Seeking Alpha

Atlantic Power -11%, continues slide after last week's debt refi

  • The decline in Atlantic Power's (AT -10.9%) stock price accelerates after the owner and operator of a fleet of power generation and infrastructure assets announced its debt financing last Thursday; shares have slumped nearly 25% in the past three sessions.
  • TD Securities cuts shares to Reduce from Hold, believing the restructuring could further compromise AT’s ability to sustain its dividend given a potential 50% cash flow sweep from the assets tied to the financing.
Comments (6)
  • Storm Warning
    , contributor
    Comments (156) | Send Message
     
    What has been going on at Atlantic Power the past few years can only be described as a criminal fleecing of innocent investors who don't know better. If this "div payer" were a prescription drug it would have a label "warning: may cause death".

     

    This is a scam IMO that the SEC should be all over. Why is it a scam? It appears to have been structured in such a way as to pay a fantastic monthly dividend that income-starved investors would be desperate to latch onto. Then with little warning (none that the little investors would pick up on) it collapsed on them. Reading the history of this makes it seem it was no surprise to management, though. Just look at the SA authors who published on this stock. Several of them were really caught. What a shame. And it should be a crime, too.
    [Disclosure: No position]
    3 Feb 2014, 04:03 PM Reply Like
  • Mike Maher
    , contributor
    Comments (2732) | Send Message
     
    Electiricity prices collapsed along with natural gas prices. The high prices AT had secured (which supported the div) reset to much lower levels when those PPAs rolled off. Its the same thing that happens when an office building signs medium term leases with rents at a peak of the market, and then the leases reset to a much lower market rate. The long term leases allow for stability over the medium term, but when the contracts are up, there's a very instant adjustment to market rates.

     

    I've looked at this before, the first time it crashed a few months ago. I didnt like the fact that they put the poison pill in place. I actually was trying to remember the ticker today, since natural gas is up so much that I figured they might be able to get some better electricity prices. Glad I stayed away.

     

    For anyone who is reading this, consider the yield on a 10 year treasury as a baseline yield for no risk. When something yields 10% above that rate, that means it is an incredibly risky investment. High yield means high risk. Anyone who tells you otherwise is trying to sell you snake oil.
    3 Feb 2014, 06:46 PM Reply Like
  • jerrys@primus.ca
    , contributor
    Comment (1) | Send Message
     
    An overrreaction. Atlantic has strong cash flows. It may have to reduce the dividend but to address the debt problem this is a small price to pay.
    3 Feb 2014, 06:24 PM Reply Like
  • pbrom
    , contributor
    Comments (2) | Send Message
     
    how much do you have in J.P
    6 Feb 2014, 10:36 PM Reply Like
  • pbrom
    , contributor
    Comments (2) | Send Message
     
    Small cap Canadian who likes to watch the bouncing beans and enjoys reading some of the public analysts comments.
    11 Feb 2014, 08:47 AM Reply Like
  • BOMBB
    , contributor
    Comments (5) | Send Message
     
    have 10000 shares, not worried about it go bankruptcy since its projects should yield higher returns.
    26 Feb 2014, 03:18 PM Reply Like
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