Atlas Energy Files Form 10 for Spin Off

(Market Cap $1.9B)

Atlas Energy, L.P has filed a Form 10 registration statement with the SEC in connection with the previously announced spin-off of ATLS’s non-midstream assets.  The distribution of Atlas Energy Group units to the ATLS unitholders is expected to be completed during the first quarter 2015, subject to the satisfaction of certain conditions outlined below.

Assets to be Initially Held by Atlas Energy Group

Atlas Energy Group is expected to provide significant opportunities for ATLS unitholders to take advantage of the general partner interests it will hold in multiple enterprises and foster future expansion projects.

Atlas Energy Group’s assets at the time of the distribution are expected to consist of the following:

* 100% of the general partner interest and incentive distribution rights in its E&P subsidiary, Atlas Resource Partners, L.P. (NYSE: ARP), as well as ATLS’s approximately 24.7 million limited partner units in ARP;
* 80% of the general partner interest and incentive distribution rights, as well as ATLS’s approximately 2.5% limited partner interest, in ATLS’ E&P Development Subsidiary, which conducts operations in the Eagle Ford shale in the mid-continent region of the United States;

* a 16% general partner interest and 12% limited partner interest in Lightfoot Capital Partners, a business that incubates new master limited partnerships (MLPs) and invests in existing MLPs. Lightfoot owns the general partner interest, incentive distribution rights and an approximately 40% limited partner interest in Arc Logistics Partners LP (NYSE: ARCX), an independent U.S.-based energy logistics service provider; and
* Coal-bed methane producing natural gas assets in the Arkoma basin, which have net production of approximately 11.5 million cubic feet per day.

Anticipated Cash Distributions of Atlas Energy Group

Atlas Energy Group expects its initial annualized distribution to be $1.25 per unit based upon the cash flow generated from its interests in these assets. The information statement included in the Form 10 provides a detailed forecast of Atlas Energy Group’s cash available to support this distribution. Atlas Energy Group also plans to enter into a term loan of approximately $155 million to repay certain ATLS indebtedness that is currently allocated to ATLS’s non-midstream assets, resulting in a pro forma leverage ratio of approximately 2.0x.

Transaction Structure

Immediately prior to the closing of the previously announced acquisition of ATLS by Targa Resources Corp. (TRC), ATLS will transfer its non-midstream assets to Atlas Energy Group and then distribute to the ATLS unitholders common units representing a 100% limited liability company interest in Atlas Energy Group.

The distribution is subject to the satisfaction of certain conditions, including the effectiveness of the Form 10 and satisfaction or waiver of the conditions to the consummation of the acquisition of ATLS by TRC. The acquisition of ATLS by TRC is subject to, among other conditions, the approval of the acquisition by holders of a majority of the outstanding limited partner interests in ATLS and the approval of a majority of the shareholders of TRC voting at the meeting to approve the transaction.

The ATLS transaction is also cross-conditioned on the previously announced acquisition of APL by TRP, which is subject to, among other conditions, the approval of the acquisition by holders of a majority of the outstanding limited partner interests in APL.


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