ATP Oil & Gas preliminary plan terms include potential sponsorship

By Caroline Salls

Pittsburgh, Jan. 24- ATP Oil & Gas Corp. filed a preliminary plan of reorganization term sheet Thursday with the U.S. Bankruptcy Court for the Southern District of Texas.

ATP said a potential plan sponsor has extended an offer to purchase newly issued capital stock of the company. The sole asset of ATP that would transfer with the company as part of this transaction would be its interests in deep water concessions or licenses issued off the coast of Israel.

While the shares of stock in ATP are not currently encumbered by any claims, the company said the liens granted to its debtor-in-possession financing lenders attach to the 5% interest the company holds in those licenses.

By structuring the transaction this way, ATP said the sponsor could acquire the rights to operate these fields concurrently with the acquisition of the newly issued shares and the resulting transfer of the 5% interests.

In addition, the company said the transaction would contemplate re-issuance of new shares of capital stock to the sponsor.

All other assets would be assigned to a liquidating trust, and all liabilities of ATP would attach to that trust, the filing said.

ATP said it expects that it would no longer hold any interest in any Gulf of Mexico properties or any interest in its U.K. subsidiary that holds properties in the North Sea.

According to the filing, the sponsor has offered $3 million for the purchase of ATP and the assets consisting solely of the specified interests.

The sponsor's proposal would be subject to higher and better offers and an appropriate break-up fee would be paid in an alternate transaction is completed.

Creditor treatment

Treatment of creditors under the plan would include the following:

• Priority claims would be paid in full;

• DIP lenders and senior secured creditors would be paid the net amounts recovered on account of collection upon those assets on which they possess liens, interests or mortgages.

The DIP lenders also possess liens on the 5% interests held by ATP in the Eastern Mediterranean licenses. As a result, half of the net proceeds related to the transaction would be paid directly to the DIP agent in return for the release of their liens on the interests;

• Holders of junior secured claims and other secured claims would receive no distribution, except to the extent monies are distributed to them in accordance with liquidating trust documents;

• Holders of general unsecured claims and contingent litigation claims would receive a share of distributions from the liquidating trust; and

• Holders of intercompany subsidiary claims, series A preferred stock and common equity interests will receive no distribution until all other classes are paid in full.

The company said the term sheet remains subject to further negotiation and discussion, but reflects the current highest and best offer received to date for the specified assets that would support a plan process.

Houston-based ATP is an offshore oil and gas development and production company focused in the Gulf of Mexico, the Mediterranean Sea and the North Sea. The company filed for bankruptcy on Aug. 17, 2012 under Chapter 11 case number 12-36187.

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