Atlas Resource plan confirmed; Sept. 1 bankruptcy emergence expected

By Caroline Salls

Pittsburgh, Aug. 26 – Atlas Resource Partners, LP’s pre-packaged plan of reorganization was confirmed by the U.S. Bankruptcy Court for the Southern District of New York.

According to a news release, the partnership is expected to emerge from bankruptcy as Titan Energy, LLC on Sept. 1.

“Today’s confirmation was a favorable step on our path to restructuring, and we look forward to beginning a new chapter as Titan Energy, LLC,” chief executive officer Daniel Herz said in the release.

In the consent solicitation process, which was concluded on Aug. 23, Atlas said the plan was approved by 100% of its revolving credit facility and second-lien credit facility lenders, as well as holders representing 99% in value and 96% in number of its senior notes.

Plan terms

Under the plan, all suppliers, vendors, employees, royalty owners, trade partners and landlords will be unimpaired and will be satisfied in full in the ordinary course of business, and the companies’ existing trade contracts and terms will be maintained.

The company’s $668 million of senior notes will be converted into 90% of the common equity and proceeds from the sale of Atlas’ hedge positions in natural gas and oil will be used to reduce revolving credit facility borrowings.

In addition, cash interest on the second-lien term loan will be reduced to 2% as soon as the restructuring proceedings begin. Holders of this loan will receive 10% of the company’s equity.

Atlas Energy Group, LLC will receive a 2% economic interest in the restructured company as consideration for providing administrative management, operating and other services following the restructuring. The 2% economic interest will be represented by a preferred share of the new holding company.

The company’s revolving credit facility will be replaced by a new senior secured revolving credit facility with a $440 million borrowing base made up of a $410 million conforming tranche and a $30 million non-conforming tranche.

Redetermination of the borrowing base will be suspended until May 1, 2017. The revolver’s maturity will be pushed out to Aug. 23, 2019, except for the non-conforming tranche, which will terminate on May 1, 2017.

The $250 million second-lien term loan plus the accrual of PIK interest during the restructuring on the $250 million will be replaced with $250 million of secured term loans that will initially pay interest at 2% in cash and Libor plus 900 basis points in-kind. Starting May 1, 2017, interest will payable in cash and in-kind according to a pricing grid for 15 months. After the 15 months, interest will be payable in cash at Libor plus 900 bps.

The lenders will receive 10% of the company’s equity.

The company’s 7¾% senior notes due 2021 and 9¼% senior notes due 2021 will be exchanged for 90% of the company’s equity.

Holders of Atlas’ common and preferred units will receive nothing.

Perella Weinberg Partners LP is acting as financial adviser, and Skadden, Arps, Slate, Meagher & Flom, LLP and Paul Hastings LLP are acting as legal counsel to the partnership in connection with the plan.

Atlas Resource Partners is an oil and gas master limited partnership based in Fort Worth, Texas. The company filed bankruptcy on July 27 under Chapter 11 case number 16-12149.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.