RE:Seeking Alpha bullish on ALA Tks jgzeger. I read this article and it scares me. They state that If ALA doesn't sell the last assets for a reasonable price their new plan will come up short If a bear market is here the divi could go to zero. Denial or reduction in rates increases will have a negative effect and this happened to them before. Below is that part that concerns me.
Key risks for AltaGas There are 3 key risks for AltaGas, each with significant implications.
The first is a broad based market shutdown, which makes any asset sale at reasonable valuation difficult. This would make it very hard to fund the latter part of the year.
The second is an across the board rating downgrade into junk territory. That is extremely unlikely, and the downgrade will probably be one step down, keeping AltaGas above investment grade.
Finally, the rate cases that are pending will be key. Any denials of rates asked for, or a significant reduction in the final amount
as has happened in the past, can be very detrimental.
Conclusion AltaGas' plan can work out. Capital markets need to cooperate for that, though.
Our base case is that the bull market is not over and this reset in sentiment is good for a bigger move up. Should we be wrong on that, AltaGas will have to go to a zero dividend.
We did not cite the US dollar as a key risk for now, AltaGas' FFO and capex in the US are about even. That may change down the line and we will reassess then. Ultimately, we think things will work out and AltaGas will deliver great returns from this point after tax-loss selling is done.