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Summary ratios for the week of July 17 |
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(P/E ratios based on annualizing the March quarter, unless otherwise noted) |
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VALUATION RATIOS |
IPO Mrkt |
Price / |
Price / |
Price / |
Price / |
% offered |
|
Cap (mm) |
Sales |
Earnings |
BookValue |
TangibleBV |
in IPO |
|
|
Atlas Pipeline (AHD) |
$506 |
see above note |
-27.7 |
-96.0 |
17% |
|
|
natural gas gathering systems partnerships |
Post-IPO shrs: 21mm |
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NewPage Holding NWP |
$915 |
0.5 |
-5 |
0.5 |
2.6 |
33% |
|
large coated paper manufacturer |
Post-IPO shrs: 61mm |
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========================================================================= |
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SEARCH BY COMPANY |
Use 'Edit, find on this page' to search for companies |
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for analysis |
scheduled below |
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========================================================================= |
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Analysis -- week of July 17 |
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Atlas Pipeline Holdings (AHD) |
AHC, C+ |
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natural gas gathering systems partnerships |
Post-IPO shrs: 21mm |
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Moon Township, PA |
see note below |
IPO Mkt |
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not an operating company |
Cap (mm) |
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$506 |
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Note: |
@$23 |
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Natural gas gathering systems limited partnership interests of NYSE:APL, $510mm market cap |
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VALUATION RATIOS |
IPO Mrkt |
Price / |
Price / |
Price / |
Price / |
% offered |
|
Cap (mm) |
Sales |
Earnings |
BookValue |
TangibleBV |
in IPO |
|
|
Atlas Pipeline (AHD) |
$506 |
see above note |
-27.7 |
-96.0 |
17% |
|
|
Distribution policy |
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. Initial quarterly distribution of $0.24 per unit, or $0.96 per unit on an annualized basis |
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. 4% on an annualized basis, which may increase based on AHD’s incentive distribution rights |
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2.0% general partner interest in Atlas, which entitles it to receive 2.0% of the cash distributed by |
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Atlas; all of the incentive distribution rights in Atlas, which entitle it to receive increasing |
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percentages, up to a maximum of 48.0%, of any cash distributed by Atlas as it reaches certain |
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target distribution levels in excess of $0.42 per Atlas unit in any quarter; |
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Note: The general partner APL pays out at an 8.3% annual rate |
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AHD is not an operating company |
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. Owns and controls Atlas Pipeline Partners GP, LLC, the general partner of Atlas Pipeline |
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Partners, L.P. (NYSE: APL), through which AHD owns certain general partner interests, all the |
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incentive distribution rights and 1,641,026 common units of Atlas Pipeline Partners, L.P., |
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|
representing 12.6% of the outstanding common units of Atlas Pipeline Partners, L.P. |
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. AHD does not have any other assets |
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Parental lineage |
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Overall parent |
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. Atlas America Inc. (ATLS), $810 mm market cap |
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|
. ATLS is engaged in the development, production, and transportation of natural gas and oil in |
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western New York, eastern Ohio, western Pennsylvania, and Tennessee. |
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Immediate ‘parent’ |
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Atlas Pipeline Partners (NYSE: APL) $510mm market cap |
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|
. APL transports natural gas from it wells to interstate pipelines and end users, as well as operates |
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|
a natural gas processing facility. |
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|
Use of $79.2mm in IPO proceeds |
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Substantially all of the net proceeds to overall parent Atlas America, NYSE:ADH |
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NewPage Holding |
NWP, C, 5 |
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large coated paper manufacturer |
Post-IPO shrs: 61mm |
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|
Dayton, OH |
Leveraged buyout |
Mar 31 qtr |
IPO Mkt |
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|
Revenue ($mm) |
Proforma for March quarter |
$507 |
Cap (mm) |
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|
Gross profit % |
8.5% |
$915 |
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Net income ($mm) |
-50.0 |
@$15 |
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Pre-tax interest (($mm) |
28.0 |
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|
Net income % |
-9.9% |
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VALUATION RATIOS |
IPO Mrkt |
Price / |
Price / |
Price / |
Price / |
% offered |
|
Cap (mm) |
Sales |
Earnings |
BookValue |
TangibleBV |
in IPO |
|
|
NewPage Holding NWP |
$915 |
0.5 |
-5 |
0.5 |
2.6 |
33% |
|
SCORECARD |
Mgt |
Market |
Market Do- |
Proprie- |
Total |
|
|
1-5, 5 is high |
Growth |
mination |
tary |
rating |
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|
20 is perfect |
1 |
1 |
2 |
1 |
5 |
|
|
Comments: One of the lowest gross profit margins we have seen, which is in spite of recent price |
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|
increases. Notice that interest payments account for half of the loss. |
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Dividend policy |
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Annual rate of 3% of IPO price per share |
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Business |
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|
. NWP believes that it is the largest coated paper manufacturer in North America, based on |
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|
production capacity. |
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. Operates four integrated pulp and paper mills in Kentucky, Maine, Maryland and Michigan |
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|
which, together with our distribution centers, are strategically located near attractive end-use |
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|
markets, such as New York, Chicago and Atlanta. |
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. NWP mills have a total annual production capacity of approximately 2.2 million short tons of |
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|
coated paper and approximately 200,000 short tons of market pulp. |
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The leveraged buy-out |
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|
On January 14, 2005, Escanaba Timber LLC, or Escanaba Timber, which prior to the Offering |
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Transactions was NWP’s direct parent, and MeadWestvaco entered into an equity and asset |
