MLP Protocol 041913

Key adjustments from last week:

  • Adjusted AMID for the following announcements on April 16:
    1. High Point Infrastructure Partners, LLC  (“High Point”), a portfolio company of ArcLight Capital Partners, LLC (“ArcLight”), acquiring 90% of AMID’s General Partner and 100% of its subordinated units
    2. Transaction resulted in a change of control of AMID
    3. AMID concurrently issuing $90 million of Series A convertible preferred units to High Point in exchange for the contribution of operating assets and approximately $15 million of cash.
    4. Acquired assets include approximately 700 miles of onshore and offshore gathering and transmission assets providing Gulf of Mexico producers with fee-based midstream services and providing $10 to $12 million of EBITDA
    5. Series A convertible preferred units priced at $17.50 per unit and are entitled to quarterly cash distributions of $0.25 per unit and in-kind quarterly distributions of $0.25 per unit for six quarters, after which they will receive the greater of the Partnership’s minimum quarterly distribution and the distribution per unit actually paid to common unit holders
    6. Overall the transactions are positive for AMID’s common unitholders, if I had managed to borrow AMID units to short on March 28 I would go ahead and cover my position (even though, as I was worried about, the fourth quarter numbers were very bad, the ArcLight transactions change my outlook)
    7. As a result of the favorable changes I adjusted my outlook for AMID distributions to now remain flat, which was an increase from my prior estimate of a cut in distributions (if I had been short AMID units I would have covered on April 17)
    8. AMID may also pursue a Subordinated Unit and Incentive Distribution Right restructure transaction near term similar to what NKA announced on April 2 (NKA press release)
    9. AMID transaction presentation (click to open): AMID-Transaction-Overview-FINAL
  • Adjusted TOO for a 2.06 million unit private equity placement offering for proceeds of approximately $60 million on April 16, so an estimated price of $29.13 per unit (~4% discount to prior closing price). The 4% discount looks very good for a PIPE transaction so I’m wondering if there are some additional “fees” that are being charged by the institution. I’ll further adjust the estimated cash proceeds if some additional details show up in an SEC filing.
  • Adjusted APL for a 10.3 million unit equity offering at $34.00 on April 17 (one day marketed deal done at a 4.1% discount to closing price prior to announcement). APL also announced plans to acquire an Eagle Ford midstream business for $1 Billion from TEAK Midstream, which is expected to close in the second quarter. APL data will be adjusted for the acquisition once it closes so until then the APL valuation will be overstated. Highlights:
    1. Assets being acquired include a 200 MMcfd cryogenic processing plant (“Silver Oak I”), 265 miles of 20″-24″ high pressure rich gas gathering lines with 750 MMcfd of throughput capacity, and a second 200 MMcfd cryogenic processing plant (“Silver Oak II”), which is expected to be delivered for installation in May of 2013 and be in service during the first quarter of 2014
    2. Total capital expenditures associated with the build-out of Silver Oak II and other projects are expected to be approximately $100 million over the next year
    3. APL introduces 2014 EBITDA guidance of $450 to $500 million and distributions of between $2.75 and $2.85 per limited partner unit does not include any future unannounced organic growth projects on its legacy business
    4. TEAK’s run-rate fourth quarter 2014 EBITDA is expected to be $160 million, currently approximately 80% fee-based
    5. TEAK assets include a large rich gas header pipeline with 750 MMcfd of throughput capacity through core producing counties including Dimmit, La Salle, McMullen, and Karnes counties in Texas
    6. Significantly increases pro forma cash flow of APL to approximately 50% fixed-fee by the end of 2014
  • First quarter 2013 distribution announcements are underway so the Quarter-over-Quarter and Year-over-Year distribution change page will be in the Weekly Snapshot throughout the announcement period, so far 28 distributions have been announced (Quarter over Quarter: 17 increases, 11 flat).

The MLP Protocol Monthly Analytics Report for April is now available, the May 2013 report will be available after April 26th.

MLP Protocol Weekly Snapshot report: (click to open) MLPP 041913 Snapshot vFree

About Philip Trinder

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