our CBM properties are located along the Horseshoe Canyon coal trend in the central part of the Province of Alberta. These properties were acquired through a series of acquisitions, including the following:

    In October 2012, we acquired 14 MMcf/d(4) of oil and gas assets in Central Alberta for approximately $31 million;

    In September 2013, we acquired 75 MMcf/d(4) of oil and gas assets in Central Alberta for approximately $200 million;

    In May 2014, we acquired 15 MMcf/d(4) of oil and gas assets in Central Alberta for approximately $45 million; and

    In January 2015, we acquired CBM natural gas assets in Central Alberta for approximately $451 million more than doubling daily production, which increased by approximately 180 MMcf/d(4).

        In addition to our CBM properties, approximately 3,000 boe/d(4), or 6% of the current production volumes, are from operations in Alberta, Canada with a focus on deep basin liquids rich resource plays complemented by light oil and include the Montney, Upper Doig and Ellerslie Formation targets. These targets are explored for, developed and exploited through horizontal drilling and modern completion techniques.

Australian Oil and Gas Operations

        Our Australian properties were acquired in June 2015 and are held through a joint venture formed prior to the acquisition. Our company's equity accounted portion in such properties is approximately 17%. Our Australian business is focused on low-cost, base producing assets with low-risk development projects. We produce approximately 55,000 boe/d3 of oil and gas from nine fields, being one of the largest suppliers of natural gas into the Western Australian domestic market. Our operations also benefit from a vast exploration portfolio covering more than ten million acres and critical onshore and offshore infrastructure comprised of three domestic gas plants and two floating production, storage and offloading vessels that produce oil for the Asian oil markets.

        Our strategy is to deliver stable, natural-gas weighted production and strong free cash flow due to our predicable reservoir performance, low cost of production and established infrastructure position. We will also pursue growth initiatives based on (i) a gas-focused exploitation strategy leveraging existing infrastructure,

   


(1)
We have adopted the standard of 6 Mcf:1 Bbl when converting natural gas to oil equivalent. BOEs may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 Mcf:1 Bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Given the value ratio based on the current price of crude oil as compared to natural gas is significantly different from the energy equivalency of 6 Mcf:1 Bbl, utilizing a conversion ratio at 6 Mcf:1 Bbl may be misleading as an indication of value.
(2)
Consolidated Subsidiaries, entities which we control and account for on a consolidated basis, are entirely composed of our Canadian oil and gas operations. Our Australian properties were acquired in June 2015 and comprise our entire oil and gas investments within our Equity Affiliate.
(3)
Represents full company interest production, not our company's equity interest.
(4)
Net of interests to others, but before deduction of royalties.

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(ii) identified, low-risk infill and sidetrack drilling in existing oil producing fields and (iii) a balanced oil and gas focused exploration strategy seeking to advance our portfolio of exploration acreage into new productive areas. We also expect external growth opportunities to surface in the current commodity down-cycle, and we believe we are well positioned to capitalize on such opportunities by virtue of our established operations in the region, our position in the domestic gas market and our infrastructure position, which currently has capacity that allows for growth.

Oil and Gas Reserves Data(5)

        On a total proved basis the reserve life for our assets is currently 10.7 years and on a total proved and probable basis the reserve life is currently 15.2 years. Our Canadian operations have an annual decline rate of approximately 7 to 8% with drilling depths ranging from 400 to 1,200 meters and consist entirely of onshore wells. Our Australian operations are comprised of oil operations with an average annual decline rate of approximately 20% and natural gas operations that exhibit relatively flat year-over-year production profiles. Drilling depths range from 1,000 to 5,000 meters, generally in shallow water depths, for subsea wells in our Australian operations.

        We expect to incur future costs associated with dismantlement, abandonment and restoration of our assets. The present value of the estimated future costs to dismantle, abandon and restore are added to the capitalized costs of our oil and gas properties and recorded as a long-term liability. The capitalized cost is included in the oil and gas property costs that are depleted over the life of the assets.

    Proved Reserves

        Evaluation and Review of Proved Reserves.    Our historical proved reserve estimates were prepared by our internal staff of petroleum engineers and they ensure the integrity, accuracy and timeliness of the data used to calculate our proved reserves relating to our oil and gas assets. Copies of our internal determination of proved reserves as of December 31, 2015 are included herein.

        Our internal technical team members determine, assess and evaluate the assumptions and methods used in the proved reserve estimation process. We utilize historical information for our properties, such as ownership interest, oil and gas production, well test data, commodity prices and operating and development costs. Ken Ronaghan, Glen Fisher and Craig Marshall, our respective senior engineering executives responsible for oil and gas reserves, which we refer to as our Internal Engineers, are primarily responsible for overseeing the preparation of all of our reserve estimates. Our Internal Engineers are petroleum engineers with collectively over 90 years of reservoir and operations experience and our geoscience staff averages over 15 years of industry experience per person. In addition, we use external reserves evaluation firms to assist in our preparation of reserves information.

        The preparation of our proved reserve estimates are completed in accordance with our internal control procedures. These procedures, which are intended to ensure reliability of reserve estimations, include the following:

    review and verification of historical production data, which data is based on actual production as reported by us;

    preparation of reserve estimates by our Internal Engineers or under their direct supervision;

    review by our Internal Engineers of all of our reported proved reserves at the close of each quarter, including the review of all significant reserve changes and all new proved undeveloped reserves additions;

    direct reporting responsibilities by our senior engineering executives to the specific company chief executive officer(s) and to the respective operating company board of directors; and

    verification of property ownership by our specific company land and legal departments.

   


(5)
Canadian and Australian oil and gas reserves disclosure as prescribed by NI 51-101 can be found in Appendix A. Reserves disclosure presented herein (other than Appendix A) is in accordance with the requirements of the SEC. All crude oil, natural gas and natural gas liquids information is presented as net of royalty volumes unless otherwise indicated.

73


        Estimation of Proved Reserves.    Under SEC rules, proved reserves are those quantities of oil and gas, which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible — from a given date forward, from known reservoirs and under existing economic conditions, operating methods and government regulations — prior to the time at which contracts providing the right to operate expire, unless evidence indicates that renewal is reasonably certain, regardless of whether deterministic or probabilistic methods are used for the estimation. If deterministic methods are used, the SEC has defined reasonable certainty for proved reserves as a "high degree of confidence that the quantities will be recovered." All of our proved reserves as of December 31, 2015 were estimated using a deterministic method. The process of estimating the quantities of recoverable oil and gas reserves relies on the use of certain generally accepted analytical procedures. These analytical procedures fall into four broad categories or methods: (1) production performance-based methods; (2) material balance-based methods; (3) volumetric-based methods; and (4) analogy. These methods should generally be used in combination by the reserve evaluator in the process of estimating the quantities of reserves if feasible. Reserves for proved developed wells were estimated using production performance methods for the vast majority of properties. Certain developed properties with very little production history were forecast using a combination of production performance and analogy to similar wells or reservoirs, both of which are considered to provide a relatively high degree of confidence. Undeveloped reserve estimates, were forecast using both volumetric and analogy methods, if feasible. These methods provide a relatively high degree of confidence for predicting proved developed and proved undeveloped reserves for our properties, due to the mature nature of the properties targeted for development and an abundance of subsurface control data.

        To estimate recoverable proved reserves and related future net cash flows, our Internal Engineers considered many factors and assumptions, including the use of reservoir parameters derived from geological, geophysical and engineering data which cannot be measured directly, economic criteria based on current costs and the SEC pricing requirements and forecasts of future production rates.

        Under SEC rules, reasonable certainty can be established using techniques that have been proven effective by actual production from projects in the same reservoir or an analogous reservoir or by other evidence using reliable technology that establishes reasonable certainty. Reliable technology is a grouping of one or more technologies (including computational methods) that has been field tested and has been demonstrated to provide reasonably certain results with consistency and repeatability in the formation being evaluated or in an analogous formation. To establish reasonable certainty with respect to our estimated proved reserves, the technologies and economic data used in the estimation of our proved reserves have been demonstrated to yield results with consistency and repeatability, and include production and well test data, downhole completion information, geologic data, electrical logs, radioactivity logs, core analyses, available seismic data and historical well cost and operating expense data. See "Notice Regarding Presentation of our Reserve Information".

    Summary of Oil and Gas Reserves

        The following table presents our estimated net proved oil and gas reserves for the three years ended December 31, 2015 based on the proved reserve report prepared by our Internal Engineers. Estimates of proved reserves are included herein and our estimates of net proved reserves have not been filed with or included in reports to any federal authority or agency other than included herein with the SEC.

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    Consolidated Subsidiaries (Canadian operations)

 
  Year Ended December 31,  
 
  2015   2014   2013  

Proved developed reserves:

                   

Oil (MBbls)

    1,248     1,362     1,117  

Natural gas (MMcf)

    1,025,259     353,283     261,408  

NGLs (MBbls)

    563     455     369  

Combined (MBOE)

    172,688     60,698     45,053  

Proved undeveloped reserves:

                   

Oil (MBbls)

        23      

Natural gas (MMcf)

        73,078     41,338  

NGLs (MBbls)

        171     76  

Combined (MBOE)

        12,374     6,966  

Proved reserves:

                   

Oil (MBbls)

    1,248     1,385     1,117  

Natural gas (MMcf)

    1,025,259     426,361     302,746  

NGLs (MBbls)

    563     626     445  

Combined (MBOE)

    172,688     73,072     52,019  

    Equity Affiliate (Australian operations)(6)

 
  Year Ended December 31,  
 
  2015   2014   2013  

Proved developed reserves:

                   

Oil (MBbls)

    2,169          

Natural gas (MMcf)

    85,731          

NGLs (MBbls)

    537          

Combined (MBOE)

    16,995          

Proved undeveloped reserves:

                   

Oil (MBbls)

    831          

Natural gas (MMcf)

    57,929          

NGLs (MBbls)

    580          

Combined (MBOE)

    11,066          

Proved reserves:

                   

Oil (MBbls)

    3,000          

Natural gas (MMcf)

    143,661          

NGLs (MBbls)

    1,117          

Combined (MBOE)

    28,060        
 

   


(6)
All of the Equity Affiliate reserves were acquired in June 2015 and reserve volumes represent our company's equity interest, not full company interest.

