Atlas Resource amends consent bid for 7¾% notes due 2021

By Susanna Moon

Chicago, Dec. 29 – Atlas Resource Partners, LP said it amended the consent solicitation for $375 million of 7¾% senior notes due 2021 issued by Atlas Resource Partners Holdings, LLC and Atlas Resource Finance Corp.

As previously reported, the issuers are seeking consents to increase the fixed dollar amount of secured debt allowed to be incurred under the indentures.

The consent fee is $10 for each $1,000 principal amount of notes.

Some “significant holders” agreed to give their consents in the solicitation with the amended terms, bringing the tally of consenting holders to about 97%, according to a company press release on Tuesday.

The issuers are now requesting consents from the holders to make the following amendments:

• Double the amount of secured debt allowed under credit facilities to $1 billion from $500 million. The issuers originally had asked to increase the amount to $1.05 billion from $500 million.

The use of secured debt incurred under the basket in exchange for the 7¾% notes or the issuers' 9¼% notes will be limited to a maximum amount of $100 million, and the issuers will be required to make any offer to exchange the 7¾% notes for secured debt of the issuers incurred under the basket to all holders of the 7¾% notes on a pro rata basis and to make any offer to exchange the 9¼% notes for secured debt of the issuers incurred under the basket to all holders of the 99¼% notes on a pro rata basis;

• Add an additional covenant providing that the company will not permit its consolidated senior secured interest expense to exceed the greater of $80 million in any fiscal year or 8% of the consolidated senior secured debt outstanding. For the 12 months ended Sept. 30, consolidated senior secured interest expense was about $43 million.

In addition, the issuers will add a corresponding event of default providing that failure to comply with the covenant will constitute an immediate event of default; and

• Add a prohibition for certain make-whole payments: Any debt incurred after Dec. 1 that contains a provision for a make-whole payment, yield maintenance payment, redemption or repayment premium, or any other premium, fee, or penalty that is payable upon the repayment, maturity or redemption of the debt will explicitly provide that the make-whole premium will not be payable after and during the continuance of an event of default, upon the automatic or other acceleration of the debt prior to its stated maturity date, or after the commencement of a case under bankruptcy law.

With the added support of noteholders, the company said it now expects to have the support of more than 97% of the holders of the 9¼% notes for that consent solicitation. And so the issuers have decided to pay the consent fee for the 9¼% notes solicitation to all holders as of the record date, the press release noted.

More details

The consent solicitation was set to end at 5 p.m. ET on Dec. 29, previously extended from Dec. 23 and Dec. 21. The solicitation was originally set to end Dec. 17.

As of 5 p.m. ET on Dec. 22, Atlas had received consents from holders of about 46% of the outstanding 7¾% notes, including those from five of the six largest institutional holders, which remained unchanged since the initial deadline.

Atlas also sought to amend the issuers’ $375 million of 9¼% senior notes due 2021 and secured the needed consents by the end of the solicitation at 5 p.m. ET on Dec. 17. The consent solicitation was announced Dec. 10.

To pass, each consent solicitation requires consents from holders of a majority of the notes. The record date is Dec. 9.

The consent solicitations are independent of each other.

The solicitation agent is Wells Fargo Securities, LLC (866 309-6316 or 704 410-4760). The information agent and tabulation agent is D.F. King & Co., Inc. (800 814-9324 or 212 269-5550).

Atlas Resource Partners is an exploration and production master limited partnership based in Fort Worth.

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