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Phillips 66 Message Board

  • michaelmars128 michaelmars128 Mar 30, 2013 9:05 AM Flag

    MLP and current shareholders

    Since PSX owns 100% of the MLP spin off are current shareholders going to receive shares in that MLP when it does it's IPO? if not why, since we are owners of PSX and they own 100% of asset they will spin off? I meand when I owned CO I got my shares in PSX which I bought more of and averaged $31PPS Very happy and looking @ $80 by yr end

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    • there is no spinoff, the PSXP will issue new equity and will thus dilute the 100% ownership of PSX. PSX will still get the benefit of dividends issued by PSXP and some day should PSX may spin of PSXP, the PSX shareholders will get a proportional ownership via stock in PSXP

      Sentiment: Hold

      • 2 Replies to santafenm1
      • Nothing really gets diluted. First of all the assets to be included in the trust are low return properties and they will probably not offer many units to begin with. Generally the monies received in the IPO are invested in higher yielding assets so that shareholders get greater value for their shares. In addition to the units, PSX gets the 2% general partner asset which will have unique dividend characteristics. In order to encourage the general partner (PSX) to rapidly increase the unit payout there is scale built into the partnership agreement whereby the general partner keeps a percentage of all dividends over a certain level. Generally once the top level is met the general partner keeps around 50% of the overage.

        I do not think that PSX can ever fully divest the whole partnership because of the general partner stake and because some of these assets are key to parts of their business that they would never want to lose control of. I have also seen cases where the general partner bought back some of the units due to valuation.

        Sentiment: Buy

      • Thanks for the info

    • You will NOT receive MLP shares. If you want to own them you will have to buy them on the open market.

      Sentiment: Buy

 
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