Seeking Alpha

Ken Lee

 
View Ken Lee's Comments BY TICKER:
  • Energy Transfer Partners - The Path To A Distribution Increase [View article]
    As a funding vehicle, its inevitable that ETP issues more units to finance its growth. As with any big block trade, any downtick in unit price from a financing is likely to be temporary and work itself out in the medium term as long as ETP's operating metrics improve as expected.
    Dec 6, 2012. 07:58 AM | Likes Like |Link to Comment
  • Energy Transfer Partners - The Path To A Distribution Increase [View article]
    I agree with your first point. Any improvement cash flows will be some what gradual as projects come online. In the interest of prudence/conservatism, I think management will try to keep something in their back pocket.

    I also agree with you with regard to the "non-core divestitures." However, give the one time nature of a divestiture and the whole Energy Transfer family are levered a bit on the high side, and I expect management to use the proceeds from divestitures for debt reduction.
    Dec 4, 2012. 10:32 AM | Likes Like |Link to Comment
  • Energy Transfer Partners - The Path To A Distribution Increase [View article]
    Hi- The IDR waiver for the Citrus acquisition ($220 million over 16 quarters or $13.75 million per quarter) took effect in Q2:2012 and the IDR waiver for the SUN acquisition ($210 million over 12 quarters or $17.5 million per quarter) took effect in Q3:2012. As such, they have an on going, but no incremental effect on ETP's IDRs to ETE. Will try to publish my model for ETP at some point, but I think the next step function for them will be the drop down of some (and eventually all) of ETE's stake in HoldCo. Though I don't expect the cash flows from operations to change dramatically, the big question will be HoldCo valuation and how much cash/ETP equity will want/take as consideration. Also to be considered will be how much of an IDR waiver ETE will give as part of the transaction.
    Dec 4, 2012. 10:26 AM | Likes Like |Link to Comment
  • Energy Transfer Partners - The Path To A Distribution Increase [View article]
    sorry - that should read Q2:2013 or Q3:2013
    Dec 4, 2012. 09:08 AM | Likes Like |Link to Comment
  • Sunoco Acquisition Closing To Put Near-Term Pressure On Energy Transfer Partners? [View article]
    Unfortunately, as of last quarter, ETP's LTM Distribution Coverage Ratio (DCR) was 92.4%. In other words, over the last twelve months, they had to draw down ~$100 million on their credit to pay maintain their distributions at current rates. To get a 5% increase in distributions, ETP would seem to have to either increase its DCR by 12%+ to pay its distributions out of current cash flow, or it would have to draw down on their credit facility by $200 million.
    Oct 4, 2012. 12:17 PM | Likes Like |Link to Comment
  • Discussion With Energy Transfer Partners: Sunoco Acquisition Is Accretive, Distribution Is Secure [View article]
    I think you miss calculated the cash need for this transaction.

    As of 3/31/12, SUN had a consolidated Cash and Cash Equivalents balance of $1.985B. Of this, $0.037B was from SXL. This would leave a "SUN only" Cash and Cash Equivalents balance of $1.948B which could be used to pay part of the $2.647B cash component of the deal. This would leave just $0.699B of the cash component of the deal to be financed either through a debt of equity issuance. This delta in the cash balance should get you another $50-75 million of cash flow depending on how the difference is financed.

    Also, based on SUN's 3/31/12 share count of 105.9 million shares, ETP would only have to issue 55.5 million shares. This should save about $11 million of cash flow.

    Based on the above, I think your annual cash flow is light by $61-86 million.
    Jul 27, 2012. 02:37 PM | 2 Likes Like |Link to Comment
More on ETP by Ken Lee
COMMENTS STATS
10 Comments
6 Likes