NEW YORK (TheStreet) -- I was talking to Jim Cramer today about the big move by Richard Kinder, consolidating his empire of master limited partnerships into the "mothership" company, Kinder Morgan (KMI) .
Kinder is abandoning the MLP structure he helped pioneer, largely because he’s been a victim of his own success at it, owning more and more of a percentage of the sub-corporation’s shares and consequently the lion’s share of the distributions that have been made.
This has kept KMI’s subordinated debt at an extremely high level, constrained cash flow and stopped Kinder from making further big deals to increase the size of his pipeline, processing and storage network.
In essence, Kinder Morgan had grown too big to continue to benefit from the MLP structure he helped create.
Only very large MLP entities might benefit from a similar move, restructuring to once again become a C – corporation with regular dividends and not distributions. Of the few candidates, I think Energy Transfer Equity (ETE) and Energy Transfer Partners (ETP) is most likely.
ETP continues to have a tremendous growth profile, the most important sustaining necessity for a great MLP and has continued to increase its distribution regularly. Even without a restructuring, ETP’s 6.6% distribution remains very tasty in this low rate environment.
I talk more about the Kinder Morgan deal with Jim in the video above.
At the time of publication, the author was long ETP, MWE, although positions may change at any time.