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Atlas Energy, L.P Message Board

  • bosox_pats bosox_pats Feb 13, 2012 10:20 PM Flag

    Record Date 2/28 for Spin

    ATLS filed 4th amendment to Form 10 today. Record date for spin 2/28 and distribution date is 3/13. ATLS will start trading shortly with and without spin - be careful. Also, once listed, ARP will start trading on a when-issued basis. It will be interesting to see how much value is created with the spin. One will receive .1021 units of ARP for every ATLS unit held. If ATLS continues to trade at current levels and ARP trades at 6% to a $1.60 distribution, about 10% of value will accrete to ATLS shareholders.

    ATLS has been dead silent with this spin as company in silent period. It will be really interesting to hear from management since fall in NG price......

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    • Referring to your 4th sentance. Why should ATLS tade at the current level. Shouldn't it decrease by the amount that ARP is valued.

    • I've seen people here talking about 40c distribution for ARP. Where is the source for that? I couldn't find anything from ATLS which mentioned it.

      Hard to value ARP if we are not sure how much it will yield.

      • 2 Replies to lizahuang54321
      • artist_formerly_known_as_pooch artist_formerly_known_as_pooch Feb 17, 2012 7:14 AM Flag

        http://www.sec.gov/Archives/edgar/data/1532750/000119312512065519/d303077dex992.htm#tx242592_10

        Minimum Quarterly Distributions

        We currently intend to distribute to the holders of our common units and class A units on a quarterly basis at least a minimum quarterly distribution of $0.40 per unit, or $1.60 per unit per year, to the extent we have sufficient available cash after we establish appropriate reserves and pay fees and expenses, including payments to our general partner in reimbursement of costs and expenses it incurs on our behalf. Our minimum quarterly distribution is intended to reflect the level of cash that we expect to be available for distribution per common unit and class A unit each quarter. There is no guarantee that we will pay the minimum quarterly distribution, or any distribution, in any quarter, and we will be prohibited from making any distributions to unitholders if it would cause an event of default or an event of default is existing under our proposed credit agreement. If we had completed the separation and distribution on October 1, 2010, the amount of pro forma available cash generated during the twelve months ended September 30, 2011 would have been insufficient by approximately $0.5 million to pay the minimum distribution on all our common units and class A units.

      • It's in the information statement that accompanies the SEC registration filing as the minimum quarterly distribution.

    • "Record date for spin 2/28 and distribution date is 3/13. ATLS will start trading shortly with and without spin"

      I'm a little confused. Do you mean that it will be distributed to current ATLS unit holders on 3/13, but it will be trading before that date? If so, where will the units traded before the distribution come from? Will ATLS itself sell some to start the trading?

      (I saw something similar with the spinoff of the Williams E&P - WPX was trading a few weeks prior to the spinoff of shares to WMB shareholders - not sure where the pre-spinoff shares came from).

      Secondly, what do people think will be the price action after 3/13? Specifically will ATLS holders want to hold a gassy E&P in this low NG price environment. Or are they likely to want to offload it soon after receipt?
      My experience is that spinoffs to existing shareholders like this typically result in a price decline lasting a few weeks as the spin off recipients unload the shares they were distributed but don't really want.

      I'm not a current ATLS holder (I hold APL) and may be interested in getting some ARP, but unsure whether it will be cheaper some weeks after the spinoff.

      P.S. Do we know the ticker yet? ARP? ATRP?

      • 2 Replies to lizahuang54333
      • Without running numbers here's my conceptual spin on the spin:

        1) Those who held Atlas through the Chevron merger did pretty darn well with ATLS stub that is now Atlas Energy. As a side note, the sale to Chevron now looks pretty smart (and I was a chief complainer about the pricing at the time) given the path natgas pricing has taken.

        2) Given the announced strategy of picking of bits and pieces of territory that others no longer want I can't think of a better time for these guys to be creating this entity. Many E&P companies are dying to get out of dry gas to fund oil production. It is a PERFECT time to be picking up the pieces others don't want for cheap cheap prices. Over the long term supply and demand will come more into balance. Supply will constrict as people shut in wells and lower drilling investments, demand will increase as utilities and industry ramp up natgas use, transportation uses develop, and export terminals come on line.

        It will take years for this to happen but in summary, being able to buy cheap assets now and develop them with funding from others (partnerships) to be ready for the day when prices on natgas firm seems to me a great great opportunity for Atlas Resource Partners. In the meantime I assume these guys will be disciplined in deployment of capital on development of new areas.

        Just my own opinion though.

      • What the OP means is that the to-be distributed units will trade on a when issued basis prior to 3/13. I am not sure what the ticker symbol will be but it should be appended with a "WI" designation. No actual units will be issued or distributed by ATLS until 3/13.

        I agree with you that the price action of the spun-off entity will likely be to the downside since many recipients (including myself) will sell. I also think that an E&P dry gas entity should trade to a higher yield (~7.5%) than other MLPs because of the low NG price environment. We will see shortly.

    • Does anyone know what happens to call options on ATLS when the spin happens? By way of example January 2014 $20 calls held for several months? I've emailed IR and been met with dead silence.

 
ATLS
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