Crius Energy Trust Tr Unit CRIUF

Volume Friday.

[Sunnyboy]

I was surprised by Friday’s volume. At current SP the gain at closing would only be 0.5%. News with an improved purchase price coming maybe? RBC indicates a fair value for KWH.UN at $9.62. Sales price should be at a premium. So $10.00 minimum would be fair I would say. If management’s presentations were accurate and the Payout ratio would indeed again go down to the high 50% some time in 2019 anything less than $10.00 would actually be robbery IMO.

[bluejay100]

The bid price was at a premium - to the recent average share price. Unless there were significant synergies to be realised in an acquisition, or there was some competitive advantage in buying up market share, why would you pay a premium?  In any event, whose to say RBC's FV estimate is the one to go with?  it's only their best guess and others have different best guesses. 

[Sunnyboy]

Well I look at it this way. Annual distribution is $.8364. If the payout ratio was to go back to High fifties than that means the business is creating min. $1.40 cash/unit if we would go with 60%. At $8.80 per unit that is an annual return of 15.9% . Pretty sure Vistra indicated in one of the news letters that they are looking for Min 10%. So at $8.80 they are getting a heck of a deal IMO.

[bluejay100]

Please explain how and why the payout ratio would drop to 60%? Making up a number out of thin air doesn't make the business any more attractive.  Are you suggesting synergistic benefits will cut costs, increase EPS and therefore reduce the ratio?

[Sunnyboy]

Not out of thin air at all. I was wrong however. The expected normalized payout ratio indicated was actually 51% ( Not high fifties.) sometime in 2019.  This came from management themselves. This was information in a report from RBC Direct investing after discussions they had with management.