Pengrowth adds capital

Article Excerpt

PENGROWTH ENERGY TRUST $10.26 (Toronto symbol PGF.UN; Units outstanding: 289.0 million; Market cap: $3.0 billion; SI Rating: Average) has sold 28.8 million trust units to the public for $10.40 each. The sale generated roughly $285 million. Pengrowth will put this toward its $1.4-billion long-term debt, which is 48.3% of its $2.9-billion market cap. The new units increased the total outstanding by roughly 11%. However, lowering its debt will help Pengrowth keep paying its monthly distributions of $0.07 a unit, for an 8.2% yield. The trust’s distributions account for just 54% of its cash flow, so they seem secure. Pengrowth also has $3.0 billion in tax losses that it can use to defer Ottawa’s new trust tax until 2013. The tax takes effect in 2011. The units trade at 4.7 times Pengrowth’s estimated 2009 cash flow of $2.20 per unit. Pengrowth is still a buy. buy…