Wells Fargo Downgrades Niska Gas Storage Partners LLC (NKA) to Underperform; Distribution Cut Likely
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Price: $4.21 --0%
Rating Summary:
0 Buy, 5 Hold, 3 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 6 | Down: 4 | New: 9
Rating Summary:
0 Buy, 5 Hold, 3 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 6 | Down: 4 | New: 9
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Wells Fargo downgraded Niska Gas Storage Partners LLC (NYSE: NKA) from Market Perform to Underperform, price target range $6-$9 from $7-11.
Wells analyst says, "We are downgrading our rating on our expectations that Niska will reduce/suspend distributions to common unitholders in the coming months. Assuming EBITDA guidance and debt repurchases, NKA should remain in compliance with its FCCR covenants; however, we see a restructuring as the logical course of action. Given NKA’s current yield of 13.7%, the market is clearly not viewing the $1.40/unit distribution as sustainable, especially given the partnership's over-levered balance sheet (FY2012 debt/EBITDA ratio estimate of 5.9x). Accordingly, we expect a recapitalization to occur with (perhaps) an equity infusion and a reset of the distribution to a sustainable level of $0.70/unit (annualized for both common and subordinated units, & assumes a distribution coverage ratio of approximately 1.25x). To reflect the higher-than-forecasted FQ3 debt repurchases and our assumed repurchases in FQ1 2013 and FQ2 2013, we are increasing our FY2012 and FY2013 DCF/unit estimates to $0.81 and $0.87, respectively, from $0.72 and $0.81."
For an analyst ratings summary and ratings history on Niska Gas Storage Partners LLC click here. For more ratings news on Niska Gas Storage Partners LLC click here.
Shares of Niska Gas Storage Partners LLC closed at $10.24 yesterday.
Wells analyst says, "We are downgrading our rating on our expectations that Niska will reduce/suspend distributions to common unitholders in the coming months. Assuming EBITDA guidance and debt repurchases, NKA should remain in compliance with its FCCR covenants; however, we see a restructuring as the logical course of action. Given NKA’s current yield of 13.7%, the market is clearly not viewing the $1.40/unit distribution as sustainable, especially given the partnership's over-levered balance sheet (FY2012 debt/EBITDA ratio estimate of 5.9x). Accordingly, we expect a recapitalization to occur with (perhaps) an equity infusion and a reset of the distribution to a sustainable level of $0.70/unit (annualized for both common and subordinated units, & assumes a distribution coverage ratio of approximately 1.25x). To reflect the higher-than-forecasted FQ3 debt repurchases and our assumed repurchases in FQ1 2013 and FQ2 2013, we are increasing our FY2012 and FY2013 DCF/unit estimates to $0.81 and $0.87, respectively, from $0.72 and $0.81."
For an analyst ratings summary and ratings history on Niska Gas Storage Partners LLC click here. For more ratings news on Niska Gas Storage Partners LLC click here.
Shares of Niska Gas Storage Partners LLC closed at $10.24 yesterday.
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