Finance & Investing | Fundraising | Capital Markets

Atlas Resource Partners' Borrowing Base Cut to $700MM

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   |    Monday,November 23,2015

Atlas Resource Partners, L.P. has entered into an amendment to its revolving credit facility and has completed its semi-annual redetermination of its credit facility borrowing base, resulting in a revised borrowing base of $700 million, a decrease of approximately 6.7% from the previous level.

In order to provide increased flexibility as a result of the current commodity price environment, the Partnership has reached an agreement with its commercial bank lending group to amend certain terms of its revolving credit facility, including improved terms on its leverage covenants. The new terms include:

• Suspension of a maximum total leverage covenant until Q1 2017; as well as new maximum total leverage covenants in future periods; including:
  • 5.75x beginning in Q1 2017
  • 5.50x beginning in Q3 2017
  • 5.25x beginning in Q1 2018
  • 5.00x beginning in Q2 2018 and thereafter
• Elimination of senior secured leverage covenant
• Addition of maximum first lien secured leverage covenant of 2.75x
• Ability to add additional subordinated secured debt

The Partnership had a total leverage ratio of approximately 5.1x as of the third quarter of 2015. The next borrowing base redetermination is expected to occur in May of 2016. As part of the amendment of the credit facility, the Partnership has agreed to adjust the Partnership's common unit distribution to $0.15 per annum, which the Partnership expects to pay on a monthly basis.

Daniel Herz, CEO of Atlas Resource Partners, L.P., commented, "As expected, the modest reduction in our borrowing base reflects the commodity price protection the Partnership has in place as well as ARP's high-quality, low-decline asset base. Further, the additional flexibility this amendment provides allows the Partnership to navigate the turbulent energy environment over an extended period of time. Finally, the reduction of the common distribution will strengthen our balance sheet."