- NGL Energy refinanced their large $2b of upcoming debt maturities and greatly helped ensure that they can remain a going concern.
- The downside on the other hand was that they were forced to completely suspended all distributions, even preferred distributions.
- Whilst this sounds very grim for unitholders, thankfully the clause only requires them to reduce total leverage to less than 4.75 before they can be reinstated.
- Their current total leverage sits at 5.32 and based upon my calculations could reach under 4.75 in as little one year.
- Since this is a relativity short wait and the risk of bankruptcy now significantly lower, I believe that upgrading to a bullish rating is appropriate.
For further details see:
NGL Energy: An Unfavourable Setback But Distributions Can Return Soon