Atlas Resource Partners LP entered into a restructuring support agreement (RSA) with all of its revolving credit facility lenders, all of its second-lien lenders and about 80% of its senior noteholders in order to reduce its debt.
Atlas Resource Partners plans to emerge from the restructuring as Titan Energy LLC, which will be publicly traded. Titan Energy will be led by Ed Cohen, executive chairman; Jonathan Cohen, executive vice chairman; Daniel Herz, CEO; Mark Schumacher, president; and Jeffrey Slotterback, CFO.
The company said it will file for prepackaged Chapter 11 bankruptcy on July 27. The proposed restructuring plan is subject to court approval, the company added on July 25.
If the RSA is completed, Atlas Resource Partners’ debt will be reduced by about $900 million, and its interest expense will be reduced by $80 million, per year. Debt will be reduced through the conversion of the $668 million outstanding senior notes into 90% of the common equity of the restructured company when the RSA is completed, and from the proceeds of the sale of natural gas and hedge positions to make repayments under the revolving credit facility.
The company plans to operate its oil and gas properties in the ordinary course during the restructuring process.
Under the RSA, there will be a new senior secured revolving credit facility with a $440 million borrowing base comprised of a conforming tranche of $410 million and a $30 million non-conforming tranche. The borrowing base’s redetermination has been suspended until May 1, 2017, pending certain conditions. Its maturity date was extended to Aug. 23, 2019, and the nonconforming tranche will mature May 1, 2017.
The second-lien term loan is comprised of$250 million in secured term loans.
Holders of the senior notes will receive 90% of the common equity interests of the restructured company when the restructuring plan is fulfilled, in exchange for all amounts owed under the notes.
Under the terms of the RSA, the company’s existing common and preferred unitholders will not be entitled to any of the equity of the restructured company, and all existing common and preferred units will be canceled.
Perella Weinberg Partners LP is Atlas Resource Partners’ financial adviser. Skadden, Arps, Slate, Meagher & Flom LLP and Paul Hastings LLP are the company’s legal counsel.
Opportune LLP is the financial adviser, and Linklaters LLP is the legal counsel to the revolving credit facility agent.
PJT Partners is the financial adviser, and Latham & Watkins LLP is the legal counsel to the second-lien term loan lenders.
Centerview Partners LLC is the financial adviser, and Akin Gump Strauss Hauer & Feld LLP is the legal counsel to an ad hoc group of senior noteholders.
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