Resiliency in Uncertain Times – Spotlight on Regulated Terminal...Brookfield Infrastructure Partners

Resiliency in Uncertain Times – Spotlight on Regulated Terminal...Brookfield Infrastructure Partners

We often characterize BIP as an investment for all seasons, highlighting the recession resistant characteristics of our business. Our cash flow profile is stable and predictable which is a function of the regulated and contracted nature of our assets.

A great example of this resilience through market cycles is our Regulated Terminal in Australia. As background, the terminal serves as a critical link in the global steel supply chain from one of the highest-quality and lowestcost basins in the world (the Bowen Basin). This fully regulated terminal operates under an established regime and has long been a steady contributor within our utilities segment.

The business has the key characteristics that we look for in infrastructure assets:

• Strategically important asset that is an essential link to global export markets and supported by a highquality and long-life resource

• Established regulatory framework provides a utility-like risk profile, and stable and predictable cash flows with a full pass-through of operating and maintenance costs

• No volume or commodity exposure as revenues are earned under long-term, take-or-pay arrangements

• Robust downside protection with a mechanism for socializing costs amongst counterparties in the event of a default and no force majeure provision in customer contracts

• Creditworthy counterparty profile comprised of some of the world’s largest mining companies

For these reasons, the economic slowdown had virtually no impact on the operational and financial performance of the business. Similarly, in the past, we have had experiences with extreme weather events, where this business continued to receive full revenue payments despite the terminal being unable to operate for periods of time.

Brookfield Infrastructure acquired the Regulated Terminal at an attractive entry point in 2009, as part of the multifaceted recapitalization of Babcock and Brown. Over 10 years of ownership, we have created value in several ways – (i) we executed significant capital projects that increased the regulatory rate base, (ii) we enhanced operating efficiency by improving working capital requirements and (iii) we reduced the cost of capital through opportunistic financing initiatives. This has, to date, resulted in returns of close to four times our invested capital.

Sam Pollock

Chief Executive Officer

Brookfield Infrastructure Partners L.P.

August 5, 2020