What AltaGas shenanigans ???scomac wrote:I have in the past with Alta Gas and I will again in the future when confronted with these sorts of shenanigans.
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What AltaGas shenanigans ???scomac wrote:I have in the past with Alta Gas and I will again in the future when confronted with these sorts of shenanigans.
Around 2007 they spun out Altagas Utility Group at the rate of 7 shares per 100 trust units. The assets were largely a maritime NG distribution network. Nothing wrong with the asset, just that it traded by appointment, paid a meagre dividend -- too small a position on its own without buying a lot more with little incentive to do so. ALA took the spin-off back in privately at $9/share early this year which was a huge premium to market for something that was spun out at a book value around $7.50/share three years earlier. Explain to me how this is maximizing my shareholder value? Somebody made out like a bandit though by putting the assets in the public place and accumulating them very cheaply to subsequently sell them back to the parent at a big premium. From a company perspective, these machinations make little sense -- essentially giving assets away at one price and then buying them back some time later at an even higher price. These antics do nothing for the company, but it certainly has the potential to enrich a few well positioned shareholders.ThinkDividends wrote:What AltaGas shenanigans ???scomac wrote:I have in the past with Alta Gas and I will again in the future when confronted with these sorts of shenanigans.
If I remember correctly, ALA wasn't allowed to have the regulated utility business under the income trust structure. When they decided to convert back to a corp, they bought Altagas Utility Group back.scomac wrote:Around 2007 they spun out Altagas Utility Group at the rate of 7 shares per 100 trust units. The assets were largely a maritime NG distribution network. Nothing wrong with the asset, just that it traded by appointment, paid a meagre dividend -- too small a position on its own without buying a lot more with little incentive to do so. ALA took the spin-off back in privately at $9/share early this year which was a huge premium to market for something that was spun out at a book value around $7.50/share three years earlier. Explain to me how this is maximizing my shareholder value?
My memory is pretty hazy when it comes to the details, so I went back to check on this as I had no recollection of the above. Sure enough, I was only off by about two years on when the spin-out occurred -- Nov. 17, 2005 at a rate of 1 per 14 and a price of $7.50.ThinkDividends wrote: If I remember correctly, ALA wasn't allowed to have the regulated utility business under the income trust structure. When they decided to convert back to a corp, they bought Altagas Utility Group back.
Almost four years later, on Aug. 17, 2009, ALTAGAS INCOME TRUST AGREES TO MAKE OFFER TO ACQUIREDavid Cornhill, Chairman and CEO of AltaGas remarked “The new company will generate solid
performance from its utility businesses, and the build out to new natural gas users in Heritage Gas’
franchise areas provides future growth for the new corporation.” He went on to say that “The
separation of the investment in AltaGas Income Trust into two investments is expected to enhance
unit holder value.”
You can decide for yourself if this is strategic planning at work predicated by regulators or a game of musical chairs that left many shareholders standing when the music quit playing and did absolutely nothing to further the underlying business.The Offer represents a 45 percent premium based on the $6.25 closing price of Utility Group common shares on
August 14, 2009 and a 21 percent premium to the price at which Utility Group was spun out by the Trust in
2005. The acquisition is valued at approximately $200 million, including assumed debt expected to approximate
$130 million, and represents approximately 1.15 times the expected combined regulated rate base. The
estimated $59 million cash required to close the transaction will be funded by existing credit facilities.
“The Utility Group acquisition is an outstanding strategic fit for AltaGas,” said David Cornhill, Chairman and CEO
of the Trust. “Utility Group’s steady, measured approach to doing business parallels AltaGas’ strategy of
investing in energy infrastructure that provides long-term, stable cash flow and solid returns. Adding Utility
Group’s investments, people and growth opportunities to AltaGas expands, diversifies and strengthens our gas
division and overall business.”
The new corporation, AUI, assumed $60 million in debt from AltaGas at the time of the spinout.Maureen Howe wrote:“Notwithstanding AltaGas’ tax efficient structure, AUI continues to pay corporate income taxes to avoid any reduction in its revenue requirement and customer rates. AUI’s decision to continue paying corporate income taxes flows from the AEUB’s August 2003 decision with respect to another utility, AltaLink. In its decision, the AEUB concluded that an allowance for income taxes should not be included as part of a utility’s revenue requirement when there was no reasonable expectation that they would likely be incurred. Given the AEUB’s decision, we believe there is very little benefit, if any, of holding AltaGas’ natural gas distribution business under an income trust structure as opposed to a corporate entity.”
It's relative. An annualized return of 4.6% (+ meagre dividends) over 4 years is a lot compared to ALA's performance in the same period (ignoring the admitedly high distribution, ALA was down by half between 05 and 09), but it might not be excessive compared to other investments that these people could have made. The biggest mistake seems more that they divested the company away from what later proved to be an asset that significantly outperformed the core business.ThinkDividends wrote:On the other hand, ALA management held a lot of Altagas Utility Group shares and made a lot $$$ on the takeover.
Was at 36.04 on Friday.AltaGas has entered into an agreement with a syndicate of underwriters, co-led by TD Securities Inc. and RBC Capital Markets as joint bookrunners, under which the underwriters have agreed to purchase from AltaGas and sell to the public 10,100,000 common shares at $34.90 per common share (the "Offering"). The sale of the common shares will result in gross proceeds of approximately $352 million, approximately $405 million if the Over-Allotment Option defined and described below is exercised in full.
Existing PPA concludes in 2020.The Acquisition is expected to be accretive to earnings and cash flow per share in 2014, the first full year of ownership, and is expected to add approximately $50 million in incremental contracted EBITDA per year.
This purchase closed today. In retrospect, it would have been a nice 15% gain + a monthly div payment to buy a month and a half ago when those common shares were offered.Descartes wrote:AltaGas Announces US$515 Million US Power Acquisition and $352 Million Common Share Offering
AltaGas has entered into an agreement with a syndicate of underwriters, co-led by TD Securities Inc. and RBC Capital Markets as joint bookrunners, under which the underwriters have agreed to purchase from AltaGas and sell to the public 10,100,000 common shares at $34.90 per common share (the "Offering"). The sale of the common shares will result in gross proceeds of approximately $352 million, approximately $405 million if the Over-Allotment Option defined and described below is exercised in full.
When I last bought I had a $31 ish bid in late August. Which I thought was stinky. But it filled at $27.10 on Aug. 24.AltaRed wrote:I bought a position in ALA a few months ago at circa $33 and change.
And I get the vibe that the company is actually quite well run. Unlike TA.AltaRed wrote:Obviously a good buy at ~$27+. The value of stink bids. I wish I would have had more stink bids in on more stocks than I did on Aug 24th but I was a little lax over the summer holidays not having more in place.
I think ALA could see a bit more softness before it heads the other direction, simply until investors are confident there is a bottom to Alberta power prices, i.e. the same factor that also affects other power producers (Atco, TA, Fortis et al) in varying degrees. That said, I believe its financials will continue to show quarter over quarter growth mostly due to its ex-Alberta assets.
I've never thought to look for that! Yet another FWF learn.JaydoubleU wrote:A bit of evidence here for my claim above that Sentry has "backed up the truck":
http://quote.morningstar.ca/Quicktakes/ ... ture=en-CA