Lots of News Coming for TWMLooks like there could be a lot of news from TWM over the next 8 or 10 weeks.
First item will be confirmation of closing of the Renewables IPO and receipt of cash by TWM. At the same time TWM is likely to confirm the immediate go-ahead for the Renewable Diesel project.
Other likely news to follow:
1. Details on a significant refinancing eliminating the high cost 2nd lien loan and possibly a new financing to replace all/most existing debt. Interest rates are at historic lows and a much stronger balance sheet should allow TWM to take advantage of this.
2. Confirmation of an Expansion of the Pipestone Gas Plant. Assuming an expansion will not be as costly as the initial build (around $210 million) this looks like something in the order of $150 million if capacity is doubled.
3. The possibility of a new growth project. I suspect the Pioneer sale + Renewables IPO financing will give TWM significant new borrowing capacity. In addition TWM could have something in the order of $80 million (possibly more) of annual free cash flow for new investments. After the assets dropdown to Renewables, TWM annual EBITDA should still be in the order of $160 to $180 million. Interest expense should drop significantly. TWM can probably pay for Pipestone expansion over 2 years from retained cash flow, leaving the possibility of an additional significant project ($200 million +).
4. Dividend increase announcement as early as September is possible. A 'modest' dividend increase has been alluded to in past quarterly conference calls. An increase from 4c to 6c per year would cost just over $7 million - not a large amount given the strengthened finances and still a very low % payout compared to other midstream companies. TWM could go much higher if they chose to.
TWM could even surprise us (again) with something not on my list.
In any event there is going to be a significant news stream over the next couple of months. Lets hope this gets reflected in the share pricing which is definitely not reflecting all the upcoming changes.
Just my thoughts FWIW.