75


    Consolidated Subsidiaries and Equity Affiliate

 
  Year Ended December 31,  
 
  2015   2014   2013  

Proved developed reserves:

                   

Consolidated Subsidiaries (MBOE)

    172,688     60,698     45,053  

Equity Affiliate (MBOE)

    16,995          

Total (MBOE)

    189,683     60,698     45,053  

Proved undeveloped reserves:

                   

Consolidated Subsidiaries (MBOE)

        12,374     6,966  

Equity Affiliate (MBOE)

    11,066          

Total (MBOE)

    11,066     12,374     6,966  

Proved reserves:

                   

Consolidated Subsidiaries (MBOE)

    172,688     73,072     52,019  

Equity Affiliate (MBOE)

    28,060          

Total (MBOE)

    200,748     73,072     52,019  

    Proved Undeveloped Reserves (PUDs)

        As of December 31, 2015, our proved undeveloped reserves were composed of 831 MBbls of oil, 57,929 MMcf of natural gas and 580 MBbls of NGLs, for a total of 11,066 MBOE. PUDs will be converted from undeveloped to developed as the applicable wells begin production.

        The following table summarizes our changes in PUDs during 2015 (in MBOE):

 
  Equity
Affiliates(7)
  Consolidated
Subsidiaries
 

Balance, December 31, 2014

    n/a     12,374  

Purchases of minerals-in-place

    11,066      

Extensions and discoveries

    n/a      

Revisions of previous estimates

    n/a     (12,088 )

Transfers to proved developed

    n/a     (286 )
           

Balance, December 31, 2015

    11,066    
 
           

        The change in our Consolidated Subsidiaries' PUDs are a result of lower commodity pricing negatively impacting the economics of previously booked PUD locations with a reduction of 12,088 MBOE. Costs incurred in 2015 relating to the development, and conversion, of 286 MBOE of PUDs to proved developed reserves were $2.0 million during 2015. The change in our Equity Affiliate's PUDs is a result of the acquisition of our Australian operations during the year.(7)

        The change in our Equity Affiliate PUDs was due to our acquisition of our Australian Operations on June 5, 2015. This amount represents the PUDs determined at December 31, 2015 as no PUD reserves were determined upon the date of acquisition. As a result, we cannot quantify the amount of capital expenditures made with respect to the development of PUD reserves during the period from June 5, 2015 to December 31, 2015.

        All of the PUD drilling locations are scheduled to be drilled within five years of initial booking.

   


(7)
Reserve volumes represent our company's equity interest, not full company interest. All of the Equity Affiliate reserves were acquired on June 5, 2015 and as such, there were no reserve balances as of December 31, 2013 or December 31, 2014. Consequently, there were also no reserve balances as of December 31, 2014 from which to provide a reconciliation.

76


Oil and Gas Production Prices and Production Costs

    Production and Price History(8)

        The following table sets forth information regarding the production of oil, natural gas and NGLs, and certain price and cost information for the periods indicated:

 
  Year Ended December 31,  
 
  2015   2015   2014   2013  
 
  Equity Affiliate(9)
(Australia)

  Consolidated Subsidiaries
(Canada)

 

Total production volumes:

                         

Oil (MBbls)

    812     337     245     220  

Natural gas (MMcf)

    7,230     110,247     46,103     24,228  

NGLs (MBbls)

    59     164     141     100  

Combined (MBOE)

    2,076     18,875     8,070     4,358  

Oil — Net of Royalties(10) (MBbls)

    812     314     207     188  

Natural Gas — Net of Royalties(10) (MMcf)

    7,230     103,775     41,664     22,353  

NGLs — Net of Royalties(10) (MBbls)

    59     148     117     86  

Combined — Net of Royalties(10) (MBOE)

    2,076     17,758     7,268     3,999  

Average daily production:

                         

Oil (MBbl/d)

    3.9     0.9     0.7     0.6  

Natural gas (MMcf/d)

    34.4     302.0     126.3     66.4  

NGLs (MBbl/d)

    0.3     0.4     0.4     0.3  

Combined (MBOE/D)

    9.9     51.7     22.1     11.9  

Oil — Net of Royalties(10) (MBbl/d)

    3.9     0.8     0.6     0.5  

Natural Gas — Net of Royalties(10) (MMcf/d)

    34.4     284.5     114.1     61.2  

NGLs — Net of Royalties(10) (MBbl/d)

    0.3     0.4     0.3     0.2  

Combined — Net of Royalties(10) (MBOE/D)

    9.9     48.6     19.9     11.0  

Average realized prices:

                         

Oil ($/Bbl) (excluding impact of cash settled derivatives)

  $ 47.67   $ 41.84   $ 78.40   $ 83.12  

Oil ($/Bbl) (after impact of cash settled derivatives)

  $ 59.43   $ 41.84   $ 78.40   $ 83.12  

Natural gas ($/Mcf) (excluding impact of cash settled derivatives)

  $ 4.28   $ 2.14   $ 4.02   $ 3.18  

Natural gas ($/Mcf) (after impact of cash settled derivatives)

  $ 4.28   $ 2.23   $ 4.06   $ 3.17  

NGLs ($/Bbl)

  $ 40.87   $ 30.17   $ 67.61   $ 70.13  

Combined ($/BOE) (excluding impact of cash settled derivatives)

  $ 33.97   $ 13.48   $ 26.54   $ 23.43  

Combined ($/BOE) (after impact of cash settled derivatives)

  $ 38.40   $ 14.04   $ 26.77   $ 23.37  

Expenses (per BOE)

                         

Lease operating

  $ 11.21   $ 7.14   $ 9.46   $ 10.56  

Production, severance and ad valorem taxes

                 

Depletion, depreciation and amortization

    29.70   $ 7.08   $ 8.87   $ 10.27  

General and administrative

  $ 0.16   $ 0.94   $ 1.11   $ 1.96  

   


(8)
Unless otherwise indicated, production figures are presented net of interests due to others, but before deduction of royalties, as we believe net production before royalties is more appropriate in light of our Canadian and Australian operations and their royalty regimes.
(9)
Our Australian properties were acquired in June 2015 and comprise our entire oil and gas investments within our Equity Affiliate. As such, results from 2015 are presented as from inception (June 5, 2015) to December 31, 2015. Production volumes represent our company's equity interest, not full company interest.
(10)
Production figures presented net of interests due to others and net of royalties.

77


    Productive Wells

        As of December 31, 2015, we owned an average 90.4% working interest in 10,515 gross (9,505 net) productive natural gas wells and an average 43.8% working interest in 112 gross (49 net) productive oil wells. Productive wells consist of producing wells and wells capable of production, including oil wells awaiting connection to production facilities. Gross wells are the total number of producing wells in which we have an interest, and net wells are the sum of our fractional working interests owned in gross wells.

    Developed and Undeveloped Acreage

        The following table sets forth information as of December 31, 2015 relating to our leasehold acreage, production licenses, exploration licenses and retention leases. Developed acres are acres spaced or assigned to productive wells and does not include undrilled acreage held by production under the terms of the respective agreements. Undeveloped acres are acres on which wells have not been drilled or completed to a point that would permit the production of commercial quantities of oil or natural gas, regardless of whether such acreage contains proved reserves. A gross acre is an acre in which a working interest is owned. The number of gross acres is the total number of acres in which a working interest is owned. A net acre is deemed to exist when the sum of the fractional ownership working interests in gross acres equals one. The number of net acres is the sum of the fractional working interests owned in gross acres expressed as whole numbers and fractions thereof.

 
  Developed Acreage   Undeveloped Acreage   Total Acreage  
Area
  Gross   Net   Gross   Net   Gross   Net  

Canada (Consolidated Subsidiaries)

                                     

Horseshoe Canyon

    2,000,942     1,688,559     574,207     473,392     2,575,149     2,161,951  

Other

    88,383     56,261     123,436     91,290     211,819     147,551  

Australia (Equity Affiliate)(11)

    136,153     76,099     2,705,970     1,607,513     2,842,123     1,683,612  
                           

Total

    2,225,478     1,820,919     3,403,613     2,172,195     5,629,091     3,993,114  
                           

        For our Consolidated Subsidiaries' operations in Canada, many of the leases comprising the undeveloped acreage set forth in the table above will expire at the end of their respective primary terms unless production from the leasehold acreage has been established prior to such date, in which event the lease will remain in effect until the cessation of production. As of January 1, 2016, we had leases representing 102,751 gross (94,419 net) acres scheduled to expire in 2016, 660,659 gross (659,979 net) acres scheduled to expire in 2017, 24,017 gross (22,872 net) acres scheduled to expire in 2018, 26,402 gross (26,391 net) acres scheduled to expire in 2019 and 6,611 gross (6,197 net) acres scheduled to expire in 2020. We have not attributed any PUD reserves to acreage whose expiration date precedes the scheduled date for PUD drilling.

