9 replies to this topic

[PorkLoin]

ATP/UN.TO (ATPWF in the U.S.) is classified as an income deposit security, not a royalty trust. Thus it's exempt from the new taxation rules that as of now are to take effect in 2011.

Yielding 10.7% Wish I'd bought more yesterday. It got affected by the panic about trusts though it's not going to be affected. Generating power, selling it and transmitting it is a steady business, and ATP isn't as risky as companies producing oil and natural gas. I think that as people sell royalty trusts money will flow to ATP.

From its website: Atlantic Power Corporation (TSX: ATP.UN) owns interests in and manages a diversified portfolio of independent, non-utility power generation projects and one transmission line situated primarily in major U.S. markets. ATP sells electricity to utilities under long-term power purchase agreements designed to pass through fuel cost fluctuations. ATP is one of the largest and most diverse power income funds in the industry.

Atlantic Power Corporation partners with experienced firms who operate and maintain its power projects. These firms typically have invested equity alongside Atlantic Power Corporation. Atlantic Power Corporation is sponsored by ArcLight Capital Partners, LLC, one of North America’s leading private equity investment firms. Focused exclusively on the electric power and energy sectors, ArcLight has more than $4.6 billion in assets under management.

Atlantic Power Corporation intends to provide investors with steady, sustainable and growing cash distributions by enhancing the operations of its facilities, optimizing the projects' contracts and through the accretive acquisition of additional interests in power generating, transmission, and other energy-related facilities.

Doug

[dasein]

Doug, thanks for the tip - but how does it turn 4.7 cents earnings into $1 dividend, without getting you concerned <G>? also agree with John - the trust idea was starting to be abused, so it ruined the party for everyone.... klh

[PorkLoin]

Hi Karen, ATP is one of the most conservative electric power trusts as far as dividend payout -- it's only putting about half its distributable cash from income into dividends. That 4.7% must be after dividends and expenses...? Doug

[dasein]

just the info from the TSE that it only earns 4.7 CD cents, but is paying a buck:

http://www.tsx.com/H...amp;Language=en

I know these trusts can do different accounting froim operating companies, so that may explain why it looks so strange....

klh

[PorkLoin]

Karen, it must be that the "earnings" are after the dividends are already paid. For 2005, ATP shows roughly $193 million in revenue, and paid out about $45 million in dividends. That leaves roughly $148 million. Earnings before interest and tax was $22 million, and a loss of $509,000 was shown, just over a penny per share, so things are pretty finely balanced. After the dividends and interest and tax, about $125 million remains to be accounted for. The cost of operating the business is going to be a certain amount, plus ATP has been expanding, and the cost of acquisitions will be in there too, though it doesn't all go directly to the bottom line, and can be financed by debt. For some trusts, they had to maintain a high-pecentage payout of distributable cash to be considered "flow-through" entities, to keep the reduced-tax status. For an "income deposit security" I don't know what the rules, if any, are. If we take the $193 million, subtract $23 million for interest & tax, there's $170 million left. From other sources I have the payout of distributable cash as right around 50%. Thus, I'd say $90 million is what's left of the $170 million after fixed costs. If the indicated current $2.5 million loss (4.65 cents per share for ~ 53,000,000 shares) is the actual bottom line then a small reduction in expansion or dividend payments would balance it out. It'd be less than a 5% cut in the dividend rate. Issuing more shares is often used if such "balance" is really necessary, too. You see a lot of apparently screwy figures for these type of companies. Expenses and dividends usually add up to just about all revenue, but one still sees very low Price/Earnings ratios listed, as if dividends are not considered costs. Yet they have to be, to arrive at the very small stated profits, or, as in the case with ATP, a small loss. Doug

[PorkLoin]

Still pretty much on-track. Yielding 9.7% It's an "income fund" or "income deposit security" rather than a trust, and is 100% exempt from the new taxation rules on trusts proposed by the Canadian government.

[vitaminm]

ATP.un

http://finance.yahoo...N.TO&...0&a=&c=

http://finance.yahoo...&...;f=2007&g=v

[PorkLoin]

Yo Vitaminm, my opinion is that a good bottom was made in July and then tested on November 1st -- very precisely even while the market was in panic mode. It's not the most bullish chart in the world but the good dividend and the lower risk with electric power (versus oil and gas) and APC's business plan in general are a large factor for me. We can certainly say the trend is down since the late December high, but the MACD histogram has begun going back up a little. I'm not trying to time this one in the short-term, and it could easily go down more, but it's also one I wouldn't think of getting rid of. Best, Doug

[mss]

I think it is a low risk high reward, but I could be wrong.

[PorkLoin]

Scott, I agree, but my focus is long-term, potentially even past what would be a coming recession for North America. If the dividend was 2% or 5%, I wouldn't feel the same way. Dawg