In the wake of the Kinder Morgan Inc (KMI) deal, Nathan Judge, Analyst covering the MLP sector at Janney Montgomery Scott, says a question that investors are still asking is whether or not a lot of other companies will follow suit and undo an MLP. Judge’s answer is no.
“We think that the MLP business model is not broken,” Judge says. “There was an unusual situation for Kinder Morgan, and it worked in their instance, but it’s going to be very rare for another company to be in a comparable situation and to choose that route of addressing their issues.”
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Judge says the primary issue for Kinder Morgan was resetting the incentive distribution rights. He says there are a lot of ways companies can go about doing that, including becoming a C-Corp.
“The fact that Kinder Morgan did that wasn’t unique, but it was unusual for them, and I don’t expect that to happen for most everybody else,” Judge says.
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