Peter, two points you seem to have missed about MIR:
1) Access to capital markets is no longer an issue. You are correct that access may be limited for a while, but that's precisely the reason (well, that and current tight margins on energy sales) MIR slashed its CAPEX budget for the next several years. Their new CAPEX budget is small enough to be fully funded from internal cash flows and existing cash/capital.
2) As for asset valuations, it does seem logical to think that if several players in the IPP space are trying to sell assets, that values would decline. However, i) many of the potential bidders are not IPPs (think oil & gas and financials); ii) many are not dependent on US capital markets (think European companies); iii) the deferral of new capacity will make existing capacity more valuable; and, perhaps most significantly for MIR in the very near term, iv) MIR has already closed the majority of its planned asset sales (with the closing of Bewag last week).
Also consider possible (likely?) positive developments that, if/when they occur, would significantly boost the stock. First among these would be Moody's restoring MIR's investment grade rating, an event which would release some $700 million of collateral that MIR was forced to post to secure its trading activities.
Remember, since Moody's downgraded, MIR has raised about $1.6 billion of fresh cash (Dec stock offering and Bewag sale). Moody's is still trying to define its ratings criteria for the industry and that is likely the only reason the upgrade has not yet occurred - they don't want to upgrade without clearly defined criteria for the new rating.
Lastly, if you are correct about the "danger" position of other, relatively weaker players, consider how that improves the competitive position and profitability prospects of the stronger players like MIR. The economics of the industry improve due to slower capacity additions and those who regain access to capital markets sooner will be in a position to buy assets from those who don't. And, the demand side can only get better - how many mild summers and mild winters can really be strung together. It was only two summers ago that the market was convinced we'd see major blackouts around the country with the next heat wave.
Peter, you were wise to buy at $9.22 (I wish I'd bought all mine that low). Hang on and enjoy the rewards of keeping your head when all around you are losing theirs.
Regards,
Bob |
