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What happened

Unlike the rest of the energy industry, shares of Ferrellgas Partners (NYSE:FGP) declined a whopping 30% in November. The reason for the large plummet was that the distribution cut that investors were anticipating was much larger than what was previously announced.

So what

Back in September, Ferrellgas Partners delivered a trifecta of awful news: It posted a huge loss for the year, it was planning on cutting its distribution, and its CEO was unceremoniously stepping down. The distribution cut was announced because the company was not in compliance with some of its debt covenants, and it would need to free up some cash to pay its obligations. Initially, management announced that it would bring the company's payout to "approxamitely" $1 per share on an annual basis, which at the time constituted a cut of a little more than 50%.

Late last month, though, management announced the actual dividend: $0.40 per share. Since much of the market was assuming that $1 per-share payout, news of the $0.40 payout sent shares tumbling again.

Now what

Ferrellgas Partners may have seen a little bit of a bump recently thanks to an analyst upgrade, but anyone looking at the stock as a potential value investment needs to know that the company has a lot of house cleaning to do on its balance sheet before we see an increase in its payout. The company's propane distribution business is a pretty strong cash-generating asset, but a warm winter could put a bit of a damper on its results. Until we see a couple of quarters in which Ferrellgas lowers its debt levels and gets back in compliance with its debt covenants, it's probably best to just sit this one out.