the only reason to not do it is so that XTXI would have dry powder in case there is a deal that XTEX has trouble financing. The scenario is XTEX has a deal (or project), and the markets are for whatever reason not willing to absorb an offering of XTEX units, so XTXI falls into a position of having to buy the units in order to get the deal done.
That is a pretty strong arguement. Not sure what you think.
ATLS is thinking of offering their GP interest. Any thoughts on that one?
I don't like the idea of the GP having to tie up new money in LP units. I understand the reasoning, but, a c-corp investing in LP units is not an efficient use of capital. It might be great for individual investors looking for a nice steady growing revenue stream, but 5%-7% won't cut the mustard for a c-corp as far as clearing the hurdle rate.
The Atlas GP deal is intriguing. I like their GP, lots of cash flow growth coming..
The idea is not for the GP to participate in offerings of LP units as a matter of course, but to have the ability to do so if needed. The idea is to keep the powder dry in case the market can not soak up an offering of units at some time in the future, however unlikely that may be.
Have you looked at TMG? Looks like the GP's IDRs are a few years out, and there is a weird distribution supply business in the mix, but the GP should be getting nice IDRs as they sell the remaining assets to the LP over the next few years. The CFO told me his model is to look like XTXI down the road, so that's a good sign. They are tied up a bit by their debt, which has covenants preventing them from being more aggressive about selling assets to the LP and also preventing them from paying dividends, but the debt can be retired in 2007 I think.