RE:RE:RE:RBC Initial Comments Very true comments but the discount imbedded in that RBC estimate is pretty extreme. Using mid-points, RBC is suggesting a realizable value of $750 million less the costs to finish of $100 million, netting to the sellor $650 million.
this is 90% complete and under 6 months from operational - 35% discount to just the costing doesn't seem realistic. The asset has an imbedded IRR of double digits according to keyera, so with even just 70% contracting done we really are looking at something more like RBC saying it's sale price is about 50% of the all in asset capitalized values.
Ppl don't have to sell as you say, but this is a net realizable value estimate by an analyst - it's hypothetical based apparently on contracted infrastructure deals.
Keyera will have $1 billioN just in costs on the books - something just doesn't make sense here imo.
hawk35 wrote: KAPS is still not live yet and they have contracted close to 70% of the capacity so KAPS will sell at a discount. Post covid inflation and the feared recession is also discounting the sale price. The market won't pay full price for an asset that is not fully contracted, not in production and facing economic headwinds of a recession.
As for the sale, this is what Pembina and KKK said after they announced plans to merge their assets.
"As part of the transactions, Pembina and KKR intend to dispose of Newco's non-operated interest in KAPS following closing of the transaction, subject to receiving acceptable purchase terms through the sale process."
The Pembina / KKK deal closed on August 15'th and the asset has not been sold. This would indicate that the "acceptable terms" have not been received yet. They may hang on to their 50% until go live / full contracting of the system is announced to ensure the best sale price.