        For our Equity Affiliate's operations in Australia, many of the leases comprising the undeveloped acreage set forth in the table above will expire at the end of their respective primary terms unless renewed prior to such date, in which event the lease will remain in effect for a further period of five years or, if production is subsequently established, until the cessation of production. As of January 1, 2016, we had leases representing 152,952 gross (78,872 net) acres scheduled to expire in 2016, 1,212,430 gross (534,735 net) acres scheduled to expire in 2017, 660,647 gross (329,885 net) acres scheduled to expire in 2018, 44,739 gross (36,519 net) acres scheduled to expire in 2019 and 550,683 gross (542,983 net) acres scheduled to expire in 2020. We have not attributed any PUD reserves to acreage whose expiration date precedes the scheduled date for PUD drilling.

   


(11)
Acreage represents our company's equity interest, not full company interest.

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    Drilling Results(12)

        The following table sets forth information with respect to the number of wells completed during the periods indicated. The information should not be considered indicative of future performance, nor should it be assumed that there is necessarily any correlation between the number of productive wells drilled, quantities of reserves found or economic value. Productive wells are those that produce commercial quantities of hydrocarbons, whether or not they produce a reasonable rate of return.

    Consolidated Subsidiaries (Canadian Operations)

 
  Year Ended December 31,  
 
  2015   2014   2013  
 
  Gross   Net   Gross   Net   Gross   Net  

Development Wells:

                                     

Productive

    8.0     7.8     132.0     115.8     47.0     28.9  

Dry holes

                         
                           

    8.0     7.8     132.0     115.8     47.0     28.9  
                           

Exploratory Wells:

                                     

Productive

                         

Dry holes

                         
                           
                           
                           

Total:

                                     

Productive

    8.0     7.8     132.0     115.8     47.0     28.9  

Dry holes

                         
                           

    8.0     7.8     132.0     115.8     47.0     28.9  
                           

        During 2015 our Canadian operations focused on low cost recompletions and optimizations primarily from the Cleanwater acquisition, rather than drilling new wells.

    Equity Affiliate(13) (Australian Operations)

 
  Year Ended
December 31,
2015
 
 
  Gross   Net  

Development Wells:

             

Productive

    0.9     0.3  

Dry holes

         
           

    0.9     0.3  
           

Exploratory Wells:

             

Productive

         

Dry holes

    0.2     0.1  
           

    0.2     0.1  
           

Total:

             

Productive

    0.9     0.3  

Dry holes

    0.2     0.1  
           

    1.1     0.4  
           

        As of December 31, 2015, our Canadian operations had no gross or net wells in the process of drilling, completing or shut in awaiting infrastructure that are not reflected in the above table. As of December 31, 2015, our Australian operations had 0.4 gross (0.1 net) wells in the process of drilling, completing or shut in awaiting infrastructure that are not reflected in the above table.(13)

   


(12)
Gross includes interests owned by others while Net excludes interests owned by others.

(13)
Represents our company's net equity interest in wells, not full Equity Affiliate company interest.

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Forward Contracts

        Operational results and financial condition are dependent upon the prices received for oil and gas production. Oil and gas prices have fluctuated widely in recent years. Such prices are primarily determined by economic and political factors. Supply and demand factors, as well as weather and conditions in other oil and gas regions of the world also impact prices. Any upward or downward movement in oil and gas prices could have an effect on the oil and gas platform's financial condition.

        We have implemented a hedging policy for our Canadian operations using, amongst others, collars and fixed price swaps to hedge our gross natural gas production on a three year rolling basis, including up to 50% in year one, up to 25% in year two and up to 10% for year three. These hedging activities could expose our company to losses or gains.

        Our Australian operations and resulting cash flows are comparatively sheltered from commodity movements, with 159 MMboe of total company oil and gas reserves (not our company's net equity interest) hedged or contracted at December 31, 2015. Our strong existing customer base and attractive long-term contract profile are enhanced further through a long-term gas sales agreement with an existing customer, one of the largest users of natural gas in Western Australia. Under the terms of our arrangement, we have a long-term "take or pay" contract commencing in 2020 at a base price that compares favorably to our full-cycle supply cost. The result of these arrangements is that approximately 93% of our oil and gas production volumes are subject to customer contracts or fixed price swaps in 2016.

Well Servicing Operations

        Our energy operations also include contract drilling and well-servicing operations primarily located in the Western Canadian Sedimentary Basin, or WCSB. We are the sixth-largest production servicing and drilling platform in Western Canada, which includes 72 service rigs, nine coil rigs and nine telescopic double drilling rigs. A significant portion of the servicing revenue is derived from large national and international oil and gas companies which operate in Alberta, Canada. In May 2014, pursuant to a plan of arrangement under the Business Corporations Act (Alberta), we acquired all of the issued and outstanding shares of a contract drilling business. The acquisition enabled us to continue our growth strategy and enter the contract drilling services business in Western Canada. At closing, we acquired a fleet of eight telescopic double drilling rigs with depth ratings from 3,200 to 4,500 metres with a ninth rig under construction. We believe the business is positioned for the changing demands of the oil and natural gas customers for horizontal drilling and deeper depths as well as servicing steam assisted gravity drainage wells.

        We experience seasonality in this business as the ability to move heavy equipment safely and efficiently in Western Canadian oil and gas fields is dependent on weather conditions. Additionally, our well servicing operations are impacted by the cyclical nature of the oil and gas sector. Volatility of commodity prices and changes in capital and operating budgets of upstream oil and gas companies impact the level of drilling and servicing activity.

Specialty Metals and Aggregates Mining

        Our mining operations currently consist of a limestone aggregates quarry located in northern Alberta, that supplies the Alberta oil sands industry, and a palladium mining operation that has been operating the Lac des Iles mine, or LDI Mine, located in Ontario, Canada since 1993.

        Our industrial minerals operations in Alberta are principally comprised of the operation and development of a limestone mine with 459.2 million tonnes of proven mineral reserves and 539.5 million tonnes of probable mineral reserves located in the heart of the Athabasca oil sands region approximately 60 km north of Fort McMurray, Alberta. Current operations are focused on the sale of limestone aggregates to large oil sands customers that require significant quantities of aggregates to build out roads, bridges, lay-down areas, facility pads, dams, water systems and other critical infrastructure. Total sales volume for 2015 was 1.9 million tonnes. In addition to our current limestone mining operations, we also hold leases for limestone and other minerals covering approximately one million acres in the surrounding area that encompass a large portion of the mineable Athabasca oil sands region of Alberta.

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        Our LDI Mine is currently one of only two primary producers of palladium in the world. Palladium is a specialty metal in the platinum group of metals, primarily used in the manufacture of catalytic converters for automobiles. We acquired the mine by converting our senior secured loan position, which we held since 2013, into an ownership position when the mine underwent a recapitalization in 2015. Since acquiring control of the mine, we have embarked on a number of initiatives targeted at expanding production and reserves and reducing cash costs. As of January 1, 2015, LDI had approximately 918,000 ounces of proven reserves which was comprised of 11.9 million tonnes of near surface ore with a palladium grade of 0.99 grams per tonne and 4.3 million tonnes of underground ore with a palladium grade of 3.86 grams per tonne. There are very few palladium producing regions worldwide and few known economically viable ore bodies. Russia and South Africa, which are known to be higher-risk jurisdictions, account for approximately 75% of global mine palladium production. Growth in palladium mine supply is constrained, due to political, infrastructure cost and labour issues in South Africa, declining palladium production in Russia and a limited number of new projects on the horizon in the near term.

        The primary underground deposits on our property are the Offset and Roby zones. Over the last few years, underground mining operations have been transitioning to a shaft based ore handling system from a ramp based one. In 2014, our company successfully transitioned from ramp access to shaft access and was focused on the ramp up of underground mining using the new shaft and completion of upgrades to the ore handling system to access new and deeper mining areas of the Offset Zone. We have legal and constructive obligations for future site reclamation and closure of the mine sites. Estimated closure and restoration costs are provided for in the accounting period when the obligation arising from the related disturbance occurs.

Graphite Electrodes Production

        We are a leading manufacturer of graphite electrodes, advanced carbon and graphite materials and needle coke products used in the production of graphite electrodes. Graphite electrodes are primarily used in electric arc furnaces, or EAF, in mini-mill steelmaking and a significant portion of our sales is to the steel production industry. We completed the acquisition of this business in August 2015 at what we believe was a low point in the industry cycle driven primarily by oversupply and downward price pressure in the steel market.

        Electrodes are key components of the conductive power systems used to produce steel and non-ferrous metals. Approximately 70% of our graphite electrodes sold are consumed in the EAF steel melting process, the steel making technology used by all "mini-mills", typically at a rate of one graphite electrode every eight to ten operating hours. We believe that mini-mills constitute the higher long-term growth sector of the steel industry and that there is currently no commercially viable substitute for graphite electrodes in EAF steel making. The remaining approximately 30% of electrodes sold are primarily used in various other ferrous and non-ferrous melting applications, including steel refining (ladle furnace operations for both EAF and basic oxygen furnace steel production), fused materials, chemical processing and alloy metals.

        The manufacture of a graphite electrode takes, on average, about two months. We manufacture graphite electrodes ranging in size up to 30 inches in diameter and over 11 feet in length, and weighing as much as 5,900 pounds (2.6 metric tons). The manufacture of graphite electrodes includes six main processes: forming the electrode, baking the electrode, impregnating the electrode with a special pitch that improves the strength, rebaking the electrode, graphitizing the electrode using electric resistance furnaces and machining.

