UPDATE 3-Quicksilver to take Barnett shale MLP public
* To raise up to $250 mln
* Plans to list common units on NYSE under the symbol "QPP"
* J.P. Morgan, Credit Suisse are underwriting IPO
* Quicksilver Resources shares fall 5 pct in early trade
By Swetha Gopinath and Ashutosh Pandey
Feb 10 (Reuters) - Debt-laden Quicksilver Resources Inc plans to take its master limited partnership (MLP) public in a $250 million offering, to cash in on rising investor appetite for the high-yield paying corporate structure.
MLPs, which pay no corporate tax, have been favored by investors as they distribute most of their profits.
The natural-gas focused company, whose cash flows have been drained by plunging prices for the fuel, said it will generate about $400 million from the sale of units in Quicksilver Production Partners and debt assumed by the MLP.
"Generally we expect a very positive reception to this deal. We saw the enormous extent of liquidity available to MLPs in all markets," said Josef Schuster, founder of IPOX Schuster, a fund that specializes in investing in newly public companies.
Jefferies & Co analyst Subash Chandra said Quicksilver was betting on the MLP market holding up.
Quicksilver shares, which have lost two-thirds of their value in the past year, were down nearly 5 percent at $5.12 in midday trade on Friday on the New York Stock Exchange.
The shares have gained 29 percent in value since touching a year low on Feb. 1.
The partnership holds proved reserves of 430.4 billion cubic feet of natural gas equivalent in the Barnett Shale.
Quicksilver Production Partners, which was formed in November, did not say how many units it planned to sell or their expected price in a filing with the U.S. Securities and Exchange Commission.
"Quicksilver has advised us that it intends to use the cash consideration received for the partnership properties to retire a portion of its existing debt," the filing read.
Quicksilver Resources had debt of about $2.1 billion and cash and equivalents of $6.6 million as of September end, Thomson Reuters Data showed.
"We anticipate this transaction to be essentially neutral to cash flow for Quicksilver," Chief Executive Glenn Darden said on a conference call with analysts.
Natural gas prices have hit decade-lows, as output has soared, straining balance sheets of producers who typically outspend cash flow to fund expensive drilling projects.
"Investors may look over initial concerns regarding the parent company," Schuster said.
Quicksilver Production Partners said J.P. Morgan and Credit Suisse would underwrite the IPO. It has applied to have its common units listed on the New York Stock Exchange under the symbol "QPP."
The amount of money a company says it plans to raise in its first IPO filings is used to calculate registration fees. The final size of the IPO could be different.
- Islamic State video purports to show beheading of U.S. journalist |
- Police move against protesters as calm dissolves in Ferguson, Missouri
- 'No' from one Iraq villager triggered Islamic State mass killings |
- Advancing Ukraine troops take fight to heart of pro-Moscow rebellion |
- Islamic State says beheads U.S. journalist, holds another