MLP Protocol 042613

Key adjustments from last week:

  • Adjusted SXE for the $40 million of Series A Convertible Preferred units it issued on April 15 that was done in conjunction with an amendment to its credit facility to loosen the financial covenants.
    1. Preferred units will be paid-in-kind at a rate of $0.40 per unit (same as the common unit Minimum Quarterly Distribution) for the first four full quarters.
    2. Amendment includes additional contingent contribution by the General Partner of another $17.4 million over the next four quarters if the increased leverage ratio test has not been met.
    3. My sense is that the first quarter performance will continue to look weak and that there is a chance they may need to lower or possibly suspend the distributions to the Subordinated Units.
  • Adjusted TOO for a $150 million 7.25% Series A Cumulative Redeemable Preferred Units offering on April 22 (upsized from $140 million, expected to close on April 30).
  • First quarter 2013 distribution announcements Quarter-over-Quarter: 48 increases, 29 flat and 2 decreases (RNF and NTI both are variable rate MLPs, NTI is based on the mid-point of the $1.15 to $1.25 distribution guidance they provided on April 26 so not officially final yet).

Additional Food for Thought on NTI:

  • Insiders filed the first draft of an S-1 back on March 28 signaling their intention to sell an additional $385 million of their position (~$442.8 million with the over-allotment), so roughly 15 million units (up to ~17.25 million with the over-allotment) out of the 60.9 million they currently hold (66.3% ownership interest prior to the pending offering).
  • In addition to the 1Q13 guidance NTI provided on April 26, they amended their equity offering filing on Friday night to include that guidance.
  • What signals are the insider sales sending?
  • Paid subscribers – please see my additional thoughts in the email sent with the full Monthly Report for May.

The MLP Protocol Monthly Analytics Report for May is now available, the June 2013 report will be available after May 30th.

MLP Protocol Weekly Snapshot report: (click to open) MLPP 042613 Snapshot vFree

About Philip Trinder

President of MLP Protocol, investor, trader, and proponent of Master Limited Partnerships.
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