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|
purchase agreement, referred to as the "purchase agreement," pursuant to which NewPage |
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Corporation and its subsidiaries acquired the coated and carbonless papers group of MeadWestvaco |
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|
. NewPage Corporation and its subsidiaries paid approximately $2.06 billion for MeadWestvaco’s |
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|
Coated and Carbonless Papers Group, excluding fees and expenses, of which $1.96 billion was |
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|
paid in cash and $100 million was paid in the form of the Floating rate senior PIK Notes |
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|
. See Sources & Uses below |
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Sponsor |
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Founded in 1992, Cerberus comprises one of the largest private investment firms in the world with |
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in excess of $18 billion of capital under management. Cerberus invests in divestitures, |
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|
turnarounds, recapitalizations, financial restructurings, public-to-privates and management |
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buyouts in a variety of sectors. Some of Cerberus’ past investments in the wood products or |
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manufacturing industries include: BlueLinx, formerly Georgia Pacific’s building products |
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distribution division; Formica Corporation, a producer of decorative surfacing; and Peguform |
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Group, a manufacturer of plastic parts for the automotive industry |
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Products |
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. Coated paper is used primarily in media and marketing applications, including corporate annual |
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reports, high-end advertising brochures, magazines, catalogs and direct mail advertising. |
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|
. NWP’s largest product category is coated freesheet paper, which is used primarily for higher-end |
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|
applications such as annual reports, brochures, coated labels and magazine covers. |
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|
. The remainder of NWP’s coated paper is coated groundwood paper, which is used primarily for |
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|
catalogs, magazines and textbooks. |
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|
. NWP also produces uncoated paper, digital printing paper and market pulp, a component used in |
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|
the manufacturing of paper. |
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Customers |
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|
. NWP has long-standing relationships with many leading publishers, commercial printers, |
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|
specialty retail merchandisers and paper merchants. |
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|
. Key customers include: Hearst Publications, McGraw-Hill Companies, Pearson Education and |
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|
Time, in publishing; Banta Corporation, QuadGraphics, QuebecorWorld and RR Donnelley, in |
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commercial printing; Williams-Sonoma, in specialty retailing; and xpedx and Unisource |
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|
Worldwide, which are paper merchants. |
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|
Pricing trends |
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|
. Since mid-2004, coated paper pricing in the U.S. has strengthened. NWP’s weighted average |
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|
coated paper prices rose from $797 per ton in 2004 to $872 per ton in 2005, an increase of 9%. |
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|
. During the first quarter of 2006, NWP announced a further $50 per ton price increase on most |
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|
coated paper grades. As a result, NWP’s weighted average coated paper prices rose further to $886 |
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|
per ton during the first quarter of 2006. |
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|
. NWP announced an additional price increase in early June 2006, which is expected to begin to |
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|
take effect in the third quarter of 2006. |
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|
Competition |
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|
In North America, competes with both local coated paper production and imports from non-North |
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|
American sources, principally from Europe and Asia. |
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|
. Primary competitors with North American coated paper manufacturing operations are |
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|
International Paper Company, Sappi Limited, Stora Enso Oyj and UPM-Kymmene Corporation. |
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|
Import trends |
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|
. Since 2004, imports of coated paper have been rising at a slower pace than from 2000 through |
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|
2003. NWP believes that this is largely due to an increase in demand in the Asian markets and a |
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|
slowdown of European supply growth combined with an increase in demand in the European |
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|
markets and less favorable exchange rates for European producers. |
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|
. For 2005, imports into the United States were down slightly from 2004 primarily as a result of |
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|
strikes in Finland and at the Miramichi mill in Canada and slightly lower demand. |
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|
. NWP believes that North American coated paper imports will continue to increase |
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|
China |
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|
. New capacity that is expected to be brought online in China over the next few years is expected |
||||||
|
to be used primarily to satisfy Asian demand. However, if this capacity is not used to primarily |
||||||
|
satisfy Asian demand, imports into North American could further increase. |
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|
Sources & uses of overall proceeds |
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|
Sources ($mm): $1,297 |
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|
. Common stock proceeds: $300 |
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|
. New term loan senior secured credit facility: $750 |
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|
. New revolving senior secured credit facility: $22 |
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|
. Hydroelectric generating facility sale proceeds: $144 |
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|
. Carbonless paper business sale proceeds: $81 |
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|
Uses: $1,297 |
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|
. Note repayment: $1,208 |
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|
. Partial stock repurchase: $60 |
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|
. Fees & expenses: $29 |
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======================================================= |
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