As things here look dismal, Calvin Coolidge once said, ”Nothing in the world can take the place of Persistence. Talent will not; nothing is more common than unsuccessful men with talent.
Genius will not; unrewarded genius is almost a proverb. Education will not; the world is full of educated derelicts.
Persistence and determination alone are omnipotent. The slogan 'Press On' has solved and always will solve the problems of the human race."
With that “Press On”; The key of persistence opens all door closed by resistance.
An open letter to the court. Use as you may!
Your honor, As an owner of ATP I do value the courts hard work in this case and with all due respect, the courts comment regarding “not putting humpty dumpty (ATP) back together again” is concerning to me.
To date the “rushed” asset sale to the dip lenders has not been approved and we see continuing improvements in the price of oil which has reached $105 a barrel. “Rigzone” reported recently of the “continued strong permitting environment in the U.S. Gulf of Mexico” and “U.S. Gulf of Mexico drilling activity will continue to rise”. Hardly diminishing market conditions!
ATP’s oil and gas assets continue to increase in value based on accepted industry standards and the courts comment appears to favor only one “creditor” group and the process of liquidation over reorganization, regardless of the increasing value of ATP’s assets and the increased market value of oil, if produced.
As you have found no issues with ATP managements “Sound Business Judgment”, others including myself have major issues with that judgment. As an ATP equity holder, an owner of the company if you will, I have serious concerns regarding my management not fulfilling their fiduciary responsibilities to me as required by state and federal laws and their actions during this case related to “best value of the estate”.
The rushed asset sale failed to deliver results of “Value”. Even with this fact, my management has recommended this path of liquidation and abandonment over reorganization leaving my company insolvent. As I find this very puzzling and I ask why this path!
As disclosure issues appear to be of concern in most bankruptcy courts, we as equity holders, owners of the company, have learned in the court hearings, the dip lenders would not allow the use of funding for any reorganization effort by ATP management including revenues generated by ATP. The court will recall a press release at the start of this case issued by the company in August 2012, in that release ATP management declares;
ATP has obtained a commitment for $617.6 million of debtor-in-possession (DIP) financing from members of its existing senior lender group, which will provide $250 million of additional funds and refinance into the DIP facility the amounts owed to those existing first lien lenders that participate in providing additional funds. Upon approval by the Bankruptcy Court, the new financing and cash generated from ATP’s ongoing operations will be used to support the business and ATP’s efforts to negotiate and implement a reorganization plan acceptable to its stakeholders.
What we have now learned in the court hearings is very concerning. How could a reorganization plan be developed if funding for this activity was never provided for? This important disclosure was never made public to equity holders and if the ad hoc committee members were aware of this condition they were restricted from disclosure as they could tell me “nothing” that wasn’t released by the court. Without this fundamental disclosure; this chapter 11 case has been cloaked as total asset liquidation, liquidation that would be easier achieved through a 363 sale.
One would think “Sound Business Judgment” would include management fulfilling their fiduciary responsibility to the company owners with public disclosure of this condition of the dip loan. We have now learned that liquidation and abandonment was the order of the day, cloaked in nondisclosure and leaving the company insolvent.
It is surprising to me that the court found no issues with ATP managements “Sound Business Judgment” as this analysis should be objective and not subjective. With all due respect, I ask the court; in using Sound Business Judgment “objective analysis”, is there an acceptable level of incompetence, a free pass so to speak, because of management’s choice in not disclosing all of the facts? I ask the court, using sound business judgment, how could one find replacement DIP financing if a reorganization plan was not developed because of funding, as we have learned. Is it sound business judgment to expect lenders to give “anyone” a billion dollars without a plan?
ATP management in court documents state they could not find replacement funding, in fact they could not find any funding except the DIP lenders. How could any business find such funding without a plan? This is hardly sound business judgment when you learn the facts.
Does management get a free pass by the court in their “late” disclosure to the court that the dip lenders would not fund any reorganization effort, therefore no public disclosure that a reorganization plan was not going to be developed? Sound business judgment or deliberate intent cloaked by nondisclosure, but failure to disclose to the owners of the company these facts is not Sound Business Judgment when public statements document; ATP’s efforts to negotiate and implement a reorganization plan acceptable to its stakeholders . This is the total disregard of management’s fiduciary responsibilities to the owners of the company. This court may feel these issues are not the responsibility of the Bankruptcy court, but sir, these issues are related to Sound Business Judgment and one’s objective analysis of that judgment.
