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TransMontaigne, Inc. (TMG) Message Board

  • vuss49 vuss49 Dec 8, 2004 8:50 PM Flag

    it doesn't add up

    RRB, you know me well enough to know that my knowledge base is wide, but not deep------of course i also "bashed" KSL, ------the contracts i'am refering to are found in the article i posted back in july (posts 591 & 592 , especially 592)----------and all i'am asking is if the deal with Morgan solves these problems or not------i guess you can spin it however you care to, but the fact is the Dietler et. al for months tried to SELL the company outright and couldn't consumate a deal despite having every brand name MLP look over their admittedly superb assets------so, its a legit question to ask if the concerns expressed in the article in post#592 are the "poison pill" that explain why TMG couldn't get their price and whether the Morgan deal fixes the problem or not------i 'am not talking about the ordinary uncertainties inherent in running a business----Dietler is 83, i don't think an income stream was his first choice

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    • Management said that the price they offered was not good enough, or more specifically the offers did not give shareholders a chance to continue to participate. That is a true statement in most cases....look at KSL. True, it jumped $12 in one day after the buyout offer, but most people that really understand the value of the GP, would have preferred being able to hold it rather than have it taken away (for cash) and not having any further participation. KSL was in an enviable position of being able to increase their own distribution by 1.30x of whatever KPP increased theirs by....it was a fabulous situation and Valero recognized it and bought them as well as KPP. Technically, Valero had to buy KSL in order to take out KPP because KSL was the GP but the story is still the same, even if they(or any entity for that matter) had just taken out KSL and not KPP...

      Like Ben Graham used to say, in the short term, the market is a voting machine, but in the long run, its a weighing machine.

      We'll just have to sit back and see. I have read the article you mention, I see a company that has a commanding prescence in some areas as far as supplying fuel, and a company that now has a strong financial backer as well as one that will have an MLP with access to cheap capital. Again you don't mention anything about the ability to hedge away some of the exposure, nor do you mention the benefits of MS taking on alot of the risk....yes, the marketing biz presented a big(huge-if it makes you feel better vuss) problem for the MLP's because it is most likely that most of the MLP's offered cash for the assets, rather than offering to buy the whole company, which is the mo for almost all MLP's(always buy the assets if possible rather than the whole company as their is alot less baggage that comes with individual asset buys). So, the dilemma was, TMG would have received alot of cash, paid off their debt and been left with a good chunk of cash but would also be left with just the marketing/rack sales biz w/o hard asset access. Probably not the most efficient way of liquidating the company, and with the way the article states it, TMG apparantly has a strong brand name and is well received as a supplier....two sides to every coin. So why not get the best of both worlds, IPO the MLP, but retain a large holding, bring in a financial player that has more resources and talent to bear some of the risk as wel as the upside of profiting from locale differentials and by holding a large chunk of the MLP, TMG gets to let the market value the terminals at the very attractive multiples that are being placed on MLP's and consequently that value will show up in the holdings of the GP......

      • 1 Reply to rrb1981
      • when management tries to sell out and can't they're always going to say the price offered wasn't good enough---what else can they say???------often it's true (remember RNHDA??)---often it's not--------rereading the press release, it appears that Morgan is lending TMG their balance sheet so that TMG can aquire the raw materials at market prices (gasoline, etc) needed to run the business in exchange for out of the money calls----Morgan loses nothing since they're using their overcapitalized balance sheet to aquire products at market and then pass them on to TMG in exchange for out of the money calls on which they could get lucky-----the article i posted appears to address what comes out the back end, the opaque long term contractual relationships to supply Pure, Liberty, etc----these appear to be the poison pills that scared off the big MLPs------why couldn't VLI (plus VLO) or SXL (plus SUN) or KMP easily done what Morgan is doing now on the front end????----afterall, those are some real nice MLPable assets TMG owns in a very hot market for MLPable assets--------so what was holding these boys back???----- the back end, maybe????----if i'am reading this right, then either TMG-LP or TMG-GP is going to get stuck with the back end, or they'll share it-------FWIW, the chart looks real ugly too

 

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