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Breitburn Energy Partners LP Message Board

  • dmer00 dmer00 Jan 10, 2014 7:16 PM Flag

    IPO's or ATM

    Ruby or anyone. Have they stated they will now do all ATM to raise additional capital or will they still do IPO's? They obviously need to raise capital to pay for this last acquisition just trying to determine how they might do it.
    Thanks in advance. dmer00

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    • No, they haven't said anything, but we all know they need to do it again. I would encourage them to go the ATM route like VNR, as it would dampen volatility compared to mass offerings. I don't know why all MLP's don't use them, it would certainly reduce the drama element, you wouldn't even know when they were in the market until financials came out.

      On the down side one could argue it might make it more difficult to price down to a lower yield, as often those events happen in a rush. If the unit price started to make dramatic gains in the market, presumably that's when management would be in there dishing units out, which would soak up that buying enthusiasm. Tough call, but I think in the long term a stable, orderly market for units is in everyone's interest.

      • 2 Replies to ruby.thedyke
      • I have mixed feelings about it. I certainly like the warm, fuzzy concept of dampening out the volatility of unit prices. But if I look back at my ledger what I find is that I've been fortunate, so far, to use SPOs to advantage in my MLP portfolio, using those dips to reinvest distributions at a discount.

        IMO, best thing they could do is raise capital ATM and then set up a true DRIP program that comes with a 5% discounted reinvestment price to incentivize existing holders to auto-reinvest their distributions. This would be sort of like having a small SPO every month without the huge dip, with partners benefitting by getting to reinvest at a discount. Then, additional capital raises would be done ATM, also without a huge dip. Best of both worlds.

        Just dreaming. Doubtful they would/could do a DRIP with the monthly distribution schedule. The transaction costs would probably make that too expensive on their end.

      • Ruby, thanks for the reply. I agree I would rather see them do the ATM. I have held PSEC on and off over the years to the point that you can almost tell they are in the middle of there ATM. It definately effects volume and you see some weakness for a few days although not generally big swings. I hope going to ATM doesnt limit BBEP's share price growth as it seems to have with PSEC.

    • Sorry!!! SPO!

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