So Liza, are you saying that they are heavily incented to grow the distribution over the initial $0.37 quarterly amount because NRGY will collect 50% over the initial amount? this would be good for both NRGM holders (their distribution grows quickly ) and NRGY holders(the amount they get from the IDRs grows quickly).
I'm just surprised the IDRs are like that. Never seen one where the 50% IDRs kicks in immediately the initial distribution is exceeded. Don't mention this example to Jack on the LINE board.
I'm not planning to buy it anyway, although I might sell some OOTM puts on it when options are available. If I was considering buying, I might be concerned those IDR tiers seem a little 'aggressive', shall we say.
Thanks for answering the question I just posed on the NRGM board, but I do not understand your concerns about the IDRs being aggressive. If NRGY stands to receive NRGM distributions in the near future, does that not help them maintain their own distributions? And NRGM, which has been growing, is apparently priced to yield about 7-8% at current larker value.
I see NRGY selling off a minority interest in NRGM, paying off $300M or so in debt, with the attendant interest savings, generating IDRs in the near future and paving the way to buy more assets. I wonder if NRGY intends to become a GP down the line--maybe IPO the propane business (high payers are popular now), use the cash to buy more assets, drop them down, collect IDRs, become another EPD?