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NuStar Energy (NS -5.4%) is downgraded to Neutral from Outperform at Credit Suisse, which...

NuStar Energy (NS -5.4%) is downgraded to Neutral from Outperform at Credit Suisse, which believes the company's distribution is again at risk to a cut following TexStar's termination of the NGL acquisition. Given the material impact of the failed transaction, the firm expects shares again will reflect the risk of a distribution cut.
Comments (8)
  • TGC004
    , contributor
    Comments (418) | Send Message
     
    This is interesting, since at the Morgan Stanley conference slides posted on NS's website (see below) they say there will be no material adverse impact if the deal doesn't go thru.

     

    They also go on to say their distribution coverage ratio will be 1.0x by Q4 2013 and all of 2014 even if the deal doesn't go thru. So why in the world would they cut their distribution?

     

    They also say they are looking at their legal options as they don't believe the other party has the right to terminate the deal.

     

    http://bit.ly/Y8Vsmr
    4 Mar 2013, 01:10 PM Reply Like
  • toomuchgas
    , contributor
    Comments (535) | Send Message
     
    There should have been at least a press release explaining what is going on because it is material.
    4 Mar 2013, 01:13 PM Reply Like
  • TGC004
    , contributor
    Comments (418) | Send Message
     
    I agree they should have put out a press release. I imagine they didn't because they didn't believe it was material as they state in their management presentation.
    4 Mar 2013, 02:02 PM Reply Like
  • TGC004
    , contributor
    Comments (418) | Send Message
     
    I went back and did a little digging on this TexStar deal. According to the management presentation from back in December, the TexStar NGL pipeline and other assets were not anticipated by management to deliver ANY EBITDA in 2013 and then contribute $40-60m in 2014 and 70-90m in 2015.

     

    This management team should be able to replace the 2014 and 15 EBITDA with either internal projects or another deal with little difficulty.

     

    On the basis that $0 in EBITDA for 2013 on the project to the range of anticipated EBITDA of $576m to $626m (per management's presentation at the Morgan Stanley event) - this deal going south is truly immaterial in my view.

     

    Odd why the market reacted so negatively today.
    4 Mar 2013, 06:48 PM Reply Like
  • wnadarzynski
    , contributor
    Comments (15) | Send Message
     
    Another Credit Suisse false alarm. I can't believe people actually listen to them.
    5 Mar 2013, 08:31 AM Reply Like
  • toomuchgas
    , contributor
    Comments (535) | Send Message
     
    It doesn't matter the credibility. Traders shoot first and ask questions later.
    5 Mar 2013, 01:35 PM Reply Like
  • wnadarzynski
    , contributor
    Comments (15) | Send Message
     
    NuStar's response:

     

    "We have no intention of cutting our distribution. We are confident that we can cover the distribution in the fourth quarter of 2013 and in 2014."
    5 Mar 2013, 04:13 PM Reply Like
  • Terry8499
    , contributor
    Comments (9) | Send Message
     
    HUM ! Where have we heared this before AT !!!!
    10 Mar 2013, 11:21 AM Reply Like
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