Totally agree with you; the banks will, IMHO, not want to wait around, in search of some optimum time for market improvement and then sell. NO, they want this sold and soon.
Yes, the Russians want to sell their nat gas to Europe - but - Europe has seen all too many times over the last few years, that Russia has cut their gas off in the winter to make whatever political point that they wanted to make. Bottom line: Russia is not a reliable supplier of NG and the Europeans know that.
Looking at the 2015 total revenues and cost of revenues for SXE and comparing them to other G&Ps, such as TRGP, DPM, and CEQP some interesting data surfaces. Here is the list of total 2015 revenues, cost of rev, and very importantly the percentage of the direct cost of revenues of the total.
--------------------------------------------SXE ------------ DPM -------------- TRGP ------------- CEQP
2015 Total Rev in $ millions ---- 698 ----------- 1,898 -------------- 6,659 -------------- 2,633
2015 cost of rev, in $ millions ---- 600 ----------- 1,460 -------------- 5,378 ------------- 1,884
2015 Percent of cost to revs ----- 86 % ---------- 77% --------------- 81% ---------------- 72%
So, what does this all mean? It means that another or better means to improve the EBITDA is to reduce the cost of revenues to bring them more inline with other G&P firms. That means the percent of the cost to revenues should be or could be about 77% ( i averaged the #s for DPM, TRGP, and CEQP ). Taking the $ 698 million revenues for SXE, then our cost should be more like $ 537.46 million vs. the actual of $ 600 million for a delta of $ 62.54 million. That $ 62 million should be added to the EBITDA.
Now, the question then becomes, why can't the Tres Amigos accomplish that which other G&Ps can do in the same areas dealing with the same issues. The only significant differentiation is economy of scale. Just look at the revenues of the G&Ps that our little SXE has to compete with. One would have to assume that Bonn et al will or have been trying - but they can do only so much.
Bottom line, the larger players in our sand box are much more efficient with the cost of revenues, that if one of these larger G&Ps were to buy our little SXE ( plus Holdings ), then significant cost reductions, EBITDA increases are possible. One would have to believe that independent business folks, including the new owners of the Holdings ( the banks ) have got to be looking at this issue as well.
Right you are. That was exactly my point. The banks want to get their money back - somehow. But if they sell only their 33% in Holdings, the PE are still running the show and the buyer of that 33% will not offer much, knowing that they are a minor owner. NO, the banks " caved " only because of an agreement that we are not privy to between the PE firms and them to sell the whole enchilada soon.
That is the proverbial $ 64,000 question. However, IMHO, this will be sold for $ 7 to $ 9 / unit by November 1, 2016.
Have gone through 3 major ch11 cases with a lot of detail; Mirant, Calpine, and Dynegy. What was clear from all of them was that the creditors, the banks or bondholders, they call the shots and get the bulk if not all of the equity in the newly organized company. The fact that the two PE firms, who were the shareholders in the old debtor, and that they now control 67% of the new company equity can only be possible if there is/was some type of deal between EIG, TW, and the banks.
Thus, the only thing that makes sense is for Holdings and SXE to be sold soon so that the banks can recover their $ 700 million.
First, we need to recognize that SXE is a partnership and not a corporation. That means there is a much different standard as to fiduciary obligations from management to the us, the partners - and sadly - there is very little to protect the partners, us because we are " limited partners "
Having said that, a shareholder meeting and associated proxy is usually filed with a SEC Form 14 - and guess what I cannot find where SXE management has ever filed a Form 14 - nor for that matter any of the other MLPs that I own.
Was looking for any kind of discussion about the scheduled startup of the OxyChem ./ Mexichem ethane cracker in Corpus Christi next year. OxyChem is now busy buying up contracts of ethane so that their plant will have the feed stock that they need at the price that they need.
For a business like SXE, you'd think that Bonn and Allan would mention this very important business opportunity for SXE.
They did not because it pertains to next year - 2017. Most businesses are already addressing next year.
Perhaps they skipped on that because they know that they will not be around then.
