Why Niska Gas Storage Partners' Shares Jumped Today
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of Niska Gas Storage Partners jumped 13% today after the company completed a restructuring.
So what: The company converted subordinate units and distribution rights into new incentive distribution rights. The company couldn't increase its distribution to common unitholders without paying minimum distributions owed to these unitholders, which would have been about $12 million per quarter, and they would take a high percentage of added payouts.
Now what: This reduces the risk Niska will have to reduce its distribution to pay back these incentive distribution rights holders and gives upside potential for investors. Both Goldman Sachs and StifelNicolaus liked the move because they upgraded the stock. The new structure gives common unit holders more upside, which should boost the stock long-term if fundamentals improve.
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