Sprague Resources LP (a New Master Limited Partnership)
By: Tim McPartland,
Anticipated Offering Range $19-21.
Minimum quarterly distribution .4125/quarter
Sprague Resources LP, a New Hampshire based limited partnership is selling 8.5 million shares in an IPO at an anticipated $20/share offering price.
Sprague is a distributor of all types of refined products as well as natural gas in the far northeast United States. Unlike many fee based MLPs Sprague actually takes ownership of the product moving through their system (thus exposing them to price risk on the inventory).
Sprague also has a material handing business where they receive store and distribute salt, coal, cement etc. This is a fee based business.
Sprague has set a minimum quarterly distribution at .4125–or an initial minimum distribution of 8 1/4% (based on an IPO at $20).
Caution must be given on this IPO. While Sprague will be a large MLP (over 4 billion in sales) they have not earned their minimum distribution in some periods recently and when they do it is just minimally met.
Please read the prospectus below carefully before making any investment decision.