Atlas Resource Partners on Course for Quick Resolution of Bankruptcy Case
2:56 pm ET July 29, 2016 (Dow Jones) Print
By Stephanie Gleason
Atlas Resource Partners LP is on course for a lightning-quick bankruptcy case, winning court approvals to continue operating under chapter 11 protection and further its goal of completing its restructuring by Labor Day.
Judge Sean Lane of the U.S. Bankruptcy Court in Manhattan on Friday granted Atlas's request to spend $17 million in cash it has on hand to fund its operations, in addition to a number of other approved requests that allow the company to pay bills and employees, as well as manage its cash.
Judge Lane also set a tentative date of Aug. 26 to consider Atlas's bankruptcy-exit plan, although that date will be nailed down next month.
Atlas filed for bankruptcy proceedings on Wednesday, with a fully prepackaged bankruptcy agreement in hand. The deal would slash $900 million in debt from the oil and gas producer's books and has the support of 90% of the company's debtholders, including 33 separate lenders and bondholders, the company's lawyers said during the hearing on Friday.
Atlas lawyer Ron Meisler of Skadden, Arps, Slate, Meagher & Flom said the company is one of 85 oil and gas exploration companies to falter under the weight of what he called an "epic downturn."
But the company is one of only a handful that has been able to execute a fully prepackaged bankruptcy, meaning creditors already have voted formally to accept the restructuring plan, he said. The ability to complete this feat is "a vote of confidence for the debtors' assets and management team," he added.
Under the terms of the plan, two sets of bondholders would exchange $668 million in debt for a 90% ownership stake in the restructured company.
Atlas's current revolving loan, under which the company owes more than $670 million, would be repaid via the liquidation of its hedge positions, and a new $410 million facility would be provided when Atlas exits bankruptcy.
The holders of $250 million in junior loan debt would receive the remaining 10% equity in Atlas in exchange for an interest-rate reduction.
Upon completion of the deal, Atlas's tax status will change to a traditional corporation and its name will be changed to Titan Energy. Its current investors will see their stakes eliminated and could face a tax bill as a result of the company's debt elimination.
Atlas is based in Pittsburgh and has 14,000 producing wells in 17 states.
Write to Stephanie Gleason at stephanie.gleason@wsj.com
(END) Dow Jones Newswires
July 29, 2016 14:56 ET (18:56 GMT)
