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Ferrellgas Partners LP Message Board

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  • rrb1981 rrb1981 Aug 3, 2005 3:21 PM Flag

    Can someone explain...

    The coverage ratio on the distribution has been well below 1.0x (close to .65x). For those of you who know nothing about MLP's and base investing on the yield, what it means is that they had to borrow cash to pay the distribution. Jim Ferrell was more or less, forced to re-subordinate his units, giving the common unit holders preference. Essentially, he is forgoing his distributions so that the common holders can receive them, because if the common units fail to receive their distributions, FGP has no equity market to turn to. The fact that Jim Ferrell was forced to subordinate his units means that FGP will not be seeing a increase in the distribution for a long time. Look at holders of Inergy (NRGY) that have seen their distribution basically double over the past 3 years as well as the unit price do the same.

    And to let you know, FGP doesn't pay a dividend, it pays a distribution, which is drastically different. If you have actually owned FGP(or any MLP) then you can attest that the pleasant K-1's are not anywhere near 1099's.

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