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Re: Williams Wooed by Two Suitors With Different AmbitionsBully:
I have a large position in MWE and a Smaller position in ETE. You said---
>>> As the MWE deal stands today, there is essentially no premium in the deal, PLUS the distribution will go down. Such a deal.<<<<
Based on the recently filed S-4 by MWE and MPLX with the SEC. there were 2 competing offers for MWE, at least one of them was for a cash transaction which would make the transaction 100% taxable. Any long term holder of MWE (Including me) would not be interested in paying about 50% or more in taxes due to my adjusted cost basis of close to ZERO. A deal at $80.50 (the all time high) would leave me about $40 per current unit and completely eliminate the Income stream I am receiving from my MWE Investment. Thats the money we use to pay all our bills
It is important to note that both competing offers were for less substantially less money than the MPLX deal.
The next important fact to consider (Also in the S-4) MWE had been in joint venture discussions with MPC for about a year. The only reasons MWE became interested in a merger were the deteriorating energy markets and MWE felt they would not be able to take advantage of the opportunities they had to grow the business and pay the increasing distributions going forward. IMHO to stop the increases or lower the distribution if necessary would be disasterous to MWE's market price and further weaken MWE's financial condition and leave them defenseless to unwanted lower bids under worse contitions (taxwise to the unitholders)---
The premium in the deal is---The continuation of the business with the unitholders continuing to receive the growing distributions at a 25% rate for both 2016-2017 Thats 5 X MWE current growth rate of 5% that MWE says in the S-4 might be a problem going forward.---
>>>>PLUS the distribution will go down<<<<
IMHO thats not true--- I have done the math and have written it out quarter by quarter for the periob of "Today to Merger date in December 2015" and then years 2016-7-8-9 as guided for by MPC and MPLX. These are shown in Post #54717 that I wrote yestereday.
The most interesting time frame I believe is between NOW and up to and including the merger premiums that will come to MWE unitholders at this time
1) There should be a $0.93 distribution payable on Nov 13, 2015
2) There should be a $3.37 cash payment payable on the date of the merger closing
3) There will be a 9% unit increase (1.09 MPLX for each MWE unit.)
4) For an owner to add or new buyer of MWE to buy at the current level These payments and Unit increase PLUS the 25% distributions going forward is a compelling buy at the present time at the present depressed price--The distributions will be accretive from the moment the $3.37 per unit is received and the bonus units of MPLx is received.
The alternatives are potentially not pretty
No merger
1) MWE market condition gets further constrained-limiting investment- limiting distributions and distribution growth
2)MWE forced into a buyout on unfavorable term to long term holders, including massive tax payments and total loss of income to unitholders
b&w |
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Msg # | Subject | Author | Recs | Date Posted |
54727 | Re: Williams Wooed by Two Suitors With Different Ambitions | Bully_gates | 0 | 9/5/2015 11:28:13 AM |