Squash11 wrote: It seems that CIBC is saying that the Company will eventually cut the dividend in order to satisfy the various credit agencies and maintain their high rating. CIBC is saying that this issue will not be clarified next week with the Q3 report. They imply a need to eventually raise capital due to infrastructure requirements, while admitting that the current leverage is, on it's own sustainable.<br /> <br /> Questions have not been answered so far about the authenticity and authorship of this report, let alone the timing. <br /> <br /> I am interested in members opinions on the need to raise large sums for infrastructure programs.<br /> <br /> I suspect that a the few bashers posting here might well be one and the same; cunning and persistent.<br /> <br /> So far this is the only (abbreviated) version of the CIBC report that I have seen, From tbnorthstar.<br /> <br /> <br /> <br /> <br /> <blockquote class="BBQuote"> <div> <cite>tbnorthstar wrote:</cite> Here is what I see,<br /> <br /> AltaGas Ltd. Lingering Uncertainty; Downgrading To Neutral All figures in Canadian dollars, unless otherwise stated. 18-156355 © 2018 CIBC World Markets Corp., the U.S. broker-dealer, and CIBC World Markets Inc., the Canadian broker-dealer (collectively, CIBC World Markets Corp./Inc.) do and seek to do business with companies covered in its research reports. As a result, investors should be aware that CIBC World Markets Corp./Inc. may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. For required regulatory disclosures please refer to "Important Disclosures" beginning on page 9. Please see "Price Target Calculations" and "Key Risks to Price Target" information on page(s) 6 to 7. October 25, 2018 Energy Stock Rating: NE U T R A L Key Ratios and Statistics 12-18 mo. Price Target $24.00 ALA-TSX (10/24/18) $21.66 Key Indices: None 352-5--week Range Yr. EPS Gr. Rate (E) $20.27-$30.06 NM Shares Outstanding 267.9M Float 266.6M Shrs Avg. Daily Trading Vol. 633,553 Market Capitalization $5,802.7M Dividend/Div Yield $1.32 / 6.1% Fiscal Year Ends December Book Value $17.32 per Shr 2018 ROE (E) 5.6% Net Debt $3,587.0M Net Asset Value Common Equity $4,639.0M Convertible Available Yes AFFO per Share 2016 2017 2018 2019 Current $3.01A $2.69A $2.85E $3.07E Prior $2.69E $3.33E Estimates (Dec. 31) 2016 2017 2018 2019 EBITDA ($mln)-Curr $700.8A $797.0A $1040.2E $1354.0E EBITDA ($mln)-Prior $1012.0E $1498.0E EPS-Curr $1.01A $1.20A $0.99E $1.21E EPS-Prior $0.75E $1.10E Valuation (Dec. 31) P/AFFO-Curr 7.2X 8.1X 7.6X 7.1X P/AFFO-Prior 8.1X 6.5X EV/EBITDA-Curr 12.1X 11.0X 16.2X 13.1X EV/EBITDA-Prior 16.6X 17.5X P/E-Curr 21.5X 18.1X 21.9X 17.8X P/E-Prior 29.0X 15.0X Company Description AltaGas is a diversified energy infrastructure company with assets in midstream, power generation and utility businesses in Canada and the U.S. www.altagas.ca Our Conclusion We are resuming coverage following a restricted period related to the AltaGas Canada IPO. Lingering uncertainty has us on the sidelines until there is more clarity on reducing leverage and related implications for the capital plan. Our price target is reduced to $24 (was $30), and our rating is reduced to Neutral from Outperformer as of October 25. Implications The company sold 16.5 million shares at $14.50/share through the IPO of AltaGas Canada (ACI) and transferred $635MM of debt for total value of $874MM ($910MM if the overallotment is exercised). The company continues to hold 45% of ACI. Many Questions Still Remain: Following the IPO, the company is still relatively levered (debt/EBITDA of 6.2x in 2019), with a high dividend yield and premium DRIP, not to mention a robust capital plan. This tells us that funding questions remain. We do not expect these issues to be clarified with the Q3 call next week and the outcome may hinge on discussions with debt rating agencies as we believe the company is motivated to retain its investment grade rating. (S&P BBB/Negative outlook). We expect the company to cut the dividend 40% (to $1.32/share annualized) rather than pay out a yield of over 10% while running a premium DRIP, even though we can see the existing dividend reaching the company's targeted 50%-60% FFO range. It doesn't make sense to raise equity through the premium DRIP at a cost that's higher than what the company earns on new investments. Funding Still Required: While the current leverage on its own isn't untenable, the company has a big capital program that will require external funding. While there may be a couple of assets left to sell, such as the Blythe power plant, we expect an equity issue.</div> </blockquote> <br /> <br />