Dynagas might not yield enough investor demand in IPO proposal - analysis

By Rizza Sta. Ana

Nov 11, 2013 02:08 PM EST

According to an article published at stock market analysis website SeekingAlpha, Dynagas LNG Partners LP planned listing would not be able to get a significant investor demand for its shares. The energy transport company filed its plans for an initial public offering on October 10. Dynagas would be making its debut on the NASDAQ Stock Exchange.

Dynagas described its company type as a limited partnership. It claimed that it had generated stable cash flows from its core business, and maintained relations with energy companies Gazprom and BG Group via multi-year charters.

The F-1 filing, also obtained and made available in the same article, showed that Dynagas would be selling 12.5 million shares plus 34% of company insider shares in its debut. It had listed its projected share price ranging from USD19 to USD21 per share. Dynagas was seeking to raise USD250 million, putting the company's market value at USD600 million should the sale got successful. Dynagas also said it would be implementing a cash distribution policy wherein a quarterly yield of USD0.365 per unit ot USD1.46 per share would be obtained by shareholders.

Dynagas had tapped Credit Suisse Securities as its lead underwriters. ABN AMRO Securities, Barclays Capital Inc, BofA Merrill Lynch, Morgan Stanley, Credit Agricole Securities and Deutsche Bank Securities would also be acting as Dynagas' underwriters as well.

The article pointed out Dynagas' interesting risk factors listed in its regulatory filing with the US Securities and Exchange Commission. The company only has 3 LNG (Liquefied natural gas) carriers, that should any of the carriers would encounter limitations to carry out its abilities would materially affect the company's overall operations and financial position. Dynagas specifically stressed that its shareholders would not be able to get their quarterly distributions should that be the case. Dynagas also relies on its partnerships with both Gazprom and BG Group that the loss of either one would greatly impact the company. BG Group accounted 58% of Dynagas' total revenue last year, while Gazprom accounted 16%.

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