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?
The aggressive IDRs are unfriendly for NRGM unitholders. It limits the chances for distribution growth (and price appreciation) because the IDRs immediately start siphoning off more cash to NRGY as soon as the distribution is raised even a fraction. It is more common for the IDR tiers to start at a distribution level well above the initial minimum distribution - and that allows distribution growth and price appreciation before the IDRs start draining more cash flow to the GP.
"I wonder if NRGY intends to become a GP." NRGY is already the GP of NRGM.