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Contributors: Douglas McIntyre Jon C. Ogg

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Wednesday, September 20, 2006

Hiland Holdings GP, A Complex IPO

Stock Tickers: HPGP, HLND

This morning we will have an IPO start trading. Hiland Holdings GP (HPGP) priced 7 million units at a price of $18.50. That was in the middle of the range.

Lehman acted as the sole book runner on the deal; and Co-managers include A.G.Edwards, Wachovia, Raymond James, RBC Capital, and Sanders Morris Harris.

This IPO is a bit odd, to say the least. The company upon the IPO will own a 2% general partner interest, all of the incentive distribution rights, and 57% of the limited partner interests in Hiland Partners LP (HLND) is involved in gathering, compressing, dehydrating, treating, processing, and marketing natural gas; and fractionating natural gas liquids. It also provides air compression and water injection services for oil and gas secondary recovery operations.

Usually we look long and hard for backdoor plays into IPO’s, but can there be such a thing as a reverse-backdoor play?

Hiland Partners LP (HLND) has been public less than 2-years, and is very thinly traded. It also has not had much activity or volatility.

Jon C. Ogg
September 20, 2006

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