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NuStar Energy L.P. Message Board

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  • rrb1981 rrb1981 Jun 3, 2008 7:16 AM Flag

    There are massive problems here.

    Exactly, Greehey and Anastasio never released the exact ebitda, but they kept hinting that they bought it at a refinery multiple (which is around 6x). So, when you factor in the total purchase price, inventory and even the hedging losses, they still got this baby at about a 6x ebitda multiple. The plan is to hold back about half the cash flow. I have no doubt that Greehey and company will have these operations running better than they have ever run and will continue to inject capital into the business to boost and optimize production. This will be fabulously accretive in the long run, especially given that the current market for acquisitions in inflated.

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    • If the deal is so good, why is the stock trading at a 52 week low....and why has it fallen $5 bucks since the deal was completed?

      All valid questions.

    • Refinery multiple?

      yes the refinery multiple is about 6x EBITDA. they said the Asphalt operations made 80-120M$ EBITDA with a purchase price of 450M$ sounds about right. the problem is that this does not take into account the 300M$ in working capital then the multiple is 6x-9x EBITDA. The 60M$ in hedging loss should have been compensated by rising Asphalt prices (assuming they went short crude and asphalt prices were rising0 that should have netted out zero - the fact that it did not means that the asphalt business probably is in the tank.

      • 1 Reply to clownbucks
      • Acquisition was 450 million plus working capital which was 100 million, not 300 million. So, factor in 450 acquisition cost, 100 million in working capital, 60 million in hedging losses, and then tack on say another 40 million because oil has risen, causing working capital requirements to increase and you still have a 6.5x ebitda multiple.

        This is a good buying opportunity. Greehey is no fool, despite what Kerfinator says. It is times like these when sage investors step in and buy when goof balls like kerfinator are panicking.

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