Question-and-Answer Session
Operator
The phone lines are interactive so if you have a question, please ask your question.
Unidentified Analyst
Why is it that High Sierra’s valuation was not substantially lowered in computing the book value? And also given that they’re paying in kind rather than in cash, is this not going to have a substantial affect on the next distribution?
Edward Russell
Well, we have a set procedure for how we value these companies using a number of procedures and when we ran through that based on the financial performance of the company which we had said was above budget, we made an adjustment to the valuation. But really the SemGroup issue was what we thought is really a one-time event. That company’s bankruptcy caught the entire market by surprise and we don’t think that High Sierra was doing anything that wouldn’t have been considered prudent by extending them trade credit.
In our analysis that we do and then we also have an independent company confirm that analysis, we believe that the fundamental value of High Sierra is still intact and that they will return to paying cash distributions. We’re still waiting for confirmation by the company. They have expressed that they have the ability to pay the cash distribution next quarter and are just waiting to finish negotiations with their bank.
Unidentified Analyst
So do you have a prediction about the current distribution that’s going to be announced in the future, some guidance?
Edward Russell
Do I have a prediction for TTO?
Unidentified Analyst
Yes, some guidance you might be able to give us on this situation?
Edward Russell
We typically do not provide that kind of information. But, I wouldn’t consider the High Sierra company, whether they would do a [PIC] for another quarter to be having a material effect on TTO. And I definitely believe that any issues regarding this and the bank approval right now to be an event that would not be long lasting.
Unidentified Analyst
You did a nice job out here outlining sort of Mowood and they have the three types of facilities, the high BTU, the direct use and I guess the electric generation. Can you say exactly what a high BTU facility is and a direct facility is?
Edward Russell
Sure. The first facility, high BTU would be capturing the landfill gas and then bringing it up to pipeline quality. That can involve either in some cases just simply cleaning it or mixing it with pure natural gas and then you’re injecting it in to a pipeline say Southern Star. Direct use would be cleaning the gas and putting it in to typically a commercial customer like their boiler.
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