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Inergy, L.P. Message Board

rrb1981 85 posts  |  Last Activity: 2 hours 34 minutes ago Member since: Apr 18, 2001
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  • Reply to

    EF results

    by harehau Nov 14, 2015 9:52 AM
    rrb1981 rrb1981 Nov 15, 2015 4:11 PM Flag

    harehau,

    Yes, as Buffett always states, it is after the tide goes out that you find out who has been skinny dipping. Well, the tide is out and ARP is sitting on the sand bar naked.

    Atlas is down 90%, yet they continue to blindly state that they are prepared for this downturn. They've cut the distribution, gotten a second lien, will likely be cutting or even suspending the distribution, they have a MAJOR conflict of interest with ATLS and of all of their assets, only the Eagle Ford appears to give them a decent rate of return, and it is marginal.

    ARP is planning to issue preferreds at 16-20% yield via the ATM. Those investors are going to be very disappointed when the distribution gets cut shortly thereafter. But hey, FBR and MLV will collect up to $3 million in fees for shilling the trash.

    The most logical use of cash is to repurchase notes on the open market at 40 cents on the dollar, giving them a 25%+ cash on cash return with no execution risk and of course the added benefit of huge debt reduction. However, that seems unlikely to happen.

    I have to admit, it is quite entertaining to watch Cohen squirm and try to spin the massive collapse into something positive.

  • Reply to

    EF results

    by harehau Nov 14, 2015 9:52 AM
    rrb1981 rrb1981 Nov 15, 2015 12:49 PM Flag

    If you think about it, the call provided essentially no new info.

    The perma-bulls now have to wait, on pins and needles, another 3 months. That likely means a looming distribution cut, of unknown quantity.

    Registering the preferreds after the call, classic Cohen.

  • Reply to

    Wake up, dummies

    by jbcguy Nov 14, 2015 1:48 PM
    rrb1981 rrb1981 Nov 15, 2015 12:43 PM Flag

    ARP is looking to issue up to $100 million in aggregate value preferred units.

    Looks like they have FBR and MLV shilling for them, to the tune of 3% commission.

    What poor suckers are going to buy this junk, trading at 40-60 percent of par liquidation value and yielding 16-20%. This is Atlas's cost of capital these days. 20%, the same return they claim they are getting in the Eagle Ford. This is nothing more than Eddie trying to keep the debt to equity ratio in a position to allow him to keep paying distributions to ATLS. ATLS needs cash, because, well, it is leveraged to the hilt.

    Those poor suckers are going to be shocked when Eddie nnounces a merger of ATLS and ARP and a subsequent suspension of distributions, including on the preferreds. I'd look for an eventual conversion back to a c-corp status. That will take care of the arrearages on the preferreds.

    Oh my, what a tangled web they weave, when first they practice to deceive...

    They are selling preferred equity to fund the common LP distributions. PONZI scheme in sheeps clothing.

  • Reply to

    Wake up, dummies

    by jbcguy Nov 14, 2015 1:48 PM
    rrb1981 rrb1981 Nov 15, 2015 10:20 AM Flag

    Bankruptcy is still quite a ways off. No doubt in my mind that ATLS and ARP will eventually get merged, the distribution will be suspended, with all cash flow going to deleveraging. This will buy time for them, but the hedges are rolling off the books every day and they are hoping for a rebound in commodity prices.

    Oh, and issuing preferred units to fund the distribution is laughable. That's called a Ponzi scheme.

    In the midst of a industry wide downturn, Cohen installs an inexperienced financial puppet with no material E&P background to run and oil and gas company. Absurd.

    Watching this trainwreck is going to be pure entertainment.

  • rrb1981 rrb1981 Nov 14, 2015 9:27 PM Flag

    lucius.rodin,

    Yes, the small holders of notes have to sit by and watch Franklin move up the ladder in terms of seniority. The institutional players have the upper hand in that they can accumulate and effectuate an exchange. I am very eager to see how the pricing on the remaining 2019 responds, with many calling for a bounce (due to $1 billion in total debt reduction, while others calling for a drop due to moving down the ladder so to speak in terms of seniority).

    Ah, but what should we expect from a management team that has been completely unfocused and clueless since Mark Ellis took over. In that time period, the only positive has been that operationally they've performed quite well and that is more likely a function of Arden Walker than Ellis and the now departed Rockov.

    And to add insult to injury, it remains to be seen how Linn bagholders will be impacted tax-wise due to the various transactions retiring notes at a discount.

    Somewhere the hockey kid is probably laughing, and while he got it right (for the wrong reasons) he still got the last laugh.