Inergy Midstream, L.P.
) has priced its public offering of 11 million units representing
limited partner interests. The price of a unit is fixed at $22.50
and the public offer is expected to close on Sep 13, 2013 subject
to customary closing conditions.
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The partnership will allow the underwriters of the issue a window
of 30 days to purchase up to 1.65 million additional common units
to cover over-allotments, if necessary. The units will be offered
in accordance to the shelf prospectus previously filed with the
Securities and Exchange Commission.
Inergy Midstream intends to utilize the net proceeds of the
issue, including proceeds from any exercise of the over-allotment
option, to repay outstanding borrowings under its credit
facilities. Moreover, the partnership intends to utilize the
remaining proceeds for its ongoing midstream expansion projects
and for general partnership purposes.
Inergy Midstream's performance has come in below market
expectation, with the partnership posting negative earnings
surprise in the last four quarters. Recently, the partnership has
taken an initiative to jointly own a crude oil rail terminal with
Enserco Midstream, LLC. A portion of the net proceeds from the
issue will be invested in this joint venture.
This midstream project is located near the resource rich Powder
River Basin. This terminal will currently have a throughput
capacity of 20,000 barrels per day, which can be expanded to
60,000 barrels per day to meet increasing demand.
Inergy Midstream ended fiscal third quarter 2013 with nearly
85.92 million of outstanding units. The partnership presently
distributes $1.60 per unit to unitholders on an annualized basis.
The contribution from this new midstream project is expected to
improve the performance of the partnership and generate
additional cash flows, which could then be distributed among
Inergy Midstream, L.P. currently has a Zacks Rank #5 (Strong
Buy). However, other operators in the sector having a favorable
Zacks Rank are
Magellan Midstream Partners L.P.
Delek Logistics Partners, L.P.
ONEOK Partners, L.P.
). Magellan Midstream Partners has a Zacks Rank #1 (Strong Buy)
while Delek Logistics Partners and ONEOK Partners retain a Zacks
Rank #2 (Buy).