isset to proceed with a restructuring plan that is expected to by about $900 million, afterwhich it will emerge as a restructured public corporation called Titan EnergyLLC.
Thepartnership reached a restructuring support agreement with all of its revolvingcredit facility lenders and second lien lenders and about 80% of its seniornote holders, according to a July 25 news release.
Under therestructuring plan, $668 million of Atlas' outstanding senior notes would beconverted into 90% of the common equity of the restructured company. Thus,senior note holders would get 90% of the common equity interests as payment forthe amounts owed. Proceeds from the sale of Atlas' natural gas and oil hedgepositions would be used to repay indebtedness under its revolving creditfacility.
The processwould also create a new senior secured revolving credit facility with a $440million borrowing basewith a conforming tranche of $410 million and a nonconforming tranche of $30million; a suspension of borrowing base redetermination until May 1, 2017; andan extension of maturity date to Aug. 23, 2019, with the nonconforming tranchematuring on May 1, 2017.
The secondlien term loan holders agreed to $250 million secured term loans. Cash interestexpense payable on the second lien term loan would be immediately reduced to 2%once the restructuring proceedings begin, and second lien term loan holderswould receive 10% of the restructured company's common equity. If completed,the restructuring would reduce interest expense by $80 million per year.
Asubsidiary of Atlas Energy GroupLLC would receive a 2% economic interest in the restructuredcompany for providing administrative management, operating and other servicesafter the restructuring. All of the partnership's existing common and preferredunit holders would not receive any of the equity of the restructured company,and all existing common and preferred units would be canceled.
After therestructuring, current Atlasexecutives Edward Cohen, Jonathan Cohen, Daniel Herz, Mark Schumacherand Jeffrey Slotterback will retain their positions as executive chairman,executive vice chairman, CEO, president and CFO, respectively.
Operationsat Atlas' oil and gas properties would continue with business as usual duringthe restructuring process. Atlas would still be paying in full its suppliers,vendors, employees and other trade partners during and after the restructuring,and all existing trade contracts and terms would be maintained.
Thepartnership plans to file for Chapter 11 bankruptcy protection on July 27.