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Gold/Mining/Energy : NGL to da moon (well, maybe to $10?)!!
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To: Elroy who wrote (11)6/7/2023 7:22:43 PM
From: Elroy  Read Replies (1) of 127
 
A few more thoughts on NGL if anyone is listening.

The ended Q1 2023 with $2.857 billion long term debt.

They said in the press release that since the of the quarter they've bought back $99m of 2025 debt, so long term debt today is at most $2.767 billion.

They plan to repurchase the remaining $280m 2025 debt before April 2024 (and perhaps inside calendar year 2023), so that will bring the long term debt position down to $2.487 billion.

If they deliver the forecast $645m EBITDA for fiscal 2024 (end March 2024) that would put their debt ($2.487b) to EBITDA ($645m) ratio to 3.86x. This should allow them to refinance all their debt and preferred stock ($900m).

Lets see what the units should be worth at that point?

LT Debt + Preferred stock will be about $3.4 billion.

If annual EBITDA is $650m.

And we give them a 7x multiple to EBITDA (low, but lets be conservative), then the oprganization's value is $4.55 billion.

$4.55 billion value minus $3.4 (billion debt + preferred stock) = $1.15 billion value.

1.15 billion value / 130 million units = $9 per share.

Ok, the question apparently is whether NGL deserves a 7x multiple to EBITDA post-refinance? Perhaps. Who's to say?

The story gets really interesting after they've 1- refinanced the 2026 debt, and 2-made the preferred stock current. At that point, if EBITDA is still $650m per year, they've got too much cash, nominal Cap Ex, and the extra cash will go to unit holders.

The distributions should push the unit price higher if the market won't do it by itself.
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