Just hope the operating nos tomorrow look ok. First glance, looks like OKE/OKS did ok. Right now, still think standalone is better than taking on $6 billion in debt. Both cos would do well. But an all equity deal, need to sweeten it some, is ok but makes takes longer to realize the value, would be a very big co. No deal still seems prudent.
Right now, I hope you are right. I'll take my chances with WMB standalone. The institutional investors could care less about the long term, it's about a few dollar premium. The activists on the board want to sell. I do think WMB is probably worth high twenties at least now if the operating nos don't look awful tomorrow. OKE is yielding 7%ish now, and WMB coverage is not as good but the long term prospects are better, 7% yield on $2.56 is $37, discount it for the coverage and you have a $30 plus stock. The problem with the vote is there is no one promoting WMB's prospects standalone, they can't do it. I'm not sure the small owners will make much difference in the vote. All equity, 2x, that's my proposal, if you bent on a deal. If not walk. And I don't think the MLP form is appropriate for the size of co ETE/WMB would be. Let's hope it gets killed soon.
Listened to cc and if you accept 450mm ebitda or around that. $1.6 billion in debt, assuming the pref shs convert, 75mm units out. The unit price at 10x ebitda should be $38 which would equate to a 6%ish yield, not unreasonable for an MLP covering at 1.6x the dist. And no tax implications for buying this year, so they say. Where are you going to find a 13% yield. And they said spending for this year has already largely happened, no need for equity raises for a couple of years. As soon as the analyst start talking it up, it should move.
Could be, my opinion changes weekly, does seem the market is believing today that deal is on. The rest of the sector is down as is ETE. I am guessing WMB operating no out tomorrow will point to a higher WMB stock price, won't be great but will support higher stock price. And I do suspect that Warren wants this deal to be done with all equity, and that's just a guess. Warren wants to grow his asset foot print and still thinks Transco would help him connect the US shales. He is shrewd if nothing else and bent on growing, a deal junkie.
It's curious that there is no info about why the tax opinion couldn't be made and WMB doesn't agree with the tax opinion conclusion. Games are being played on both sides which is to be expected. Seems if the tax opinion is a deal breaker, ETE could terminate now without repercussions. This change indicates to me that is probably on with changes. All equity makes sense and resolves issues, conv pref plan goes away, tax free exchange, no additional debt, dist is probably safe. The synergies will come back if comm prices rebound so the reduction in those is bogus imo. I really don't care at this point whether it goes through or not. A rebound in the sector is much more important.
The shrewd investor that owned the second rate mortgage bank at $1500 per share and it's $20s now. Good job. Get over the communications spin off, no one cares.
Just a guess but I think he implemented that to get WMB to do what they did. IMO, the deal doesn't make it to a vote with that plan in place. To keep that plan for his insiders without the merger seems really egregious. He installed the plan to counteract the $6 billion add'l debt load. I do think WMB wins that challenge and Warren knew they would. Gets convoluted. Seems everyday I have different take.
You have a good point, still seems ETE wants out of the deal as structured currently. But suspect that with all equity, Warren might want to go through with it. He appears to be a shrewd negotiator. I own both cos and will keep both if the deal falls through or keep shares of the combined co. More importantly, we need $60 plus oil and a solid $3+ gas for either the merged co or the separate ones to succeed. About the only thing that can be said with certainty is this is not over and who knows where it ends.
Listening to replay, the repeat what they said in the release, those buying this year and holding won't have tax implications from the deal. Those that bought before this year, suspended losses should cover most if not all of gain. Not an accountant but seems they are certain. Seems CEQP at $2.40 dist should be yielding at least 10%.
With all equity, seems you wouldn't have to cut the dist, the $6 billion of debt is eliminated. ETE standalone imo is worth $14ish and WMB mid twenties. Seems $12 all equity 2x swap, $24 for WMB. Or about the same value standalone for WMB, indifferent imo. And ETE would have assets to shed in the merged co, Canada, Fla pipe, Geismar, SUN, not sure how that synergiizes with other assets. Pull it off with rising oil and gas prices over next couple of years and would look like a great deal. Or kill it and both cos have good prospects. WMB still owns the best pipe in the country. The original ETE deal didn't include cash, was 1.87x. At that ratio, WMB $22 and 2x $24. Anyway you cut it, WMB is undervalued. And ETE is probably more undervalued as standalone over the long haul.
Clear as mud, so if you buy this year and hold through the year, no effect. But if you have held for years, allocate losses and have a substantial portion of the gain offset. ??????????
The transaction will result in an approximate $600 million taxable gain being allocated among Crestwood’s unitholders during 2016. Based on management’s projections and assumptions, Crestwood anticipates unitholders who purchase CEQP units in 2016, and hold such units throughout the remainder of 2016, will generally not incur any tax liability with respect to the transaction or its eventual use of proceeds, considering deductions to be allocated to those unitholders. For unitholders who are allocated a taxable gain related to the transaction and its use of proceeds, Crestwood believes that many of these unitholders may be able to utilize 2016 allocated deductions and previously allocated passive losses (which total $900 million in aggregate since 2013 between Crestwood Equity Partners LP and Crestwood Midstream Partners LP) to offset a substantial portion of that taxable gain. The ability of each unitholder to offset all or a portion of taxable gain will depend on their particular situation, including when and how the unitholder acquired its units and the ability of the unitholder to utilize passive losses. Unitholders are encouraged to consult their tax advisors with respect to these matters.
If i remember correctly, WMB holders get 20 days min before vote. Will need the S4 finalized and distributed in the next couple of weeks, it seems. Does appear that the 6/28 date won't be enough. Just as soon kill this and get on with each cos plans. WMB release tomorrow and conf call should be enlightening.