UPDATE: Bank of America Reiterates on Eagle Rock Energy Partners LP After Cash Distribution is Suspended
In a report published Thursday, Bank of America analyst Gabe Moreen reiterated a Neutral rating on Eagle Rock Energy Partners LP (NASDAQ: EROC), but lowered the price target from $6.50 to $5.50.
In the report, Bank of America noted, “Yesterday after market close, EROC announced a suspension of its quarterly cash distribution, due largely to a timing delay around the closing of the divestiture of its midstream assets to Regency Energy Partners, LP (RGP). EROC previously received a second request for additional information on 27 February 2014 from the Federal Trade Commission (FTC) in connection with the RGP-deal. Due to the potential delay in the RGP deal closing, EROC was bumping up against balance sheet constraints.
"In our view, the distribution suspension is a negative and another blow to weary EROC investors that already endured a previous cash distribution cut and unit price underperformace. That said, we believe the decision prudent in light of EROC's current high debt levels – which should be alleviated upon completion of the RGP deal – and the limited duration of EROC's existing debt covenant modifications. We maintain our Neutral rating.”
Eagle Rock Energy Partners LP closed on Wednesday at $4.85.
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