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Enterprise Products Partners L.P. Message Board

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  • ACE_IV ACE_IV Jul 4, 2009 11:25 AM Flag

    Dan Duncan forgoing distributions on some shares

    Hi All,

    Who would buy "B" shares? If they are the same in every way, except they don't have a distribution for 16 quarters, why would anyone buy them when they could, just as easily buy the "A" shares. It would be dumb to willingly forgo the distribution. It is clear to me that Dan Duncan intends to hold them.

    Alex
    Long TPP, EPE

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    • "B" shares might have a value equal to the following -

      "A" share market price
      less -
      Expected present value of distributions for 16 quarters
      and a risk factor.

      Example --

      Current EPD market price - $25.05

      Est dist of $2.15/yr (assume dist increases offset present value effect, or a net reduction in value of $8.60).

      Risk factor reduction to reflect lack of marketability (unregistered units) and risk of accepting a security with no cash flow for 16 qtrs - wild guess of at least a net deduction of $1.45.

      Result is a value of "B" units accepted by Mr Duncan of no more than $15.00.

      I agree thatiIt is clear that Dan Duncan intends to hold the "B" units. It is a clear demonstration of his commitment to this transaction.

 
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