NRGY is pretty highly leveraged to growth at NRGM.
You saw that of the 3 public entities in the merger, NRGY gained the most on the news.
A little FYI........the majority of the MLP funds who own NRGY & NRGM are selling NRGY, and BUYING NRGM. Perhaps their contact sources may have provided some prior insight to this deal taking place. I own KYE & KMF (Kayne Anderson MLP Mid-Stream) in a Roth IRA. I follow and add selective single MLP investment new positions when they BUY or ADD, I buy to my brokerage account. Never a loser, returns have been great following their holdings. I view their other fund holdings to pick out buys to diversify across the energy sector. I consider them my personal insider, and a leader in the MLP fund sector with a first class set of energy analyst on staff.
Confused it is....I don't own any of the three involved, but want to buy a piece from the merger because long term it's a winner.
NRGY or NRGM? Inclined to go with NRGM maybe today!
Liza, I see you on many energy related boards. CMLP was on my watch list, but don't own it. I am not sure what to buy out of this deal.......NRGM, or NRGY. I like the deal, and the assets areas they hold and believe it's a win-win going forward.
quite a remarkable transformation of NRGY in the last year from a propane distributor to the GP controlling a diverse set of midstream assets (after the NRGM CMLP merger). Pretty impressive how they completely transformed the company bin such a short time.
As a CMLP, soon to be NRGM unitholder, the only think I really dislike about the structure (although it is good for NRGY) is the unusually onerous IDR structure. When NRGM was first IPOd, it came out with a structure that send it to the top 50% IDR tier at any distribution level higher than the initial minimum distribution (which it passed with the first full quarter's distribution). I'm not against IDRs in general like a lot of MLP investors are, however this is the exception with that unique (so far as I know) extreme structure. All the others at least have to raise the distributions considerably at the LP (and thus benefit unitholders in the process) before the top tier kicks in and 50% of cash flow goes to the GP. It's clear why NRGY rallied after the merger announcement as the addition of the CMLP assets will boost cash flow to the GP NRGY.
The website states the .29 quarterly distribution will remain. That means if the price adjusts down to $15, the yield will become just under $8? Really? And NRGY holders will also get the .395 qtr distributions from their acquired NRGM shares going forward? So, basicially you can add .17 more (from NRGM) to the .29 for each share of NRGY, bringing the net quarterly distribution to .46. Sweet! This thing is horribly confusing.
So,in essence,you believe that NRGY is going to drop down to the $13 to $15 range ?? I don't think the Crestwood management people who are going to run the company would let that fly..
"""Units of NRGY will be adjusted down by (NRGM *0.4321) closing price the date received."""
How is that a special dividend? That sounds like a wash.
What is the actual math of the deal to, say, 1000 units of NRGY at today's 23.75 close? Anyone?
Contacted investor relations. This deal will be the same as with SPH. Units of NRGY will be adjusted down by (NRGM *0.4321) closing price the date received. The plus side is we will get the NRGM distribution, net result is $0.17 increase over
the current $0.29 or $0.46 a quarter. All assuming the deal happens and the finacials remain stable.
You most likely are right based on the price action. In my brokerage account my SPH is showing as zero cost basis. Of course my NRGY has a loss so it is a wash.
There no tax on SPH. That was an even swap. The amount of SPH was about 34.50 and the same amount of cash was taken from the value from the NRGY account.I think the same thing is going on here. Midstream is being spun off and nothing more. If I am wrong someone please tell me what they think. My broker is on vacation until the 13th so I haven't talked to an "expert" about this. The price today tells me I'm right .
If it works like the sale to SPH we will receive the NRGM units at a $0 cost basis. 100% capital gain on sale. Not sure why nrgy is up so little? May 8th is ex-div, so people may assume that the news release was for the normal distribution? plus a simularity with nrgy nrgm symbols. I bought 200 more
I guess. Here is the pertinent part of the release:
"...to Inergy unitholders of record on the record date (as described below) of 56,398,707 common units of Inergy Midstream, L.P. (NRGM) (NRGM) held by Inergy. Payment of the special distribution is contingent on the satisfaction or waiver of all closing conditions under the contribution agreement.
The Board declared a record date of June 14, 2013 for the distribution of the NRGM units. The distribution of the NRGM common units is expected to be approximately 0.4321 NRGM common units for each Inergy limited partner unit outstanding on the record date. The distribution of the NRGM common units is expected to occur after the market closes on June 18, 2013 (the “Distribution Date”). "
NRGM is currently trading at about $23. That equates to about $9.9 of NRGM units (.4321 times $23) to each NRGY unit. What am I missing that NRGY is only up $1.93 today?
Wonder what tax issues that will create?
Did I read correctly? That we are receiving units of NRGM as a special dividend .43 unit of ngrm for each unit of INRGY. plus the merger and it is ex-dividend today. At todays price of NRGM that would be a $9 dollar special dividend to INRGY unit holders
What are the terms of this deal. The articles releases so far a lacking detail....
I see NRGY is up in premarket, but based on what? Just that there is a deal happening?