No One Left Behind – Equity Follow-on Award West

The follow-on equity offering is an essential tool in the Master Limited Partnership’s (“MLP”) toolkit. MLPs must grow and the source of that growth, generally, is the MLP’s parent company which inventories assets that are subsequently dropped down to the partnership. In most cases, the parent can transfer the associated loan with the asset, leaving an equity shortfall. But that is not a problem for these serial equity issuers. Retail investors can’t get enough of these high yielding shares. After all the revenues are visible and contracted over the long-term and, but for some reserves, all the cash flow is paid out as dividends. And with each dropdown the dividend paying capacity increases.

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