Now is not the time to "get over it". Now is the time to vote NO on the deal. The all equity offer significantly under values NGLS long term income producing assets. Nor do you mention the unwanted and enormous tax implications for long term NGLS shareholders.
TRGP is trying to take advantage of a bear market in oil and gas with a low ball offer. How well has this worked for KMI when they did the same thing last year?
If the offer were structured with a collar to protect NGLS shareholders or all cash then there is some reason to consider it. Although I would still vote No. The NGLS Board that signed off on this has represented its shareholders poorly. I still hope that another much higher offer emerges.
I agree with much of what you are saying. The Saudi's are indicating they could cut production in order to better balance the oil markets. I don't know if they'll announce that at the next OPEC meeting on Dec 4th. I do expect it sometime in 2016.
However with regard to Preferred dividends only the Series B is being PIK. The Series A (BBEPP) is being paid in cash.
"Breitburn has elected to pay the distribution on the Series B Units in kind by issuing additional Series B Units instead of paying a cash distribution".
This far in advance of the vote and closing date the acquired company always trades at a discount. That will shrink if and when the shareholders vote to approve the buyout. At this point that seems highly questionable.
I'm just surprised that TRGP has dropped so much since the offer was announced. The deal is immediately accretive to earnings. It's the NGLS shareholders who are getting the royal shaft here.
BY Investars Analyst Actions - public
— 2:11 PM ET 11/16/2015
On November 16, 2015 Thomson Reuters/Verus upgraded BREITBURN ENERGY PARTNERS LP ( BBEP ) from SELL to HOLD.
Can you avoid the wash sale rule by selling the Common and buying the Preferred within the 30 day window? I believe you can as long as the Preferred aren't convertible into common shares.
The GP is under no obligation to increase the offer. They're less concerned with the shareprice in the short term than ensuring the deal gets completed. It's up to shareholders to overwhelmingly reject this deal.
Then and only then will they get the message - their offer is woefully inadequate.
I still hold out some hope that a White Knight will ride to the rescue. Alas, it may be wishful thinking.
If ETP liked it at $90 and a $15B+ valuation, someone should really love it at less than half that. Surely NGLS has move value to someone than the measly $4.5B it's currently trading at.
I did the same but I don't expect an answer. I'm surprised that TRGP stock price has dropped almost 24% from when the deal was announced given the deal is immediately accretive to TRGP.
TRGP shareholders hate this deal as much as NGLS shareholders do.
I have no idea where the bottom is here but at some point both of these stocks become a screaming Buy. This deal needs to be increased which would help offset the tax burden to existing shareholders and a "Collar" needs to be included with a floor and ceiling protecting both company shareholders.
How the NGLS BOD approved this deal should be investigated. I smell conflict of interests here up the Yazoo. The deal is just plain awful and amateurish.
Wait, what? First you wrote that:
"Projections, based on company guidance, company operations and market conditions, are a waste of time. Okay"
The you wrote:
"numbers certainly don't care who calculates them, they're correct for the assumptions (management's guidance, company operations and the futures market, not mine) or not".
Which is it? Are they correct or a waste of time? I favor the latter.
If oil prices don't rise to the mid to high 70's by 2018 then BBEP has a serious problem. Most of their hedges will have rolled off by then. That much I agree with and I said so - "BBEP has a major problem".
However, that's 2 years away and no one can accurately predict the future price of oil and gas 2 years in advance. T. Boone thought he could do it back in July predicting $70 by the end of this year;
"If I miss on $70 it'll be because it's over $70, not under $70. That's how confident I am," the founder of BP Capital said. "I think demand will be over 2 million barrels a day." So much for predictions.
BBEP continues to cut costs. The distribution could be suspended. OPEC may cut production. A major Mid-East War could break-out. BBEP could be bought out. And so on.
So NO your numbers are not correct for 2018-2019 because numbers change. Many times by then. You have no idea of what the new numbers will be. Your spreadsheet is an exercise in futility.
So I find it to be of no use right now. I'll know what to do with BBEP as an investment by the 2nd half of 2016.
It's not a question of being a "divy chaser" at this point. Everyone knows that was a miserable quarter. We all realize the major hit that NAV took at the expense of maintaining an "un-earned dividend" and ROC. I think there is little doubt that regardless of who takes over TICC the dividend will have to be cut now.
The only reason to continue to Hold the stock is the very real possibility that TPG is successful or NexPoint. Even if BSP becomes the new management I doubt it can be run anymore incompetently than TICC management. Anything is possible.
Raging Capital, the largest shareholder, wants a Board seat. Prior to that they also wanted a strategic review of the company that would include the following (see below). I doubt they have changed their position. They're willing to buy off TICC to gain the influence they need to force changes.
TICC is not an ideal stock to Short because of the risk of a successful bid by it's White Knight - TPG. Or successful litigation by NP. But if you have the stones - have at it.
1) a sale of the Company to a suitable acquiror that could improve shareholder returns via scale efficiencies, lower management fees, improved portfolio management, and better deal sourcing;
2) entering into a fresh management agreement with a firm that can offer permanently lower management fees, superior deal sourcing and portfolio management skills, and who is committed to buying back material amounts of stock if TICC shares trade meaningfully below Net Asset Value, and
3) an outright liquidation and complete return of capital to stockholders.
How accurate have you been in the past in predicting future events two years in advance?
I think everyone on this board knows that BBEP has a major problem if oil doesn't come back up to a reasonable level as the hedges roll off.
TPG did say they wish they could buy more TICC stock but are prevented from doing so.
Therefore the point is moot. But my rationale was this.
Why would they want to buy more stock? You're looking at the short game while I'm looking at the long game. This isn't about next week or next month. This thing is far from over whether BSP is successful or not. TPG is not going away. Their followup offer after TICC's miserable earnings report proves that.
By becoming the largest shareholder they could influence the annual election of the Board of Directors by offering their slate of Directors come June 2016. Regardless of whether BSP succeeds or not. There is also the remote possibility of a Special Election. But as TPG said it's not going to happen.
Nothing preventing TPG from going directly to shareholders with their offer. A hostile takeover. Shareholders more than likely would approve TPG's offer.
I sent TPG and email request as to why they weren't buying TICC stock on the open market and under NAV if they so wanted to buy the Company. I was told that current SEC rules on BDC's limits the amount of stock to only 3%. That was news to me.
From TPG IR:
We wish that we could purchase additional TICC stock, but, unfortunately, under current SEC rules for BDCs, TSLX is limited to buying 3% of the outstanding stock. Therefore, we have solicited TICC shareholder votes via proxy to vote Against the BSP deal, which we believe is bad for shareholders. TICC is required to get 67% of the vote For the transaction to pass, which is a very high standard. We hope that TICC is unable to get enough votes to have the manager change approved and that they will then engage with us. You are correct that any shareholder can put a measure on the ballot at the next shareholder meeting.
TPG Specialty Lending
888 Seventh Avenue, 35th Floor
New York, NY 10106
T 212.430.4119| C 917.373.7200 | F 212.430.7519
How about selling the Company to more competent management? Haven't seen a lot of REIT acquisitions this year. Someone should take a run at RSO. I'd be happy with a discounted sale price of 10% to NAV.
That's right! TRGP is taking your shares for no premium and handing you a very un-wanted tax bill. These guys are laughing all the way to the bank.
Wait what? S&P maintains a HOLD opinion with a one year $8 price target?? That's a 45% one year projected increase. What do you have to do to get a Buy rating?