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Energy Transfer Partners, L.P. Message Board

  • burnaka@sbcglobal.net burnaka Jun 27, 2012 5:32 PM Flag

    13.5 million 7.5% share dilution

    Back in Nov they did a secondary for = number of shares as today. The day prior it closed at 44.97, today 44.98. 2 days later stock hit 42.75 down 2.22, yet the share dilution was near 8%, oil was running at the time. Approx a 5% drop in stock price. This time with oil weak I expect the full 7.5 drop, to 41.60 or a retest of recent low at 41.15. Thoughts??? If it pulls back enough I will be a buyer.

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    • By my calculations, the dilution break even point is $42.96, which is a distribution rate of 8.333%.

    • "...either way 50% increase in units, 50% rise in divi payments."

      They are acquiring earning assets that hopefully will generate enough cash flow to cover the additional units issued.

    • Stock finally had a nice day, but management found a way to screw it up!

      • 1 Reply to hodge_podge97
      • burnaka@sbcglobal.net burnaka Jun 27, 2012 9:08 PM Flag

        I own wmb and plan to switch to etp, missed the last bottom. What I find curios is the last secondary was for the exact same reason, to pay the revolver. I am having minor second thoughts.

        Basically, the divi is a little too high for earnings if they need to issue stock twice in 6 months to pay the revolver. This has nothing to do with sunoco, they will need to issue shares then too, and a lot more of them????

        Roughly 113 million shares 50% dilution, stock could drop to 22-23 range. Plus with that many shares they either cut divi to .60/qtr or earn an additional .30per share. Not sure of terms on sun debt, 2.5B, but etp gets 1.98b cash, the net is more debt.

        Currently they have been issuing shares to pay loans, so what am I missing??? The one thing I am sure of, is this, they have, and are issuing shares to pay dividend, this is unsustainable.

        Either they explode earnings or halve the divi, cannot do both, keep or raise divi by issuing shares, that is a pyramid scheme, and currently, that is how they are paying debt.

        Most will say no they are not issuing shares to pay dividend, but the reality is they are. Either pay debt from earnings or dividends from earnings, all that cash comes from the same pool, eps. They are issuing shares bi-annually to make ends meet.

        Still tempted, but leery.

    • Everytime the CEO appears on Mad Money a secondary is on the way. They just did it again

      • 1 Reply to strawjack55
      • He pretty much told you in the interview that this was coming

        "i felt when you were on last you might have to issue equity which i'm not against. they have been great buying opportunities. it seemed in your last announcement it looked like you don't need to raise capital because of the different deals you have done and the structure itself is ready once it's simplified. you know, the growth that we are experiencing now is huge. we are between now and the first quarter of 2013 spending between 5 billion if quality, quality pipeline projects. so, yes, sure. we need equity. that's part of what we do. however we sold our propane company. that was -- we think, a positive move for holders. it was a better redeployment of capital. reduced our needs for equity. we will continue to need equity because we'll continue to be a growth story. i will tell you, jim, we have been -- i know that we have probably created a little bit of deal fatigue to the market because we have been so inquisitive."

 
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