Lenders increase cash part of bid for ATP drilling assets
BY JOSEPH CHECKLER
Lenders looking to buy ATP Oil & Gas's deep water drilling assets have increased the cash portion of their $690 million bid, a move that could appease the bankruptcy judge overseeing ATP's Chapter 11 case.
In a filing with United States Bankruptcy Court in Houston, lenders led by an affiliate of Credit Suisse Group said they would pay $55 million in cash for the assets, up from $45 million, on top of $645 million in debt forgiveness. The filing depicted the latest terms of the crucial purchase agreement that could help spur ATP closer to a bankruptcy exit.
Late last month, Judge Marvin Isgur warned ATP that his approval of the sale is not "preordained." At that hearing, an ATP lawyer said he was concerned the company wouldn't have enough cash to cover its bankruptcy, prompting Judge Isgur to suggest ATP look for other financing options.
ATP's unsecured creditors have been fighting the sale, saying the lenders should be on the hook for more. A two day hearing on the matter is scheduled for this in front of Judge Isgur. That hearing has previously been pushed back several times, as negotiations continued.
ATP is currently operating under a temporary emergency order that allows it to cover payroll and essential expenses while talks continue about the shape of the proposed lender takeover. Unsecured creditors want lenders to cover the cost of winding down ATP's unwanted business operations and wrapping up the Chapter 11 proceeding.
The pledge of debt forgiveness, dubbed "credit bidding," became one of the hottest topics in bankruptcy law last year after conflicting appeals courts decisions sent the matter up to the United States Supreme Court. The justices ultimately decided that credit bidding is legal.
In ATP's case, the loan being forgiven is most of a $650 million debtor in possession financing package that helped fund the company's bankruptcy.
ATP, which drills for natural gas and oil in the Gulf of Mexico and elsewhere, filed for Chapter 11 last August. The Houston company blamed the drilling moratorium imposed after the 2010 Deepwater Horizon disaster in the Gulf of Mexico.
Dow Jones Newswires