Using a simple calculation that $2.82 dividend is covered at 68% = $1.92 at 100% coverage. I expect the new dividend to be covered by 1.20 so the new level should be $1.60. This would allow more softness to absorb cost of cost savings (yes I know that sounds redundant) as well as more softness in the propane market given the low cost of alternative Nat Gas going forward. That would give us a 9% plus yield at $17.45/share currently with room for upside as debt is reduced, and NRGM gets up to speed. The storage business is weak too. Look at NKA for more info on that. At this price, NRGY becomes a cheap takeover candidate as well so don't be surprised to see a lowball offer in the high teens from APU or SPH who have money and a balance sheet to do this accretively. They could replace the high cost debt from NRGY with much lower cost debt and equity to add to accretion easily.
Well those are my thoughts.
Bought today at 17.5 and below and sold Feb 17.5 puts at $1.10. Might get a bit more on second news day, but will add more.
APU just bought ETP's propane business so there's no way they are doing another deal and there's no way the FTC or Antitrust would let them do it either. Don't know much of the overlap with SPH. Selling NRGY would essentially be selling NRGM also, so I doubt they would want to do that before they have had a chance to grow NRGM.
Still, consolidation is going to continue. Baird it throwing in the towel and gave a 50% divvy cut and 14 target on the stock. At that level with NRGM in the mix, it is extremely cheap. Could still get some downside, but I don't expect 14. I would be happy to own even more at that level. With a lower payout, there will be less stress on the debt, with some paydown possible. With 119 Million shares outstanding and a cut of $1.40, there would be an additonal $166myn that would give the company 60myn to pay down debt with the extra $100myn not being wasted on returning capital to us while killing the company. APL did this as did other E and P companies and they turned around quite well. Insiders will get new options that exercise at much lower levels and get rich, too.