PHILADELPHIA, May 31, 2012 /PRNewswire/ -- Atlas Pipeline Partners, L.P. (APL) ("APL", "Atlas Pipeline", or the "Partnership") announced today that the Partnership has successfully amended its revolving credit facility which significantly increases the Partnership's borrowing capacity, extends the term of the facility, and lowers borrowing costs. The amended five year facility now matures on May 31, 2017, has an initial borrowing capacity of $600 million, and contains an accordion feature of up to an additional $200 million which, if exercised, will increase total available capacity to $800 million. This facility represents an increase of over 77% in total potential borrowing capacity over the existing revolving credit facility.
The amended facility includes a reduction in borrowing costs for the Partnership, which, similar to the existing facility, is based on total leverage at the Partnership. The amended facility is structured with a reduction of 50 basis points at each leverage tier as compared to the current facility. Atlas Pipeline is also welcoming 8 new banks to the facility, which was substantially oversubscribed. ABN AMRO Capital, BB&T Company, Goldman Sachs Bank, Sovereign Bank, Regions Bank, OneWest Bank, Cadence Bank, and F&M Bank & Trust Company have now become participants in the facility. These new participants bring the total number of banks in the facility to 19 institutions. Wells Fargo acted as lead arranger and continues as the administrative agent for the facility.
"We are very pleased to successfully execute this amendment to our revolving credit facility and welcome the new participants. Maintaining our strong balance sheet and significant liquidity are core principals of Atlas Pipeline as we continue to pursue our objectives of operating aggressively while employing fiscal conservatism. This amended facility contains numerous benefits to the Partnership and our unitholders, including reducing borrowing costs, extending the term, and providing increased liquidity. This amendment is another step in our financial plan as we continue to execute on high returning capital projects in our existing footprint and to maintain flexibility for pursuing additional opportunities outside of our core areas. I would like to thank all of the institutions for their strong support," stated Trey Karlovich, Chief Financial Officer of the Partnership.
APL increased their borrowing power to just under 1 billion dollars, lowered their effective interest rate and there were more lenders wanting to lend them money than APL needed. That should rest any fears of them doing a secondary offering anytime soon and raise the speculation on what they might do with all that money. More organic growth projects? A big acquisition?
I can't come up with a good reason to increase your line of credit ( $800 mil ) to 1/2 the size of the market cap for the whole company ( $1.6 bil ) unless you're going to use it.