        The primary raw materials for electrodes are engineered by-products and residues of the petroleum and coal industries. We use these raw materials because of their high carbon content. The primary raw materials for graphite electrodes are calcined needle coke and pitch. We produce petroleum needle coke at one manufacturing facility in the United States and currently produce a substantial portion of our needle coke requirements.

        Petroleum needle coke, a crystalline form of carbon derived from decant oil, is used in the production of graphite electrodes. Petroleum needle coke is produced through a manufacturing process very similar to a refinery. The production process converts decant oil into petroleum needle coke shaped in a needle-like structure. Pitch needle coke is produced using coal-tar pitch.

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        We purchase other raw materials from a variety of sources and believe that the quality and cost of our raw materials on the whole is competitive with those available to our competitors. Our needle coke production allows us to be the only vertically integrated graphite electrode manufacturer. We believe that we are the world's second largest petroleum-based needle coke producer and assuming normal annual maintenance, a product mix of only normal premium petroleum needle coke production and related by-products, the annual capacity is approximately 140,000 metric tons.

        The primary raw material used to make petroleum needle coke is decant oil, a by-product of the gasoline refining process. We are not dependent on any single refinery for decant oil. While we have purchased a substantial majority of our raw material inventory from a limited number of suppliers in recent years, we believe that there is an abundant supply of suitable decant oil in the United States available from a variety of sources.

        In addition, we manufacture carbon, graphite and semi-graphite refractory products, which protect the walls of blast furnaces and submerged arc furnaces. We provide advanced graphite and carbon materials used in the transportation, solar and oil and gas exploration industries and manufacture flexible graphite products, enabling thermal management solutions for the electronics industry.

        Our manufacturing facilities principally consist of four graphite electrode facilities located in Spain, France, the United States and Mexico, a petroleum needle coke facility in the United States, an electrode machining center in Brazil and specialty graphite and carbon products manufacturing facilities and sales offices across the globe. We currently have the operating capability, depending on product demand and mix, to manufacture approximately 195,000 metric tons of graphite. Our strategy is to be a low-cost producer in an industry where there are high barriers to entry given the high capital investment and the extensive product, process and material science knowledge required in the production process.

        Our operations have over 125 years of experience in the research and development of graphite and carbon based solutions and our intellectual property portfolio is extensive. We conduct our research and development both independently and in conjunction with our strategic suppliers, customers and others. For example, we are currently streamlining our processes with shorter lead times, lower costs, higher quality products and exceptional service which should allow us to generate cash flows and returns as we come out of the trough in this cyclical business. A new dedicated innovation and technology center located near the corporate headquarters in Ohio was opened in February 2015 and it focuses on all of our products.

        We sell globally to customers in industries such as metal production, electronics, chemicals, aerospace and transportation. We sell our products primarily through our direct sales force, independent sales representatives and distributors, all of whom are trained and experienced with our products. We have a large customer technical service organization, with supporting application engineering and scientific groups.

Bath and Shower Products Manufacturing

        We manufacture and distribute a broad range of bath and shower products for the residential housing market in North America. We have a recognized and established brand, MAAX, that is sold at major retailers across North America.

        Our operations include eight manufacturing facilities, four in the United States and four in Canada, as well as a procurement office in China. Our existing operations have the ability to absorb growth in volumes as U.S. housing continues to recover. Our office in China houses our dedicated Asia sourcing team. Approximately 30% of total raw material purchases are sourced from the Asian market. We believe a dedicated team on the ground provides us with advantage to build strategic partnerships with our key suppliers and to ensure the product that we are receiving and the process used manufacture that product meets our quality standards. Our top 10 suppliers make up 51% of spend.

        We have invested a significant amount of research and development costs into our product portfolio, with the objective of driving increased market share and profit margins. In 2015, new products made up approximately 18% of total revenues and generated margins higher than those from the existing product portfolio. Our latest product, Utile by MAAX, is an innovative shower and tub shower wall solution that comes in a range of colors, textures and patterns that look and feel like tile. Utile offers the look of tile without the

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added time and complexity of standard ceramic tile installation, including need for special tools or professional construction expertise. We are in the process of launching Utile at major retailers across North America.

        Our distribution is principally through large format retail stores like Home Depot, Rona, Lowe's and plumbing retailers. Approximately 66% of our sales are wholesale and 34% are to retailers, with dedicated sales team in place to serve each channel. Our customer base is highly diversified, with the largest customer making up less than 10% of total revenue and geographically, 43% of our bath and shower product manufacturing revenue is derived in Canada and 57% in the United States.

Infrastructure Support Products Manufacturing

        In June 2015, we acquired operations that manufacture and market a comprehensive range of infrastructure products and engineered construction solutions. We service in a diverse cross-section of industries in Canada, as well as selected markets globally. These markets include Canada's national and regional public infrastructure markets and private sector markets in agricultural drainage, building construction and natural resources. We manufacture and market corrugated high-density polyethylene pipe, or HDPE, corrugated steel pipe, or CSP, and other drainage related products including small bridge structures. We also manufacture and market engineered precast systems such as parking garages, bridges, sport venues and building envelopes as well as standard precast products such as steps, paving stones and utility vaults.

        We operate through 42 locations in Canada, which include production facilities and offices across the country. Various raw materials are used in the manufacturing process. In particular, the primary raw materials are various types and grades of resins and steel as well as cement, aggregates, rebar and steel strand. These raw materials are sourced and traded throughout the world. We currently rely on a limited number of suppliers for raw materials. We have maintained long-term relationships with key suppliers of raw materials, which have resulted in a competitive advantage in procurement and reliability of supply.

        We sell to customers in a wide range of industries including, among others, agriculture, industrial, commercial and institutional, residential and mining and resources. The demand for our products is cyclical and is driven by public infrastructure spending, commercial development, natural resources activity, residential construction and agricultural drainage requirements. Growth and profitability in these operations are directly impacted by the demand for infrastructure but the diverse factors driving infrastructure investment activity result in relative stability of demand. We generate our business by participating in bids for our engineered precast products and, for our other products, through established customer relationships with a diverse base of clients across industries and end-markets.

Our Growth Strategy

        We seek to build value through enhancing the cash flows of our businesses, pursuing an operations-oriented acquisition strategy and opportunistically recycling capital generated from operations and dispositions into our existing platforms, new acquisitions and investments. We look to ensure that each of our businesses has a clear, concise business strategy built on its competitive advantages, while focusing on profitability, sustainable operating product margins and cash flows. We emphasize downside protection by utilizing business plans that do not rely exclusively on top-line growth or excessive leverage.

        We plan to grow by acquiring positions of control or significant influence in businesses at attractive valuations and by enhancing earnings of the businesses we operate. In addition to pursuing accretive acquisitions within our current operations, we plan to opportunistically build new platforms or make investments where our expertise, or the broader Brookfield platforms, provide insight into global demand for goods and commodities to source acquisitions that are not available or obvious to competitors.

        We offer a long-term ownership structure to companies whose management teams are seeking additional sources of capital but prefer not to be public as a standalone business. From time to time, we will recycle capital opportunistically, but we will have the ability to own and operate businesses for the long-term.

        Consistent with Brookfield's history as an owner/operator, our strategy is to:

    build and operate businesses with sustainable cash flows to reduce risk and lower cost of capital;

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    utilize an active management approach focused on strategic, operational and/or financial improvements;

    acquire businesses on a value basis; deploying contrarian thinking to target out of favor sectors; and

    make direct acquisitions or add-on acquisitions within existing platforms and/or in sectors where we believe we possess competitive advantages.

        In addition, we may make opportunistic investments in private and public securities of businesses where we can leverage our operating footprint or the broader Brookfield platform to provide us with a competitive advantage. As an example of our strategy, in partnership with institutional investors, we have acquired first lien debt of Texas Competitive Electric Holdings, or TCEH, a subsidiary of Energy Future Holdings Corporation, which is currently in bankruptcy proceedings in the United States. As one of the largest creditors, our consortium has recently been in discussions about the future of TCEH and its restructuring with other constituents. We believe that TCEH is critical to the infrastructure of Texas. We hope to own a significant piece of this business when it emerges from bankruptcy and we plan to work with management to assist them to make TCEH into a solidly financed company for the long term.

Intellectual Property

        Our company and the Holding LP have each entered into a licensing agreement with Brookfield pursuant to which Brookfield has granted a non-exclusive, royalty-free license to use the name "Brookfield" and the Brookfield logo. Other than under this limited license, we do not have a legal right to the "Brookfield" name and the Brookfield logo.

        Brookfield may terminate the licensing agreement effective immediately upon termination of our Master Services Agreement or with respect to any licensee upon 30 days' prior written notice of termination if any of the following occurs:

    the licensee defaults in the performance of any material term, condition or agreement contained in the agreement and the default continues for a period of 30 days after written notice of the breach is given to the licensee;

    the licensee assigns, sublicenses, pledges, mortgages or otherwise encumbers the intellectual property rights granted to it pursuant to the licensing agreement;

    certain events relating to a bankruptcy or insolvency of the licensee; or

    the licensee ceases to be an affiliate of Brookfield.

        A termination of the licensing agreement with respect to one or more licensees will not affect the validity or enforceability of the agreement with respect to any other licensees.

