Independent oil and gas company Linn Energy LLC (NASDAQ: LINE) today priced an IPO of its wholly owned subsidiary LinnCo LLC (NASDAQ: LNCO) at $36.50 per common share. The company had earlier said that it would price LinnCo shares within 5% of the closing price of Linn’s closing price on the day before the IPO.
The implied range based on Linn’s statement was $38.01 to $42.01 based on last night’s closing price of $40.01 for Linn’s common units.
Each share of LinnCo represents one common unit of Linn, which is structured much like a master limited partnership (MLP). LinnCo shareholders will own 13.2% of Linn.
By structuring LinnCo as a corporation, Linn hopes to attract institutional investors and pension funds that are often unable to buy into partnerships. MLPs often dodge this restriction by offering publicly traded shares in their general partners. Linn, which does not have a general partner, chose this spinoff as its alternative.
Linn’s current distribution to common unitholders totals $2.90 annually. If the company maintains that level of payouts, LinnCo shareholders will receive $2.75 to $2.84 after taxes.
Shares of Linn are up about 1% at $40.40 this morning in a 52-week range of $34.43 to $42.25.
Shares of LinnCo are up about 2% at $37.24 on volume of 6 million shares.
Paul Ausick
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