Yes, I'm not super knowledgeable about the HMM details, it seems it's on the brink of bankruptcy, so something negative will happen. One analyst report I read said when this type of thing (customer about to go bankrupt asks shippers to reduce charter rates) happens, the shipper (CPLP in this case) got something in return for the reduction in fees. So, CPLP may have to reduce rates for HMM, but in return may get an equity interest in some portion of the company. And yes, I've read even if HMM goes to zero, then CPLP remains viable. CPLP may then cut the dividend somewhat, but even if they cut in half, you've still got a yield above 10% AND a then greater than 1.0x coverage.
So it's a mystery how it will turn out, but seems a good bet. If CPLP cuts the dividends from 95 cents per year to 50 cents per year, and has well above 1.0x coverage on that new level, surely it's worth $4.00 per share (a 12.5% yield off the new dividend)?
And who knows, hopefully HMM won't just go bust, CPLP doesn't cut the dividend, and muddles through.
When I say I don't expect CPLP to cut the dividend don't put too much stake in what I say. Just spoutin' off about something I don't know much about (although I did buy a bunch more CPLP around $2.60 a few months ago). |