Yes, the PE firms can buyout more shares on the open market - but - they will have to file a SEC Form 4, within 3 trading days of each transaction. So, if EIG or Tailwater were buying we should see a Form 4 by early next week.
If they do not file a Form 4, then someone else has been accumulating.
Notice also the reply from Bonn or Allan - Holdings must have 80% of each class. They will have to get the convertible units converted but cannot do this until the 0.44 distribution, which IMHO will not ever happen as this thing will be sold by November this year.
There is little sense to speculate how a possible buyout will occur, at least IMHO.
What is pertinent, however, is that a buyout of Holdings and SXE will occur and closed prior to November 1, 2016 - as that is the day when the employment contract for the Tres Amigos runs out - and of course, when they are really not needed anymore.
As our good friend Cubemeister has pointed out so many times in the past - insider trading is not limited to the true insiders. It happens when something is being worked on, somebody in lower ranks at SXE, or investment bankers etc - they mention something to another person etc etc.
This sort of thing happens all the time. One would have to be an idiot if you believe that insider trading is limited to the top management only. Insider trading is just that if people trade on non-public knowledge.
The super high volume - in particular the 2 or 3 hours in the afternoon, is a clear indication that some major money was jumping in on SXE based on knowledge that only they had.
It seems that you have gone totally short on SXE because what you just wrote is so totally illogical.
1. We did not need the CC to tell us that there will be dilution, that was well know before when the $ 11.8 million cure was announced.
2. The Q1-2016 reduction is primarily due to the fire at Lancester, which is fixed now.
3. Your question about bankruptcy is so totally off from your prior posts and most importantly - makes absolutely no sense.
Based on your logic, EIG and Tailwater, who now own an additional 8 million plus units of SXE - and clearly want to get more on the cheap - and call it equity cures - and based on your logic these PE firms want to take SXE into bankruptcy - after they have sunk another $ 170 million into SXE.
NO WAY, that is pure rubbish.
It is abundantly clear that there is short term money to be made trading SXE - but your talk about ch11 is way way off.
If you are short now - come on guy - be honest and say so, nothing wrong with making money long or short. Just drop this stupid stuff that you know full and well is total garbage about bankruptcy.
After having read and re-read the transcript, I am most puzzled why the Tres Amigos required a full week to deliver their opening statement and answer a few questions.
Everything they brought up was already known from the 10-K filing the week prior.
In the past, they have ALWAYS delivered the CC on the morning after the issuance of the 10-Q or 10-K, which is pretty much inline with what almost all other publicly traded entities do.
So, why did they need a week to deliver absolutely nothing of substance.
The only logical explanation would be that there was - or still is - something major being worked on in the background.
We got an inkling of that when on Wednesday, April 20, 2016 at about noon or so - all hell broke loose and the unit prices skyrocketed on super high volume. Some major money was jumping in with some seriously large buy orders - WHY?
At over 4 million units traded that day, that was not short covering. Clearly, that was insider trading. As soon as these major buyers had their fill, it pulled back big time.
Bottom line; whatever the impetus was that caused some major buyers to jump in, that is obviously still being worked on.
Many of us have pointed out to you numerous times that it was Holdings that went through ch11 and not SXE - yet you continue to beat the drum of a SXE ch 11.
Next, on the issue of TPG buying SXE units, you and none of us know if and to what extent TPG bought any SXE units during the Holdings ch11 proceedings.
We will only get a glimpse - maybe in the next three weeks when everybody has to file their 13D or 13G for Q1-2016. However, TPG could also have commenced buying SXE literally when the Holdings ch11 filing started or April 1. In that case, we will not know until mid-August how much TPG has bought.
Equally - absolutely no other PE firm or hedge fund was on this CC -except for TPG Capital. For a business with market cap of less than $ 100 million, we sure seem to be getting some serious attention.
More to your point, why is TPG Capital interested in SXE - they are not one of the top 20 institutional holders. Plus, the # 20 institutional holder owns less than 60,000 units, which makes them less than many of us on this board.
So, why does TPG Capital show up now on the landscape vis-a-vis SXE?