Author Topic: KMI - Kinder Morgan  (Read 134370 times)

globalfinancepartners

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Re: KMI - Kinder Morgan
« Reply #20 on: January 27, 2014, 03:39:47 PM »
(and on the warrants, listen to his explanation of why KMI is repurchasing warrants instead of ordinary shares - he believes the warrants are the better use of KMI repurchase funds at this point)
I haven't seen that.  Can you please provide a link?  Thanks in advance.

I wish I could remember exactly where I heard it - but it was an audio track of Richard Kinder from a conference call.  I think it might have been on a youtube video posted by this guy, but I apologize in advance because he's posted quite a few on Kinder Morgan - it was one of the presentations or conference calls that is overlaid with the powerpoint slides --->

http://www.youtube.com/user/Sumflows/videos


CorpRaider

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Re: KMI - Kinder Morgan
« Reply #21 on: January 27, 2014, 03:56:22 PM »
Yeah it was two or three quarters ago.  Basically you can tell which one they buy back (warrants versus common).

ItsAValueTrap

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Re: KMI - Kinder Morgan
« Reply #22 on: January 27, 2014, 04:05:00 PM »
Last quarter (Q4 2013) they bought back both.  Or maybe they just bought back the warrants.

http://phx.corporate-ir.net/phoenix.zhtml?c=93621&p=irol-newsArticle&ID=1891159&highlight=

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KMI repurchased 5.2 million shares of its common stock during the fourth quarter for approximately $172 million. KMI has fully utilized the $350 million share and warrant repurchase program authorized by the board of directors in July of 2013 and has $94 million remaining on the $250 million authorized by the board in October of 2013 for share and warrant repurchase.
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ItsAValueTrap

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Re: KMI - Kinder Morgan
« Reply #23 on: January 27, 2014, 04:25:09 PM »
found it
http://seekingalpha.com/article/1749622-kinder-morgan-energy-partners-ceo-discusses-q3-2013-results-earnings-call-transcript

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Craig Shere - Tuohy Brothers

Okay. And last question, given some of the recent headwinds kind of affecting KMIís share price from some market perceptions. How do you think about the alternatives of repurchasing warrants versus existing shares? And how much capacity do we have to keep renewing this equity repurchases every quarter?
Richard D. Kinder - Chairman and Chief Executive Officer

Well, we look at that based on growth projections and based on what we believe the return is on purchasing warrants versus shares. And as you see today, the board authorized an additional $250 million to be used for either shares or warrants at our discretion and we just continue to look at what makes the most sense to buyback shares or buyback warrants.
Craig Shere - Tuohy Brothers

I gotcha. And speaking with some clients Rich, that the comment was made that your own repurchases were not a large percentage of your annual distributions that you get, and I just wonder if you would like to opine on the value of the equity right now?
Richard D. Kinder - Chairman and Chief Executive Officer

Thatís of course you guys expertise not mine, but I believe obviously the equity is undervalued at KMI. You have a stock that is yielding 4.5% now and has growth of 14% this year in declared dividends. We said we believe long-term, itís 9% to 10%. And at KMP, you have a security thatís yielding 6.5% with growth of 7% this year. We said long-term we believe 5% to 6% there. So to me thatís a very good investment, but thatís again not mine to opine, Iím obviously prejudiced. I think the stock in units are tremendously underpriced in my view, but again thatís for the market to determine.
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bmichaud

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bmichaud

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Re: KMI - Kinder Morgan
« Reply #25 on: January 28, 2014, 07:31:52 AM »
Is anyone worried about the on-going warrant buyback program vis a vis ultimately being able to realize full value for the warrants? Can the Company just squeeze out minority warrant holders without a premium? Or can you simply refrain from participating in any tender offer?

ItsAValueTrap

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Re: KMI - Kinder Morgan
« Reply #26 on: January 28, 2014, 08:38:38 AM »
The terms of the warrants are described here:
http://www.sec.gov/Archives/edgar/data/1506307/000119312512255687/d355500d424b3.htm#toc355500_5
There is protection from the company issuing excessive dividends.

I don't understand what you're saying about a squeeze-out.  I don't see any provision where the company can squeeze out all of the warrant holders?
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thomcapital

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Re: KMI - Kinder Morgan
« Reply #27 on: January 28, 2014, 09:17:19 AM »
Is anyone worried about the on-going warrant buyback program vis a vis ultimately being able to realize full value for the warrants? Can the Company just squeeze out minority warrant holders without a premium? Or can you simply refrain from participating in any tender offer?

I asked the same question a couple times regarding some of the bank warrants outstanding. Others here (far smarter than I) said no, it's not an issue.

What is an issue - if Mr. Kinder tries another MBO at a low enough price that would put the warrants in the red.

bmichaud

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Re: KMI - Kinder Morgan
« Reply #28 on: January 28, 2014, 09:23:43 AM »
Is anyone worried about the on-going warrant buyback program vis a vis ultimately being able to realize full value for the warrants? Can the Company just squeeze out minority warrant holders without a premium? Or can you simply refrain from participating in any tender offer?

I asked the same question a couple times regarding some of the bank warrants outstanding. Others here (far smarter than I) said no, it's not an issue.

What is an issue - if Mr. Kinder tries another MBO at a low enough price that would put the warrants in the red.

Good point. He's likely to NOT pay fair value in a buyout, and a 20% premium over $36 is only $43....seems risky.

ItsAValueTrap

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Re: KMI - Kinder Morgan
« Reply #29 on: January 28, 2014, 09:46:44 AM »
If that was his Machiavellian master plan all along, then why repurchase warrants in the first place?

C'mon guys   ;)
« Last Edit: January 28, 2014, 10:22:29 AM by ItsAValueTrap »
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