Atlas Pipeline Partners Amends Debt Agreement
June 01 2009 - 1:24PM
Dow Jones News
Atlas Pipeline Partners LP (APL) said Monday that the company
has amended a debt agreement, improving Atlas Pipeline's financial
flexibility as the company struggles with a heavy debt load and
meager cash flows.
Falling gas demand and tumbling commodity prices during the
recession have been squeezing small pipeline operators like Moon
Township, Pa.-based Atlas Pipeline, leading it to put transmission
and gathering systems on the sales block. Atlas Pipeline's amended
debt agreement comes days after Standard & Poor's Ratings
Services lowered its credit ratings for the company deeper into
junk territory, saying the company's cash flow could significantly
decline amid lower natural gas prices and the fact that the company
has hedged only a small part of its equity volumes.
"Although we were fully compliant with all covenants under the
facility, and expected to remain compliant, the amendment
significantly increases our operating liquidity and offers relaxed
[earnings] and total debt covenants, providing Atlas Pipeline with
substantially increased cushions against possible future negative
developments," Atlas Chief Executive Gene Dubay said in a prepared
statement.
Under the amended agreement, certain debt and earnings
requirements have been eased through Dec. 31, 2010. A "reinvestment
basket," which allows Atlas Pipeline to use cash proceeds from
asset sales for up to 12 months before reinvestment, has almost
tripled to $135 million. Atlas can make capital expenditures up to
$95 million for the rest of 2009.
Lenders also approved a natural gas gathering and processing
joint venture agreement with Williams Cos. (WMB). Under that
agreement, announced in April, Williams will own 51% of the venture
and operate Atlas Pipeline's Appalachian basin gathering system in
the Marcellus Shale.
Atlas Pipeline shares were recently trading 15 cents higher, or
2.9%, at $5.38. Shares are down 88% from the 52-week high of
$42.63.
-By Christine Buurma, Dow Jones Newswires; 201-938-2061;
christine.buurma@dowjones.com