Crius Energy Trust Tr Unit CRIUF

Status Update...

[DMR001]

Folks,
I have just gone back and analyzed where the unit holders stand with KWH.UN trust units.

Here is my synopsis:

Jan 16 News Release (relevant points only)

• Declaration date if they go ahead for the quarterly distributions will normally be March 31, June 30, September 30 and December 31
• The first distribution was declared at this time, way early. It states record date of May 31 and payment date of June 17.

Feb 7, News Release

• Vistra offer of $7.57/unit plus the distribution made. The previously declared at 0.209/unit for Q1 will be added to the offer.
• One of the conditions in the agreement is that Crius will not declare any future distributions.

Feb 20, News Release

• Vistra ups their offer to $8.80 per unit.
• The Q1 distribution stands but the payment date has been changed to the earlier of the closing date for the buyout or June 17, 2019.
• The “no declarations” of future distributions stays in force.
• Filing of documents for getting approval to proceed was done with both the HSR and FERC on February 19, 2019.

May 10, News Release (subsection: Update on Vistra Transaction and Payment of Declared Distribution for Q1 2019)

• The record date (May 31) that had been declared previously (Jan 16 news release) is amended and moved backward in time to March 26, 2019.
• The distribution payment date will be the closing date of the Vistra Transaction.

Above are just facts extracted from the news release - no opinions of mine are intentionally expressed there.
Opinions/observations:

1. Backdating the record for Q1 distribution from May 31 (Jan 16 news release) to March 26 (May 10 news release) is a move I have never seen before. Anyone who previously sold their holdings in the period of March 27 to May 31 are in for a pleasant surprise. The distribution that they previously understood they had given up by selling ex-distribution is miraculously been gifted back to them. Similarly, those who held their units to May 31 (actually May 10 they were advised) to keep the right to the distribution, prior to selling, did so for no good reason given the hindsight. And finally, anyone who made big purchases after March 27 but before May 10 to ensure they were eligible for the distribution will be denied that distribution.
2. Changing the Q1 payment date to the closing date is an unreasonable action given that it was to be the earlier of June 17 or the closing date. This seemed to be quite poorly planned as well, because I and many others received the Jun 17 distribution only to see it revered in the days that followed.
3. Clearly, stating the earlier of the closing date or June 17 put many of us in the mindset that closing was imminent when it was not.
4. We are now very close to what would have been the record date for Q2 but with further distribution declarations prohibited, any unpaid distribution for Q2 accrues to the buyers. Clearly, I would not have cared about this if the deal with Vistra had closed 1-2 months ago but now I feel robbed. I signed up for this investment mostly because of the distribution but Q1’s distribution got deferred for some unknown period and there is no prospect of a distribution for Q2.  FWIW, the distribution amount is $0.209/unit comes to about $9M in aggregate per quarter. This value is accruing to the buyer. I had to go back to my earlier notes to calculate this as the financial statements are no longer available through RBC – DI. The question is who benefits most from the deal not closing?  Assuming that Crius is doing sensible business, it is the buyer who reaps the benefit of any delay, and it would seem, that the longer the better for Vistra.

 
Other thoughts? Things I missed? Diasagreed with me? Please provide an alternate opinion.