Governmental, Legal and Arbitration Proceedings

        We are not currently subject to any material governmental, legal or arbitration proceedings which may have or have had a significant impact on our company's financial position or profitability, nor are we aware of any such proceedings that are pending or threatened.

        We are occasionally named as a party in various claims and legal proceedings which arise during the normal course of our business. We review each of these claims, including the nature of the claim, the amount in dispute or claimed and the availability of insurance coverage. Although there can be no assurance as to the resolution of any particular claim, we do not believe that the outcome of any claims or potential claims of which we are currently aware will have a material adverse effect on us.

Employees

        As of December 31, 2015 our operating companies had approximately 19,100 employees, including approximately 5,700 within our construction services business, approximately 7,400 in our other business services, approximately 1,500 in our energy operations and approximately 4,500 in our other industrial business. Our employees are primarily based in North America (55%) and Australia (11%). Approximately 3,000 of our

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employees are represented by labor organizations. Our company believes that its employees are critical to its success and its relationships with its employees and with any labor organizations that represent its employees are good.

Facilities

        Our principal registered office is located in Bermuda, with our operations being carried out in Canada, the United States, Australia, Europe, Asia, Mexico, Brazil and the Middle East. In total, we lease and own approximately 1.5 million square feet and 8.5 million square feet of space, respectively, across these locations for such operations, including office, warehouse and manufacturing space. We consider our primary facilities are:

    Approximately 4.1 million square feet of manufacturing and warehouse facilities in the United States related to our graphite electrode and bath and shower products manufacturing businesses;

    Approximately 2.8 million square feet of manufacturing and warehouse facilities in Canada related to our infrastructure products and engineered solution operations, our logistics business and our bath and shower products manufacturing operations; and

    Approximately 1.2 million square feet of manufacturing and warehouse facilities in Europe related to our graphite electrode manufacturing business.

        Our leases expire at various times during the coming years. We believe that our current facilities are suitable and adequate to meet our current needs and that suitable additional or substitute space will be available as needed to accommodate continuing and expanding of our operations.

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OWNERSHIP AND ORGANIZATIONAL STRUCTURE

Organizational Chart

        The chart below represents a simplified summary of our organizational structure. All ownership interests indicated below are 100% unless otherwise indicated. "GP Interest" denotes a general partnership interest and "LP Interest" denotes a limited partnership interest. Certain subsidiaries through which Brookfield Asset Management holds units of our company and the Redemption-Exchange Units have been omitted. This chart should be read in conjunction with the explanation of our ownership and organizational structure below.

GRAPHIC


(1)
It is currently anticipated that public holders of our units will own approximately 45% of our units and Brookfield will own approximately 55% of our units upon completion of the spin-off. Our company's sole direct investment will be a managing general partnership interest in the Holding LP. Brookfield will also own a limited partnership interest in the Holding LP through Brookfield's ownership of Redemption-Exchange Units and Special LP Units. The Redemption-Exchange Units are redeemable for cash or

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    exchangeable for our units in accordance with the Redemption-Exchange Mechanism, which could result in Brookfield owning approximately 78% of the units of our company issued and outstanding on a fully exchanged basis. On a fully exchanged basis, public holders of our units would own approximately 22% of the units of our company issued and outstanding. Brookfield's interest in our company on the closing date of the spin-off will consist of a combination of our units and general partner interests, the Redemption-Exchange Units and the Special LP Units. The Special LP units will entitle the holder to receive incentive distributions. See "Relationship with Brookfield — Incentive Distributions". The BBP General Partner intends to adopt a distribution policy pursuant to which our company intends to make quarterly cash distributions to public holders of our units. In general, quarterly cash distributions by the company will be made from distributions received by the company on its Managing General Partner Units. Distributions of available cash (if any) by the Holding LP will be made in accordance with the Holding LP Limited Partnership Agreement, which generally provides for distributions to be made by the Holding LP to all owners of the Holding LP's partnership interests (including the Managing General Partner Units owned by us and the Special LP Units and Redemption-Exchange Units owned by Brookfield) on a pro rata basis. Immediately after the spin-off, our company will own approximately 44 million Managing General Partner Units and Brookfield will own approximately 46 million Redemption-Exchange Units and four Special LP Units. However, if available cash in a quarter is not sufficient to pay the quarterly distribution amount, currently expected to be $0.0625 per unit, to the owners of all the Holding LP interests, then the company can elect to defer distributions on the Redemption-Exchange Units and accrue such deficiency for payment from available cash in future quarters. See "Distribution Policy" and "Description of the Holding LP Limited Partnership Agreement — Distributions".

(2)
The Holding LP will own, directly or indirectly, all of the common shares or equity interests, as applicable, of the Holding Entities. Brookfield will subscribe for $5 million of preferred shares of each of CanHoldco and two of our other subsidiaries, which preferred shares will be entitled to vote with the common shares of the applicable entity. Brookfield will have an aggregate of 1% of the votes of each of the three entities.
(3)
Certain of the operating businesses and intermediate holding companies that will be directly or indirectly owned by the Holding Entities and that will directly or indirectly hold our operations are not shown on the chart. All percentages listed represent our economic interest in the applicable entity or group of assets, which may not be the same as our voting interest in those entities and groups of assets. All interests are rounded to the nearest one percent and are calculated as of the date of this prospectus. See "Ownership and Organizational Structure".

        The following table provides the percentage of voting securities owned, or controlled or directed, directly or indirectly, by us, and our economic interest in our operating businesses included in our organizational chart set out above.

Significant Subsidiaries
  Jurisdiction of
Organization
  Voting Securities   Economic Interest  

Business Services

                 

Brookfield Multiplex Pty Ltd.

  Australia     100%     100%  

Brookfield RPS Limited

  Canada     100%     100%  

Brookfield Global Integrated Solutions Pty Limited

  Australia     100%     30%  

Brookfield Global Integrated Solutions Canada L.P.

  Canada     100%     30%  

Industrial Operations

                 

GrafTech International Ltd.

  United States     100%     40%  

Ember Resources Inc.

  Canada     100%     40%  

CWC Energy Services Corp.

  Canada     70%     40%  

Our Company

        Our company was established on January 18, 2016 as a Bermuda exempted limited partnership registered under the Bermuda Limited Partnership Act of 1883, as amended, and the Bermuda Exempted Partnerships Act of 1992, as amended. Our company's head and registered office is 73 Front Street, 5th Floor, Hamilton HM 12, Bermuda and our company's telephone number is +441 294-3304.

        Prior to the spin-off, we will acquire the Business from Brookfield. We will be Brookfield's flagship public company for its business services and industrial operations and the primary entity through which Brookfield owns and operates these businesses on a global basis. We are positioned to provide unitholders with the opportunity to benefit from Brookfield's global presence, operating experience, execution capabilities and relationships.

Holding LP

        Our company's sole direct investment is a managing general partnership interest in the Holding LP. It is currently anticipated that Brookfield will own units of our company and Redemption-Exchange Units of the

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Holding LP that, in aggregate, represent approximately a 78% interest in the Holding LP and holders of our units other than Brookfield will hold the remaining interest in the Holding LP. Brookfield will also own a special limited partnership interest in the Holding LP that entitles it to receive incentive distributions from the Holding LP. See "Description of the Holding LP Limited Partnership Agreement — Distributions" and "Relationship with Brookfield — Incentive Distributions".

        Our company has filed an undertaking with the Canadian Securities Administrators to treat the Holding LP as a subsidiary of our company and to take appropriate measures to require each person who would be required as a reporting insider of the Holding LP to file insider reports about trades in units and to comply with statutory prohibitions against insider trading.

Our Service Providers

        The Service Providers, wholly-owned subsidiaries of Brookfield Asset Management, provide management services to us pursuant to our Master Services Agreement. The senior management team that is principally responsible for providing us with management services include many of the same executives that have successfully overseen and grown Brookfield's business services and industrial operations, including Cyrus Madon who is a Senior Managing Partner of Brookfield Asset Management and Head of its Private Equity Group.

The BBP General Partner

        The BBP General Partner, a wholly-owned subsidiary of Brookfield Asset Management, has sole authority for the management and control of our company. Holders of our units, in their capacities as such, may not take part in the management or control of the activities and affairs of our company and do not have any right or authority to act for or to bind our company or to take part or interfere in the conduct or management of our company. See "Description of Our Units and Our Limited Partnership Agreement".

Holding Entities

        Our company indirectly holds its interests in our operating businesses through the Holding Entities, which are newly formed entities. The Holding LP owns, directly or indirectly, all of the common shares or equity interests, as applicable, of the Holding Entities. In addition, Brookfield has subscribed for $5 million of preferred shares of each of CanHoldco and two of our other subsidiaries. See "Relationship with Brookfield" for further detail.

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GOVERNANCE

BBP General Partner Board of Directors

        As required by law, our Limited Partnership Agreement provides for the management and control of our company by a general partner rather than a board of directors and officers. The BBP General Partner serves as our company's general partner and has a board of directors. The BBP General Partner has no executive officers. The BBP General Partner has sole responsibility and authority for the central management and control of our company, which is exercised through its board of directors. Directors of the BBP General Partner are directors of our company for the purposes of Canadian securities laws and such directors and the BBP General Partner will be insiders of our Company pursuant to applicable securities laws.

