RE: RE: MLPs in the Mid-Content db, thank you for the insight on the inner workings of Scotia Waterous; I have spoken to the bankers handling the deal on three occasions and I was impressed by them. Scotia Waterous was the top O&G deal maker in the US last year.
I fully agree with you, the Canadian assets are of no interest to an MLP; this is why when I discussed the transaction with Scotia, they talked about the potential of two buyers (one for the Canadian assets, and one for the US side), the fact Scotia has chosen to hire Desjardins to co-market the Canadian assets indicate to me that they are going that route.
Indeed the macro environment is quite harsh; with this in mind I spoke to the lead manager on the deal Mr.Undershute last week, I asked him if the process has been hampered in any way by the difficult environment, to my surprise he sounded quite upbeat, more upbeat than when I spoke with him in early May; he indicated that the interest in the company/assets has been better than he expected.
I think there is a strong chance still that the company will receive a decent bid; as you have indicated they do have extensive and large assets; the board of directors is “very keen” on getting a deal done as per Mr.Undershute. The company is also very flexible they are open to asset sales, merger, full buyout, cash payment, stock payment .. etc; when you have a flexible and keen seller a deal usually takes place.
The Scotia bankers mentioned a target value of just under 6 times running ebitda as a range to expect for a deal; this would put us somewhere in the $5s range.
I have a strong feeling that one of the bidders would be Atlas; I do have information that they wanted to acquire the whole Mississippian earlier in the year from Equal, but management refused. Atlas has a history of paying with stock, their stock is very expensive, buying the Hunton/Mississippian would be very accretive to them if they pay with shares.
I believe come July, investors will be pleasantly surprised, this situation reminds me of Daylight, one day investors will wake up and see a bid 100% above the current share price.
Regards,
Nawar