Brookfield increased loan to Compass ahead of $5.5-billion buyout

financialpost.com:

A unit of Brookfield Asset Management Inc. raised the size of a credit facility to Compass Datacenters LLC shortly before Brookfield and other investors struck a deal to buy control of the Dallas-based company.

Brookfield-managed infrastructure debt funds approved a US$400 million increase to the facility in early June, taking it to US$1.1 billion, according to people familiar with the matter. Then, on June 20, Brookfield Infrastructure Partners LP announced it had joined forces with Ontario Teachers’ Pension Plan to acquire the company, which operates data centres in the U.S., Italy and Canada.

The deal is expected to close by year-end.

Brookfield’s plan to own both the debt and equity of Compass illustrates the multiple roles alternative asset managers are playing in deals as they expand their direct lending activities. Although it’s not uncommon for the same firm to participate in multiple parts of a company’s capital structure, the situation can create the potential for conflicts in decisions about how to use a company’s cash — whether to prioritize dividends or debt repayment, for example.

Compass will deal with any possible future conflicts of interest by having representatives from the Ontario Teachers’ fund take charge of any discussions related to Brookfield’s loan to Compass, said the people, who asked not to be identified because the matter is still private. Representatives for Brookfield and Ontario Teachers’ declined to comment.

Compass plans to use the expanded credit facility for a variety of purposes, including capital expenditures, the people said. “The loan increase was done in normal course on a competitive basis with proceeds supporting the continued growth of the Compass business and was approved