        The following table presents certain information concerning the board of directors of the BBP General Partner:

Name, Municipality of Residence and Independence(1)
  Age   Position with the
BBP General
Partner
  Principal
Occupation

Jeffrey M. Blidner(2), Toronto, Ontario, Canada
(Not Independent)

    68   Board Chair and Director   Senior Managing Partner of Brookfield Asset Management

Stephen J. Girsky(3)(8), New York, New York, United States of America
(Independent)

    54   Director   President, SJ Girsky & Co.

David Hamill(3)(4)(8), Eastern Heights, Queensland, Australia
(Independent)

    58   Director   Corporate Director

John Lacey(3)(5), Thornhill, Ontario, Canada
(Independent)

    73   Lead Independent Director   Retired

Craig J. Laurie(6), New York, New York, United States of America
(Not Independent)

    44   Director   Managing Partner of Brookfield Asset Management and Chief Financial Officer of Brookfield Business Partners

Don Mackenzie(3)(4), Pembroke Parish, Bermuda
(Independent)

    56   Director   Chairman and Owner of New Venture Holdings

Cyrus Madon(6), Toronto, Ontario, Canada
(Not Independent)

    51   Director   Senior Managing Partner of Brookfield Asset Management and Chief Executive Officer of Brookfield Business Partners

A.J. Silber(6), Toronto, Ontario, Canada
(Not Independent)

    36   Director   Vice President, Legal Affairs, Brookfield Asset Management

Denis Turcotte(3), Sault Ste. Marie, Ontario, Canada
(Independent)

    54   Director   President and Chief Executive Officer, North Channel Management

Patricia Zuccotti(3)(7), Kirkland, Washington, United States of America
(Independent)

    68   Director   Corporate Director

(1)
The mailing addresses for the directors are set forth under "Security Ownership".
(2)
Expected to remain on as chair of the board after completion of the spin-off.
(3)
Has agreed to serve on the board after completion of the spin-off.
(4)
Expected to serve as a member of the audit committee after completion of the spin-off.
(5)
Expected to serve as chair of the governance and nominating committee after completion of the spin-off.
(6)
Expected to resign from the board prior to completion of the spin-off.
(7)
Expected to serve as chair of the audit committee of the board after completion of the spin-off.
(8)
Expected to serve as a member of the governance and nominating committee after completion of the spin-off.

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        Set forth below is biographical information for the BBP General Partner's current directors.

        Jeffrey M. Blidner.    Mr. Blidner is chair of the board of directors of our company and a Senior Managing Partner of Brookfield Asset Management responsible for strategic planning and fund raising. Mr. Blidner is also the Chief Executive Officer of Brookfield's Private Funds Group, Chairman and a director of Brookfield Renewable Partners and a director of Brookfield Asset Management, Brookfield Property Partners, Brookfield Infrastructure Partners and Rouse Properties Inc. Prior to joining Brookfield in 2000, Mr. Blidner was a Senior Partner of a Canadian law firm.

        Craig Laurie.    Mr. Laurie is a Managing Partner of Brookfield Asset Management within the Private Equity Group. He joined Brookfield Asset Management in 1997 and has held a number of senior finance positions with Brookfield Asset Management and associated companies, including from October 2008 to September 2015 the position of Executive Vice-President and Chief Financial Officer for Brookfield Residential Properties Inc. and predecessor companies. Prior to joining Brookfield Asset Management, Mr. Laurie worked in restructuring and advisory services at Deloitte & Touche. He is a Chartered Professional Accountant and holds a Bachelor of Commerce degree from Queen's University.

        Cyrus Madon.    Mr. Madon is a Senior Managing Partner of Brookfield Asset Management, Head of Brookfield's Private Equity Group and Chief Executive Officer of our company. Mr. Madon joined Brookfield in 1998 as Chief Financial Officer of Brookfield's real estate brokerage business. During his tenure he has held a number of senior roles across the organization, including head of Brookfield's corporate lending business. Mr. Madon began his career at Pricewaterhouse-Coopers where he worked in Corporate Finance and Recovery, both in Canada and the United Kingdom.

        A.J. Silber.    Mr. Silber is vice-president, legal affairs and corporate secretary of Brookfield Asset Management. He joined Brookfield in 2012 after working at the law firms of Torys LLP in Toronto and Ropes & Gray LLP in New York. Mr. Silber is a graduate of the JD/MBA program at the University of Toronto and holds a Bachelor of Commerce degree from McGill University. Mr. Silber is called to the Bar of Ontario and New York.

        Prior to completion of the spin-off, the BBP General Partner's board of directors will be expanded to seven (7) members, a majority of whom will be independent under applicable law and the regulations of the securities exchanges on which our units will be listed. Members of the board of directors are expected to include Jeffrey M. Blidner, Stephen J. Girsky, David Hamill, John S. Lacey, Don Mackenzie, Denis Turcotte and Patricia Zuccotti, with Mr. Blidner serving as the chair of the board, Ms. Zuccotti serving as the chair of the audit committee of the board and Mr. Lacey serving as chair of the governance and nominating committee and lead independent director. It is currently anticipated that Messrs. Laurie, Madon and Silber will resign from the board of directors prior to completion of the spin-off. Set forth below is biographical information for these proposed directors, other than for Jeffrey M. Blidner, whose biographical information is described above.

        Stephen J. Girsky.    Stephen is the president of S.J. Girsky & Co., an independent advisory firm based in New York, and serves on the board of directors of General Motors Co. and Valens Semiconductor Ltd. Mr. Girsky was previously the president of Centerbridge Industrial Partners, a managing director at Morgan Stanley and the Vice Chairman of General Motors Co. Stephen holds a B.S. in mathematics from the University of California at Los Angeles and a M.B.A. from the Harvard Business School.

        David Hamill.    David Hamill is a professional director and was Treasurer of the State of Queensland in Australia from 1998 to 2001, Minister for Education from 1995 to 1996, and Minister for Transport and Minister Assisting the Premier on Economic and Trade Development from 1989 to 1995. Dr. Hamill retired from the Queensland Parliament in February 2001. Dr. Hamill holds a Bachelor of Arts (Honours) from the University of Queensland, a Master of Arts from Oxford University and a Doctorate of Philosophy from University of Queensland and is a fellow of the Chartered Institute of Transport and the Australian Institute of Company Directors. Dr. Hamill currently serves as a director of Brookfield Infrastructure Partners L.P.

        John Lacey.    John S. Lacey is a consultant to the Chairman of the Board of George Weston Ltd., a Canadian food processing and distribution company, and Loblaw Companies Limited, a Canadian food retailer. John was previously the Chairman of the board of directors of Alderwoods Group, Inc., an organization operating funeral

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cemeteries within North America, until 2006. He is the former President and Chief Executive Officer of The Oshawa Group (now part of Sobeys Inc.) and a current director of Loblaw Companies Limited and TELUS Corporation.

        Don Mackenzie.    Don Mackenzie is the Chairman and Owner of New Venture Holdings, a well-established privately owned holding company with operating company and real estate investments in Bermuda and Canada. Prior to moving to Bermuda in 1990, Don worked in the software and sales sector. He acquired his first business in 1995, and New Venture Holdings was formed in 2000 to consolidate a number of operating investments under a holding company umbrella. Don has a Bachelor of Commerce from Queens University and an MBA from Schulich School of Business of York University. He currently serves as a director of Brookfield Infrastructure Partners L.P.

        Denis Turcotte.    Denis A. Turcotte is President and Chief Executive Officer of North Channel Management and North Channel Capital Partners, both consulting, private investment and management companies. Mr. Turcotte was President and Chief Executive Officer and a Director of Algoma Steel Inc., an integrated flat products steel company, from 2002 through 2008 and was named CEO of the year by Canadian Business Magazine in 2006. Prior to joining Algoma he was President of the Paper Group and Executive Vice President of Corporate Development and Strategy of Tembec Inc., a forest products company, from 1999 to 2002. He currently serves as a director of Brookfield Office Properties Inc., Domtar Corporation and Norbord Inc.

        Patricia Zuccotti.    Patricia is a director of Brookfield Renewable Partners L.P. and served as Senior Vice President, Chief Accounting and Controller of Expedia, Inc. from October 2005 to September 2011. Prior to joining Expedia, Patricia was the Director, Enterprise Risk Services of Deloitte & Touche LLP from June 2003 until October 2005. Patricia is a Certified Public Accountant and received her Master's in Business Administration, majoring in accounting and finance, from the University of Washington and a Bachelor of Arts, majoring in political science, from Trinity College.

Board Structure, Practices and Committees

        The structure, practices and committees of the BBP General Partner's board of directors, including matters relating to the size and composition of the board of directors, the election and removal of directors, requirements relating to board action and the powers delegated to board committees, are governed by the BBP General Partner's bye-laws. The BBP General Partner's board of directors is responsible for supervising the management, control, power and authority of the BBP General Partner except as required by applicable law or the bye-laws of the BBP General Partner. The following is a summary of certain provisions of those bye-laws that affect our company's governance.

Size, Independence and Composition of the Board of Directors

        The BBP General Partner's board of directors may consist of between three (3) and eleven (11) directors or such other number of directors as may be determined from time to time by a resolution of the BBP General Partner's shareholders and subject to its bye-laws. Prior to completion of the spin-off, the BBP General Partner's board will be expanded to seven (7) directors, a majority of whom will be independent. In addition, the BBP General Partner's bye-laws provide that not more than 50% of the directors (as a group) or the independent directors (as a group) may be residents of any one jurisdiction (other than Bermuda and any other jurisdiction designated by the board of directors from time to time).

