I suspect that if they do not do the buyback at these prices, they won't do it at all. I have questioned whether they should do the transaction at all and simply deploy the cash into picking up assets on the cheap. In reviewing what BadBernanke mentioned, that this cash came from a non producing asset, that was unlikely to be developed I have changed my mind. In that context, I would think it would be wise to see if the banks would allow them to use the whole 200 million to retire units. I would then think it would be prudent for Linn to use the savings from the reduction in distributions to de-leverage.
Another poster mentioned some time back that the SEC has rules governing buybacks. The rules limit the quantity that a company can buy on a given day, the hours of trading and a few other items. Here is a summary from an old CPA journal and a link to the place I found it:
The company itself is covered by the SEC rules that prohibit insider trading in a public corporation’s stock. A corporation may not repurchase its own stock before any material inside information is reported to the public; a company should announce the decision to buy back stock before commencing actual purchases.
The SEC’s complex section 240.10b-18, referred to as Rule 10b-18, is generally regarded as the safe harbor for stock buybacks, although it does not provide absolute protection from litigation. Highlights of Rule 10b-18, which also provides various exceptions and traps, include the following:
Time. A corporation generally may not perform the opening trade on any day and may not trade during the 30 minutes before the market closes. The same restrictions apply to any affiliated purchasers, such as advisors involved in the decision to buy back stock.
Volume. During any one day, a corporation generally may not buy more stock than the larger of one round lot (generally 100 shares) or the number of round lots nearest to equaling 25% of the stock’s average daily trading volume for the four calendar weeks preceding the start of the buyback program.
Block purchases, which may be privately negotiated outside of the market, typically are not subject to the volume restriction if each block--
has a purchase price of at least $50,000 including at least 5,000 shares,
has a purchase price of at least $200,000, or includes 2,000 shares (20 round lots) or more and is at least 150% of the stock’s average trading volume for the four calendar weeks preceding the buyback period.
Price. A corporation generally may not reacquire its stock with a purchase price or bid that exceeds the greater of the highest current independent bid quotation or the last independent sale price. Affiliated purchasers are bound to the same ceiling.
On last CC EVEP said they were going to sit on spending dollars on production...They thought in the near future they would get more bang for the buck by buying assets on the cheap because there are companies out there in trouble...LINE has money so maybe they will do the same...