ATP management should have disclosed that the DIP loan would not provide funding for any reorganization effort and liquidation of the company’s assets was the only option. Instead ATP’s management reported “Upon approval by the Bankruptcy Court, the new financing and cash generated from ATP’s ongoing operations will be used to support the business and ATP’s efforts to negotiate and implement a reorganization plan acceptable to its stakeholders.”
Objective analysis of sound business judgment has to remove the cloak of nondisclosure. We discover by reading court documents, “after the fact” of managements issues in making sound business decisions. We now understand why Gomez failed, the ownership structure of the Gomez oil and gas production. Of course history shows us ATP’s current management has used questionable business judgment in the past, proven “Bad” business decisions. They have blamed the Gomez failure on the “greed” of the folks who purchased the production interest they in fact sold to them. So now, without the Gomez production everyone who owns an interest in that production has lost. Hundreds of millions of dollars lost in the cloak of nondisclosure. ATP management declares they tried to negotiate a deal with production owners. How could anyone agree to a restructure their ownership, if a reorganization plan was never done? Is it sound business judgment to expect the other production owners just to give back their interest? We have learned in court documents ATP’s ownership in Gomez production was merely 20% as they sold off the balance. Gomez production owners will receive nothing after Gomez has been abandoned; they knew that and still no deal. How does one objectively evaluate sound business judgment without knowledge of all the facts? I would hope that the court has not used subjective analysis, as salesmanship plays a big part in that analysis.
As investors in publicly held companies we trust those folks managing our companies and they are paid quite well for that responsibility. We also trust the courts to insure our rights as “owners” are protected from the “professional managers”. Therefore, in this case, are their actions in the best interest of the estate. As an owner of ATP and with more information being disclosed, I question ATP’s management in using sound business judgment and making business decisions based on that judgment.
How does any competent management explain SEC filings that state the “Gross Value of Assets” at billions of dollars and then history of their “Sound Business Judgment” decisions allow those assets to be liquidated for substantially less? How does any competent management explain SEC filings that show hundreds of millions of dollars of asset value being abandoned? If ATP management has used sound business judgment in there liquidation plan vs. a reorganization plan, they have singlehandedly proven oil and gas assets really are not worth what they are advertised in SEC filings. This in itself defies all objective logic, if one path does not deliver value is it sound business judgment to continue down that path? Or does sound business judgment suggest a different path, a path of reorganization.
Sound business logic would suggest that the 80% ownership interest in the Gomez production (non ATP interest), might have had an interest in signing over that ownership interest to APT if they were to receive an ownership position in the reorganized company. Of course there would need to be a reorganized company for this to happen and as we now know the DIP lenders will not allow funds for this activity, but will allow $15 million to get their purchase of valuable ATP assets closed, as these assets are increasing in value daily.
Sound business judgment, has the court been fooled by the act of “salesmanship” where only half of the story has been told? Or has the court known from the beginning that asset liquidation and the abandonment of assets was going to be the only action ATP’s management was going to pursue and then deemed that course of action from the beginning as sound business judgment?
With current oil prices at $105 a barrel and the increased value of ATP oil and gas assets, it is difficult to understand the logic in the courts comment regarding “not putting humpty dumpty (ATP) back together again. We have two path’s, the one we are traveling has now reached a very deep canyon and we are standing at the edge of the cliff, as the court has said we are not going back, some suggest we just jump off into the canyon. Sound logic would suggest this path doesn’t work and we turn around and travel the second path. Sure it may require more time and energy, but what would be in our collective best interest, to jump or travel the other path. Then we are reminded by those that want us to jump, they never provided funding to travel that other path, so now everyone just line up and jump, as the Dip Lenders have reached the end of their path, with more value than they had four months ago.
In closing I would ask the court to reconsider as sound business judgment is a very objective analysis and disclosing only half the facts to support ones salesmanship skills to the court becomes very subjective. Hopefully the court will not be fooled.
With all due respect, someone has let the cows out of the barn; and as an owner of those cows, I believe it is not too late to get these cows back into the barn. If anyone were to suggest that reorganization plans have not been submitted to the court would be factually wrong, as I have submitted a plan that could see a successful reorganization if one were just to commit the time and energy to make the plan work.
I ask, is it in the best interest of the court or the best interest of the estate to approve the liquidation and abandonment of valuable ATP assets when those assets have been proven to be more value today. I hope the court is not asking us to jump off the cliff, only because of the time and energy that has been put into this case.
Best regards,
