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Inergy, L.P. Message Board

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  • rrb1981 rrb1981 Oct 19, 2011 1:37 PM Flag

    What is NRGY worth?

    The Amerigas-Energy Transfer deal is huge for Inergy in that it puts a value on an integrated platform.

    I believe that Inergy may end up contributing its propane assets to Suburban (SPH), which would allow SPH to bulk up and rival the bulked up Amerigas. SPH has a pristine balance sheet, no IDRs, so it would be perfect for SPH and would allow NRGY to focus on midstream.

    One thing is certain, NRGY has now become cheap. The fear mongering by beefstu is just that, fear mongering. NRGY certainly deserves much of the punishment they have received (i.e. price decline) as they made a series of poor decisions (hefty GP buyout followed by a transformational transaction in Tres Palacios), but the rumors of their demise are misleading.

    All of that being said, NRGY will likely be able to maintain the distribution at its current level, and at worst, a cut of 20%.

    A cut of 20% brings it down to $2.24/unit and with a 8% yield, you have a price of $28.20.


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