NuStar Energy LP, the pipeline operator that sold its refining business this year, fell the most in three months after an analyst said a canceled purchase puts it at risk of cutting payments to investors.
The units declined 6.9 percent to $47 at the close in New York, the most since Nov. 12.
NuStar may have to cut the distribution it pays to unitholders after its plan to buy assets from closely held TexStar Midstream Services LP was canceled, Brett Reilly, an analyst for Credit Suisse Group AG, wrote in a note to clients today. Credit Suisse downgraded the units to the equivalent of sell from hold.
“We have no intention of cutting our distribution,” Mary Rose Brown, a spokeswoman for San Antonio-based NuStar, said in an e-mailed statement. “We are confident that we can cover the distribution in the fourth quarter of 2013 and in 2014.”
NuStar agreed in November to buy assets from TexStar in two separate transactions for $425 million. The company received a letter from TexStar on Feb. 18 purporting to cancel the sale of a natural gas liquids pipeline and processing assets, according to a March 1 filing.
TexStar doesn’t have the right to end the agreement, and NuStar is “evaluating all of our legal options,” the company said in the filing.
Rob Liddell, a spokesman for San Antonio-based TexStar, didn’t immediately return a call seeking comment.