PVR Partners, L.P. (PVR) once again decided to issue common units and utilize the proceeds to replenish its revolving credit facility. The partnership plans to offer 6,500,000 common units to the public. This transaction is subject to market and other clauses. The unitholders of this offering will get limited partner interests in the partnership. With this issuance, PVR Partners’ total outstanding units will be 126,832,000.
Per the conditions of the offering, the underwriters can issue up to 975,000 additional common units in a one-month of time to cover the over-subscription, if necessary.
In November last year, the partnership issued 7,000,000 common units and utilized the proceeds to pay-back the amount used from its revolving credit facility.
As of September 30, 2012, the partnership had utilized $0.53 billion from its total limit of $1.0 billion revolving credit facility. PVR Partners intends to utilize the net proceeds of this issue, including the proceeds from exercise of the over-allotment option, to repay a part of its outstanding borrowings under its revolving credit facility.
We appreciate PVR Partners’ continuous effort towards reducing its debt burden under its revolving credit facility. Further, this initiative will enable the partnership to not only fund its internal growth projects but also continue with its inorganic growth strategy.
In 2012, PVR Partners expects to invest $485.0 million for its numerous internal growth projects particularly at the Marcellus. In addition, the partnership continues to focus on its Eastern Midstream businesses along with commencement of its new Wyoming County Pipeline operations.
The partnership expects to enjoy same growth story out of these operations in the forthcoming quarters. PVR Partners’ profitable growth projects and strong liquidity position enable it to raise required fund easily from the market on a regular interval.
The unit holders continue to enjoy the benefits of a regular cash distribution by the partnership. During third-quarter 2012 earnings call, the Board of Directors of PVR Partners announced to increase the quarterly distribution to 54 cents per unit from 53 cents per unit. As a result of this quarterly distribution hike, the annualized distribution rate will be $2.16 per unit, representing an increase of 8.0% over the prior-year quarterly distribution.
As per the Zacks Consensus Estimates, the partnership’s earnings per unit for fourth-quarter and full-year 2012 are currently pegged at 17 cents and 49 cents, respectively.
PVR Partners, L.P. currently has short- term Zacks #3 Rank (Hold rating).
Radnor, Pennsylvania-based PVR Partners, L.P. owns and operates a string of natural gas midstream pipeline systems and processing plants and is also involved in the management of coal as well as natural gas properties. The partnership’s current market capitalization stands at $2.11 billion and competes with CONSOL Energy Inc. (CNX).