Atlas Pipeline Makes Progress in Deleveraging the Company

Atlas Pipeline Partners | Investor Relations : News Release.

Atlas Pipeline Partners | Investor Relations : News Release.

The two news releases linked above give the first indications of the progress for Atlas Pipeline Partners (APL) to deleverage the company. When the company released its quarterly earnings report a little over a month ago, management said they were in negotiation to sell all or part of 3 different company assets to raise cash and pay down debt. It looks like 2 of the deals are complete and I would say they were pretty successful.

First, APL has sold 51% of their Marcellus shale gathering network for $90 million in cash plus an additional $25 million obligation to be paid later.

The second was the sale of their NOARK natural gas system for $300 million.

So the company has raised almost $400 million in asset sales so far. At the end of 2008 APL had long term debt of approximately $1.5 billion, so they have raised enough to pay off about a quarter of the debt. The big question for shareholders is whether the company can sustain the 38¢ distribution. If they can, the shares which are currently yielding over 30% should move up significantly.

Disclosure: I currently own some Atlas Energy (ATN) and I am now taking a close look at APL.

Comments

[mac.barron:]

I don't own any but Atlas Pipeline has always struck me as a cagey play. I really like that they are aggressively working on their debt. Good luck with them and their efforts to keep that dividend supported.

Apr 11 09:15 PM

[biomedlives:]

I'd be interested to know if it's possible to figure out how the two sales will affect the book value and the EPS at APL.

Apr 12 12:15 PM

[secmaven:]

Big losses will have to be booked on these sales. Atlas overpaid like Hell for its pipeline assets bought last year. The original investors at north of 40 bucks a share got totally hosed!

Apr 12 11:50 PM

[alfredog:]

Can't see how they can maintain their distribution if they sold $390 million in assets which generated at least $55 to $65 million of cash flow (EBITDA) and they still have the same number of units outstanding.

Apr 14 05:49 PM