Brascan eyes Ontario hydro firms

- Brascan Corp. seems almost certain to lose its bid for the Canary Wharf office development in London, but the conglomerate's chief executive says the firm has plenty of cash to spend on acquisitions and intends to focus on power producers.

"We think there will be a number of acquisition opportunities that have been out there and just haven't been dealt with, and that haven't been sold, that we may be able to participate in," Bruce Flatt told shareholders recently at Brascan's annual meeting in Toronto.

Brascan has already bought hydroelectric power plants in Northern Ontario from Ontario Power Generation Inc. under the former provincial government's plan to bring more competition to the electricity market. The conglomerate has also been rapidly expanding its presence in the United States and Brazil and now has more than 40 plants in Ontario, Quebec, the United States and South America.

"We think that, here in Ontario, there is a lot of consternation about where the market will be, and we think that we're ideally suited to acquire assets, should Ontario Power (Generation) put out further assets into the market," Flatt said.

Brascan, which announced an increase of more than 160 per cent in first-quarter profit recently, has about $1 billion (U.S.) in cash and securities as well as about $3 billion in assets that the company could use to make purchases.

Meanwhile, its well-known mining and forestry assets, Noranda Inc. and Nexfor Inc., are reporting booming profits, while businesses in real estate, asset management and financial services are also doing well.

Canary Wharf shareholders have until mid-May to accept either Brascan's offer or one from U.S. investment bank Morgan Stanley. They have been advised by Canary Wharf directors to accept the Morgan Stanley offer.

Losing bid or not, Brascan will have made a profit on investing in Canary Wharf.

"We purchased 9 per cent of the company prior to this process, and ... our profit is more than $100 million," Flatt said at a news conference after the meeting.

The conglomerate, which reports in U.S. currency, said virtually all of Brascan's diversified holdings contributed strongly to a first-quarter profit of $147 million (U.S.), up from $56 million a year earlier. Net profit for the quarter ended March 31 amounted to 75 cents a share, up from 23 cents.

Strong results in power generation and real estate added to earnings, but Brascan's non-core holdings in mining and forestry excelled.

"The large chunk in that income is due almost entirely to better results at Noranda and Nexfor," Brascan chief financial officer Brian Lawson told shareholders.

Earlier this week, subsidiary Noranda reported sharply improved quarterly profit of $153 million, mainly due to soaring nickel prices, and forestry company Nexfor increased quarterly profits to $81 million.

Brascan executives gave no further insight into their rumoured intentions to sell or spin off Noranda, which is worth about $2 billion and is almost half owned by Brascan.