"Though XTEX would seem to be dead money for the next two years, the prospects for XTXI may be different as we do not expect XTXI holders will diluted by any financings. Further, because of the structure of XTEX's IDR, XTXI could benefit disproportionately as the Crosstex family raises the financing needed to fund its growth by issuing additional XTEX equity capital.
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XTXI shares seem to be trading fairly in advance of XTEX's prospective equity issuance in H1:2012. However, because of the lack of dilution at the XTXI level and the disproportionate cash flow from the company's IDRs, XTXI's quarterly distributions should increase from a current level of $0.11 per share to $0.13 per share in early 2014, and $0.17 per share when Cajun Sibon Phase II begins operation. Based on a dividend yield of 3.5% and forward year EV/EBITDA trading multiples in the 11-12x range, we feel it is likely that XTXI shares will have 10-15% upside in the next 12 months, and that 50-60% upside may be possible in the next 24 months as XTEX's organic growth projects begin to generate cash flow."
So did Credit Suisse... not a surprise because that new Cajun phase I and phase II system is combined over $600M.....
Magnetar is buying 2.7M shares in a concurrent private offering..... I assume that will help stem the downside tide coming tomorrow and that perhaps it was a stretch to try to offer many more units to the public. As long as they can get the job done.
I disagree on the less risk? The only reason (imo) to buy EX is because of current yield. They both share the same risk. If Capital markets shut down for any reason, then expansion would slow and bank covenants could become in jeopardy.... If You believe in the story going forward, then XI will benefit exponentially because of the IDR's. The article states EX is dead money for two years( granted with the 10% yield from Dist.) and upside as much as 50% on XI!
If all the current projects continue on Revenue guidance, then raising Equity thru issuance of units will be no problem... BUT EX takes the dilution in units, and XI benefits by the dilution....