The use of net proceeds from the offering, approximately $50.3 million excluding offering expenses, will be used to partially fund its growth capital budget and the partnership plans to apply a portion of the net proceeds to pay down borrowings under its revolving credit facility.
Morgan Stanley was the sole book-running manager for the secondary offering, and the partnership has granted an overallotment option for an additional 435,000 common units to the underwriter.
This $18.15 is a fairly deep discount of about 9% from the close of $19.95 yesterday and shares had not really been able to break above the $20.00 mark all week. The 52-week trading range is $6.55 to $38.50. So far we have seen some 250,000 units trade and the last price is down at $18.15. Its market cap before this offering and before the implied price drop was listed as $1.14 billion.
MLP’s can trade with a mind of their own and the price of oil is usually the bias-setter each day. But generally speaking, a price drop of twice the dilution to the stock is deemed excessive. The problem with using that general rule is that this one has also doubled in the last 3 months.
Jon C. Ogg
June 5, 2009
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