NEW YORK, April 30 (Reuters) - Shares of PAA Natural Gas Storage LP opened nearly 5 percent above their initial public offering price and traded up on Friday as its shareholder payout drew investors.
The shares opened at $22.50 and rose as high as $23.79 on the New York Stock Exchange before falling back later in the morning to $23.39, up 8.8 percent.
The company sold 11.72 million shares for $21.50 each on Thursday, raising about $251.98 million. It had planned to sell 10 million shares between $19 and $21.
'People gravitated to this deal because of the yield,' said IPO Boutique Senior Managing Partner Scott Sweet. Sweet calculated the minimum quarterly distribution to shareholders at just above 6 percent based on the IPO price.
'That's a nice dividend compared to what you're getting in savings right now,' he said.
Houston-based PAA Natural Gas Storage owns and operates two natural gas storage facilities in Louisiana and Michigan and sometimes leases additional capacity and pipeline transportation from third parties. Nearly all of its revenue comes from providing fee-based storage services under multiyear contracts.
PAA Natural Gas Storage said it would use proceeds from the IPO along with additional credit to pay back its owner, Plains All American, and for general purposes.
PAA Natural Gas had $451 million worth of debt outstanding to Plains All American as of Dec. 31, with a fixed interest rate of 6.5 percent.
Underwriters on the PAA Natural Gas offering were led by Barclays Capital, UBS Investment Bank , Citi and Wells Fargo Securities.
(Reporting by Clare Baldwin; Editing by Lisa Von Ahn) Keywords: PAA/IPO (clare.baldwin@thomsonreuters.com; Reuters Messaging: clare.baldwin.reuters.com@reuters.net; +1 646 223 6189) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
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