Lead Independent Director

        John Lacey will serve as the lead independent director immediately following completion of the spin-off. The lead independent director's primary role will be to facilitate the functioning of the board (independently of the Service Providers and Brookfield), and to maintain and enhance the quality of our company's corporate governance practices. The lead independent director will preside over the private sessions of the independent directors of BBP's General Partner that will take place following each meeting of the board and convey the results of these meetings to the chair of the board. In addition, the lead independent director will be available, when appropriate, for consultation and direct communication with unitholders or other stakeholders of our

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company. Going forward, the lead independent director will be selected by the BBP General Partner's directors from among the independent directors.

Election and Removal of Directors

        The BBP General Partner's board of directors is appointed by its shareholders and each of its current directors will serve until the earlier of his or her death, resignation or removal from office. Vacancies on the board of directors may be filled and additional directors may be added by a resolution of the BBP General Partner's shareholders or a vote of the directors then in office. A director may be removed from office by a resolution duly passed by the BBP General Partner's shareholders. A director will be automatically removed from the board of directors if he or she becomes bankrupt, insolvent or suspends payments to his or her creditors, or becomes prohibited by law from acting as a director.

Action by the Board of Directors

        The BBP General Partner's board of directors may take action in a duly convened meeting at which a quorum is present or by a written resolution signed by all directors then holding office. The BBP General Partner's board of directors will hold a minimum of four meetings per year. When action is to be taken at a meeting of the board of directors, the affirmative vote of a majority of the votes cast is required for any action to be taken.

Transactions Requiring Approval by the Governance and Nominating Committee

        The BBP General Partner's governance and nominating committee has approved a conflicts policy which addresses the approval requirement and other requirements for transactions in which there is greater potential for a conflict of interest to arise. These transactions include:

    the dissolution of our partnership;

    any material amendment to our Master Services Agreement, our Limited Partnership Agreement or the Holding LP Limited Partnership Agreement;

    any material service agreement or other arrangement pursuant to which Brookfield will be paid a fee, or other consideration other than any agreement or arrangement contemplated by our Master Services Agreement;

    co-investments by us with Brookfield;

    acquisitions by us from, and dispositions by us to, Brookfield;

    any other material transaction involving us and Brookfield; and

    termination of, or any determinations regarding indemnification under, our Master Services Agreement.

        Our conflicts policy requires the transactions described above to be approved by the BBP General Partner's governance and nominating committee. Pursuant to our conflicts policy, the BBP General Partner's governance and nominating committee may grant approvals for any of the transactions described above in the form of general guidelines, policies or procedures in which case no further special approval will be required in connection with a particular transaction or matter permitted thereby. The conflicts policy can be amended at the discretion of the BBP General Partner's governance and nominating committee. See "Relationship with Brookfield — Conflicts of Interest and Fiduciary Duties".

Service Contracts

        There are no service contracts with directors that provide benefits upon termination of office or services.

Transactions in which a Director has an Interest

        A director who directly or indirectly has an interest in a contract, transaction or arrangement with the BBP General Partner, our company or certain of our affiliates is required to disclose the nature of his or her interest

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to the full board of directors. Such disclosure may generally take the form of a general notice given to the board of directors to the effect that the director has an interest in a specified company or firm and is to be regarded as interested in any contract, transaction or arrangement with that company or firm or its affiliates. A director may participate in any meeting called to discuss or any vote called to approve the transaction in which the director has an interest and no transaction approved by the board of directors will be void or voidable solely because the director was present at or participates in the meeting in which the approval was given provided that the board of directors or a board committee authorizes the transaction in good faith after the director's interest has been disclosed or the transaction is fair to the BBP General Partner and our company at the time it is approved.

Transactions Requiring Unitholder Approval

        Limited partners have consent rights with respect to certain fundamental matters and related party transactions (in accordance with MI 61-101) and on any other matters that require their approval in accordance with applicable securities laws and stock exchange rules. See "Description of the Holding LP Limited Partnership Agreement — Amendment of the Holding LP Limited Partnership Agreement", "Description of the Holding LP Limited Partnership Agreement — Opinion of Counsel and Limited Partner Approval" and "Description of the Holding LP Limited Partnership Agreement — Withdrawal of the Managing General Partner".

Audit Committee

        The BBP General Partner's board of directors is required to maintain an audit committee that operates pursuant to a written charter. The audit committee will consist solely of independent directors and each member must be financially literate as defined under our audit committee charter. The audit committee charter defines being "financially literate" as having the ability to read and understand a set of financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of the issues that can reasonably be expected to be raised by our company's financial statements. Not more than 50% of the audit committee members may be residents of any one jurisdiction (other than Bermuda and any other jurisdiction designated by the board of directors from time to time).

        The audit committee is responsible for assisting and advising the BBP General Partner's board of directors with respect to:

    our accounting and financial reporting processes;

    the integrity and audits of our financial statements;

    our compliance with legal and regulatory requirements; and

    the qualifications, performance and independence of our independent accountants.

        The audit committee is responsible for engaging our independent auditors, reviewing the plans and results of each audit engagement with our independent auditors, approving professional services provided by our independent accountants, considering the range of audit and non-audit fees charged by our independent auditors and reviewing the adequacy of our internal accounting controls.

Governance and Nominating Committee

        The BBP General Partner's board of directors is required to maintain at all times following the spin-off a governance and nominating committee that operates pursuant to a written charter. The governance and nominating committee will consist solely of independent directors and not more than 50% of the governance and nominating committee members may be residents of any one jurisdiction (other than Bermuda and any other jurisdiction designated by the board of directors from time to time).

        The governance and nominating committee has approved a conflicts policy which addresses the approval and other requirements for transactions in which there is a greater potential for a conflict of interest to arise. The governance and nominating committee may be required to approve any such transactions. See "— Transactions Requiring Approval by the Governance and Nominating Committee".

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        The governance and nominating committee is responsible for approving the appointment by the sitting directors of a person to the office of director and for recommending a slate of nominees for election as directors by the BBP General Partner's shareholders. The governance and nominating committee is responsible for assisting and advising the BBP General Partner's board of directors with respect to matters relating to the general operation of the board of directors, our company's governance, the governance of the BBP General Partner and the performance of its board of directors. The governance and nominating committee is responsible for reviewing and making recommendations to the board of directors of the BBP General Partner concerning the remuneration of directors and committee members and any changes in the fees to be paid pursuant to our Master Services Agreement.

Status as Foreign Private Issuer

        Because we will qualify as a foreign private issuer under SEC rules, we are permitted to follow the corporate governance practices of Bermuda (the jurisdiction in which we are organized) in lieu of the NYSE corporate governance requirements that would otherwise be applicable to us. We currently intend to follow the same corporate governance practices as would be applicable to U.S. domestic limited partnerships. However, we may in the future elect to follow Bermuda law for certain corporate governance practices, as permitted by the rules of NYSE, in which case our unitholders would not be afforded the same protection as provided under NYSE corporate governance standards. Following our home country governance practices as opposed to the requirements that would otherwise apply to a limited partnership listed on the NYSE may provide less protection than is accorded to investors of U.S. domestic issuers.

Indemnification and Limitations on Liability

Our Limited Partnership Agreement

        The laws of Bermuda permit the partnership agreement of a limited partnership, such as our company, to provide for the indemnification of a partner, the officers and directors of a partner and any other person against any and all claims and demands whatsoever, except to the extent that the indemnification may be held by the courts of Bermuda to be contrary to public policy or to the extent that the laws of Bermuda prohibit indemnification against personal liability that may be imposed under specific provisions of the laws of Bermuda. The laws of Bermuda also permit a partnership to pay or reimburse an indemnified person's expenses in advance of a final disposition of a proceeding for which indemnification is sought. See "Description of Our Units and Our Limited Partnership Agreement — Indemnification; Limitations on Liability" for a description of the indemnification arrangements in place under our Limited Partnership Agreement.

The BBP General Partner's Bye-laws

        The laws of Bermuda permit the bye-laws of an exempted company, such as the BBP General Partner, to provide for the indemnification of its officers, directors and shareholders and any other person designated by our company against any and all claims and demands whatsoever, except to the extent that the indemnification may be held by the courts of Bermuda to be contrary to public policy or to the extent that the laws of Bermuda prohibit indemnification against personal liability that may be imposed under specific provisions of Bermuda law, such as the prohibition under the Bermuda Companies Act 1981 to indemnify liabilities arising from fraud or dishonesty. The BBP General Partner's bye-laws provide that, as permitted by the laws of Bermuda, it will pay or reimburse an indemnified person's expenses in advance of a final disposition of a proceeding for which indemnification is sought.

        Under the BBP General Partner's bye-laws, the BBP General Partner is required to indemnify, to the fullest extent permitted by law, its affiliates, directors, officers, resident representative, shareholders and employees, any person who serves on a governing body of the Holding LP or any of its subsidiaries and certain others against any and all losses, claims, damages, liabilities, costs or expenses (including legal fees and expenses), judgments, fines, penalties, interest, settlements or other amounts arising from any and all claims, demands, actions, suits or proceedings, incurred by an indemnified person in connection with our company's operations and activities or in respect of or arising from their holding such positions, except to the extent that the claims, liabilities, losses, damages, costs or expenses are determined to have resulted from the indemnified person's bad

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faith, fraud or willful misconduct, or in the case of a criminal matter, action that the indemnified person knew to have been unlawful. In addition, under the BBP General Partner's bye-laws: (i) the liability of such persons has been limited to the fullest extent permitted by law and except to the extent that their conduct involves bad faith, fraud or willful misconduct, or in the case of a criminal matter, action that the indemnified person knew to have been unlawful; and (ii) any matter that is approved by the independent directors will not constitute a breach of any duties stated or implied by law or equity, including fiduciary duties. The BBP General Partner's bye-laws require it to advance funds to pay the expenses of an indemnified person in connection with a matter in which indemnification may be sought until it is determined that the indemnified person is not entitled to indemnification.

