Much ado about Linn raising cash ... they will sell units to raise cash if they feel like it and they see something accretive but are not forced to do it. If Linn desires, it can do nothing.
If Linn was overly concerned about their cash levels, or debt to equity levels, why would they have just raised the distribution by 5%? Keeping the old distribution level would have conserved cash, yet they decided to give it away to the unitholders.
And doesn't Linn have a chunk of unused revolving credit at their disposal?
Joe - the floor is yours ...
No, not just for fun... they did it to comply with disclosure rules.
Whether they exercise their strategy of selling shares ? Who knows.
The world looks a bit different this week than it did last week, thru no fault of Linn Energy.
If anything, the biggest vote of confidence, and the most telling, was that Linn raised its distribution by 5% last week. This is hardly a company under pressure or distress. They could have waited another 90 days, but they felt it was the right time to reward unitholders with some spendable cash.
That's the reality of it Joe.
You are distorting, and apparently intentionally, what Linn announced.
The annoucement communicated that in place of the "large" SOs they have in the past done, that distressed unit holders with price dips, they will instead sell at the market to rebalance equty level with debt level from time to time when opportune.
Linn has a borrowing facility of $1.5 B, and ample cash flow, growing cash flowe at that, to cover the distribution, and well development and maintenance, and makes a practice of short term borrowiug to make cash accretive property purchases.
Your attempt to supply shortimg nonsense is glaring.
So, that suggests that someone in finance, concurrent with the release of the Quarterly, said "Hey, just for fun let's announce the sale this Quarter of $500 Million in new Units".
Do they routinely do that? Something they do end of every Quarter?
Get real. This is not a bad thing as long as the acquisitions are accretive. If they do these as all Debt / Revolver, then interest gets paid rather than DCF to new investors. If production turns down, interest, amortization are FIXED, whereas Equity DCF can adjust with conditions.
Let’s settle this the easy way: If their Outstanding Units are the same at the end of 3rd Quarter, you win the discussion. If greater, I win discussion.
Regardless, I believe LINN will return superior returns and appreciation over the next 4 years.
My LAST words on the issue.
You keep repeatedly posing miinfomaton and misunderstanding of the company's invesment strategy. The company is opporunitic about great acquisitions. They will borrow to lock in good deals, if sensible. Over time, they like to have 2 parts equity to one part debt.
You must be Short to keep posting misinformationb about the financial data and company strategy?
"If I am such a fool that dreamed up the need for cash, WHY did they announce potential sale of $500 Million along with the Quarterly?"
Because the law requires they make this announcement of "potential".
Whether "potential" becomes "reality" is another question. Linn might do, they might not. It's up to their best judgment, but I doubt they absolutely positively must do the sale.
I means they, as an E&P, if they can have:
Existing Liabilities of : $ 3.68 Billion
Revolver of $1.5 Billion
In Theory Total Liabilities of $5.18 Billion
on $3 Billion Equity in this sector
That is WONDERFUL. That approaches the ratios in my space; pipelines where we have fixed assets and long term contracts with the majors.
I LOVE companies performing at their MAX potential. This is all a FINANCE game now. If they can pull those ratios in E&P, GREAT!
PLEASE; I am not here to disparage, once again I like LINN, own 2,000 units at close today, and will swing trade up to 5,000.
Just like to deal in facts.
If I am such a fool that dreamed up the need for cash, WHY did they announce potential sale of $500 Million along with the Quarterly?
If they have $1.5 Billion revolver, why alert Unit holders of potential sale?
But you all must acknowledge that they did $750 Million in Seniors @ 6.5% last quarter. They are locking in stability in long-term finance rather than putting this on the credit card, the revolver.
When they lock in long-term, the investment bank that placed that will require more Equity.