Insurance

        Prior to the completion of the spin-off, we intend to obtain insurance coverage under which the directors of the BBP General Partner will be insured, subject to the limits of the policy, against certain losses arising from claims made against such directors by reason of any acts or omissions covered under the policy in their respective capacities as directors of the BBP General Partner, including certain liabilities under securities laws. The insurance will apply in certain circumstances where we may not indemnify the BBP General Partner's directors and officers for their acts or omissions.

Compensation

        Because our company is a newly formed partnership, the BBP General Partner has not previously provided any compensation to its directors. Effective January 1, 2016, the BBP General Partner plans to pay each of its independent directors $100,000 per year for serving on its board of directors and various board committees. The BBP General Partner's other directors are not expected to be compensated in connection with their board service. The BBP General Partner plans to pay the chair of the audit committee an additional $20,000 per year and the lead independent director an additional $10,000 per year.

        The BBP General Partner currently does not have any employees. Pursuant to our Master Services Agreement, the Service Providers will provide or arrange for other service providers to provide day-to-day management and administrative services for our company, the Holding LP and the Holding Entities. The fees payable to the Service Providers under our Master Services Agreement are set forth under "Management and Our Master Services Agreement — Our Master Services Agreement — Management Fee".

        Pursuant to our Master Services Agreement, members of Brookfield's senior management and other individuals from Brookfield's global affiliates are drawn upon to fulfill obligations under our Master Services Agreement. However, these individuals, including the Brookfield employees identified in the table under "Management and Our Master Services Agreement — Our Management", will not be compensated by our company or the BBP General Partner. Instead, they will continue to be compensated by Brookfield.

        Pursuant to our Master Services Agreement, there may be instances in which an employee of Brookfield provides services in addition to those contemplated by our Master Services Agreement to the BBP General Partner, our company or any of our subsidiaries, or vice versa. In such cases, all or a portion of the compensation paid to an employee who provides services to the other party may be allocated to such other party.

Director Unit Ownership Requirements

        The BBP General Partner believes that directors can better represent our company's unitholders if they have economic exposure to our company themselves. Our company expects that directors should hold sufficient limited partnership units such that the acquisition costs of units held by such directors is equal to at least two times their annual retainer (the "Unit Ownership Requirement"), as determined by the board of directors from time to time.

        Directors are required to purchase limited partnership units on an annual basis in an amount not less than 20% of the Unit Ownership Requirement until this requirement has been met. Directors are required to achieve the Unit Ownership Requirement within five years of joining the board. In the event of an increase in the annual retainer fee, the directors will have two years from the date of the change to comply with the Unit Ownership

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Requirement. In the case of directors who have served on the board less than five years at the date of the change, such directors will be required to comply with the Unit Ownership Requirement by the date that is the later of: (i) the fifth anniversary of their appointment to the board, and (ii) two years following the date of the change in retainer fee.

The Unit Option Plan

        Our company will adopt the Unit Option Plan upon completion of the spin-off to enable our company to grant options to eligible persons should it be considered desirable to do so in the future. The plan provides for the issuance of our units (or delivery of our units purchased in the open market) on the exercise of an option with a value equal to the amount, if any, by which the fair market value of a unit on the date of exercise exceeds the exercise price of the option.

        The Unit Option Plan allows for the issuance of up to 5 million units, representing approximately 7% of the number of units (on a fully exchanged basis) expected to be outstanding upon completion of the spin-off. When our units are issued to a participant upon the exercise of an option, the number of units issued to the participant in respect of the in-the-money amount of the option will be deducted from the maximum number of units issuable under the Unit Option Plan.

        The maximum number of our units issuable to any one person under the Unit Option Plan is 5% of the outstanding units (on a fully exchanged, non-diluted basis) less the aggregate number of our units reserved for issuance to such person under any other security based compensation arrangement of our company. The number of our units issuable to insiders, at any time, under the Unit Option Plan and all other security based compensation arrangements of our company cannot exceed 10% of the issued and outstanding units (on a fully exchanged basis). The number of our units issued to insiders, within any one-year period, under the Unit Option Plan and all other security based compensation arrangements of our company cannot exceed 10% of the issued and outstanding units (on a fully exchanged basis).

        The exercise price of an option under the Unit Option Plan is established at the time such option is granted, which shall be in U.S. dollars and shall not be less than the fair market value on the date of grant of such option (based on the closing price of a unit on the NYSE on the last trading day preceding the date of grant), and shall, in all cases, be not less than such amount required by applicable regulatory authorities from time to time. If the approval date for options to be granted falls within a blackout period, the effective grant date for such options will be no earlier than six business days after the date on which the blackout period ends, and the exercise price for such options shall not be less than the volume-weighted average price of a unit on the NYSE for the five business days preceding the effective grant date.

        The board of directors of the BBP General Partner may determine vesting terms for options and may determine that an option shall be vested and exercisable in installments. Unless otherwise specified in the option agreement or other agreement with the participant, options become vested as to 20% on the first anniversary date after the grant and as to 20% on each subsequent anniversary date up to and including the fifth anniversary date of the grant. The board of directors of the BBP General Partner may determine the maximum period following the grant date during which a vested option may be exercised, subject to the provision that options shall not be exercisable later than 10 years after the date of grant, provided that, if an option would otherwise expire during a blackout period or within 10 days after the end of the blackout period, to the extent permitted by applicable law, the term of such option shall automatically be extended until 10 days after the end of the blackout period. To the extent permitted by law, the board of directors of the BBP General Partner may, from time to time, delegate to an administrative committee or the chair thereof all or any of the powers conferred on the board of directors of the BBP General Partner under the Unit Option Plan.

        Eligible persons under the Unit Option Plan are: (i) officers or employees of our company or any affiliate of our company whose location of employment is within the United States, without regard to that individual's tax residence or citizenship and for which our units constitute "service recipient stock" within the meaning of Section 409A of the U.S. Internal Revenue Code; (ii) officers or employees of our company or any affiliate of our company whose location of employment is within the United Kingdom or any jurisdiction other than the United States, Australia or Canada, without regard to that individual's tax residence or citizenship; and (iii) any other persons (other than non-employee directors) so designated by the board of directors of the BBP General

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Partner, subject to applicable laws and regulations. Options may not be assigned; however, the foregoing does not prohibit a holder from directing payments under the Unit Option Plan to his or her legal representative.

        All options immediately cease to be exercisable if the holder ceases to be an eligible person under the Unit Option Plan for any reason, except termination without cause or due to a holder's death, retirement or continuous leave of absence as a result of disability or leave authorized by statute. If the holder's employment is terminated without cause or due to a continuous leave of absence as a result of disability or leave authorized by statute, the holder has 60 days after the holder's termination date to exercise vested options and options which have not vested by the termination date are cancelled on the termination date. If the holder's employment is terminated for cause, by resignation, or by a continuous leave of absence other than as a result of disability or leave authorized by statute, all options whether vested or not vested by the termination date are cancelled on the termination date. If the holder retires, vested options remain exercisable until the original expiry date and options which have not vested by the termination date are cancelled on the termination date. If the holder dies, the holder's legal representatives have six months to exercise vested options.

        The board of directors of the BBP General Partner may make the following types of amendments to the Unit Option Plan without seeking unitholder approval: (i) amendments of a "housekeeping" or administrative nature, including any amendment for the purpose of curing any ambiguity, error or omission in the Unit Option Plan or to correct or supplement any provision of the Unit Option Plan that is inconsistent with any other provision of the Unit Option Plan; (ii) amendments necessary to comply with the provisions of applicable law (including the rules, regulations and policies of the TSX and the NYSE); (iii) amendments necessary for awards to qualify for favorable treatment under applicable tax laws; (iv) amendments to the vesting provisions of the Unit Option Plan or any option; (v) amendments to the termination or early termination provisions of the Unit Option Plan or any option, whether or not such option is held by an insider, provided any such amendment does not entail an extension beyond the original expiry date; and (vi) amendments necessary to suspend or terminate the Unit Option Plan.

        Unitholder approval is required for certain amendments to the Unit Option Plan, including: (i) any amendment to increase the number of our units issuable under the Unit Option Plan, including an increase to a fixed maximum number of units or a change from a fixed maximum number of units to a fixed maximum percentage; (ii) any amendment to the Unit Option Plan that increases the length of the period after a blackout period during which options may be exercised; (iii) any amendment which would result in the exercise price for any option granted under the Unit Option Plan being lower than the fair market value of our units at the time the option is granted; (iv) any amendment which reduces the exercise price of an option, except in connection with any change in our outstanding units by reason of any stock dividend or split, recapitalization, reorganization, amalgamation, consolidation, merger or other corporate change; (v) any amendment expanding the categories of eligible person which may permit the introduction or reintroduction of non-employee directors on a discretionary basis or any amendment to remove or exceed the insider participation limit; (vi) any amendment extending the term of an option beyond its original expiry date, or a date beyond the permitted automatic extension in the case of an option expiring during a blackout period; (vii) any amendment which would permit Options to be transferable or assignable other than for normal estate settlement purposes; (viii) any amendment to the amendment provisions; and (ix) amendments required to be approved by unitholders under applicable law (including the rules, regulations and policies of the TSX and the NYSE).

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