On July 25, 2016, Atlas Resource Partners, L.P. (the
Partnership), certain of its subsidiaries (collectively with the Partnership, ARP) and Atlas Energy Group, LLC, the Partnerships general partner (ATLS), solely with respect to certain sections thereof,
entered into a Restructuring Support Agreement (the Restructuring Support Agreement) with (i) lenders holding 100% of the Partnerships senior secured revolving credit facility (the First Lien Lenders),
(ii) lenders holding 100% of the Partnerships second lien term loan (the Second Lien Lenders) and (iii) holders (the Consenting Noteholders and, collectively with the First Lien Lenders and the Second Lien
Lenders, and their respective successors or permitted assigns that become party to the Restructuring Support Agreement, the Restructuring Support Parties) of approximately 80% of the aggregate principal amount outstanding of the 7.75%
Senior Notes due 2021 of the Partnerships subsidiaries, Atlas Resource Partners Holdings, LLC and Atlas Resource Finance Corporation (together, the Issuers), and 9.25% Senior Notes due 2021 of the Issuers. Under the Restructuring
Support Agreement, the Restructuring Support Parties have agreed, subject to certain terms and conditions, to support a restructuring of ARP (the Restructuring) pursuant to a pre-packaged plan of reorganization (the Plan) to
be filed in a case commenced under chapter 11 of the United States Bankruptcy Code (Chapter 11).
Pursuant to the
Restructuring Support Agreement, the Partnership expects to commence a solicitation of votes for the Plan on July 25, 2016 and expects to commence the Chapter 11 cases on or before July 27, 2016. The Partnership expects its oil and gas
properties to continue operating in the ordinary course throughout the Restructuring. Pursuant to the Plan, the business assets and operations of the Partnership will vest in a new limited liability company, which will be classified as a corporation
for U.S. federal income tax purposes (New Holdco). Under the Plan, all suppliers, vendors, employees, royalty owners, trade partners and landlords will be unimpaired by the Restructuring and will be satisfied in full in the ordinary
course of business, and ARPs existing trade contracts and terms will be maintained.
Under the Plan, on the Plan Effective Date, a
wholly owned subsidiary of ATLS (ARP Mgt LLC) will receive a preferred share of New HoldCo. The preferred share will entitle ARP Mgt LLC to receive 2% of the economics of New HoldCo (subject to dilution if catch-up contributions are not
made with respect to future equity issuances, other than pursuant to a management incentive plan) and certain other rights as provided for in the Restructuring Support Agreement. For so long as ARP Mgt LLC holds such preferred share, a majority of
the board of directors of New HoldCo will be appointed by certain current affiliates of ATLS. New HoldCo will have a continuing right to purchase the preferred share at fair market value, subject to the approval of 67% of the outstanding common
shares not held by ARP Mgt LLC or its affiliates.
Under the Plan, holders of the Partnerships limited partnership units, including
ATLS and its affiliates, will receive no recovery with respect to such partnership units. On the Plan Effective Date, all preferred limited partnership units and common limited partnership units of the Partnership will be cancelled without the
receipt of any consideration.
In accordance with, and subject to the terms and conditions of, the Restructuring Support Agreement, ATLS
has agreed, subject to applicable fiduciary duties, among other things, to take all commercially reasonable actions necessary to consummate the Restructuring in accordance with the Plan and the related term sheets.
The Restructuring Support Agreement may be terminated upon the occurrence of certain events, including the failure to meet specified
milestones related to filing, confirmation and consummation of the Plan, among other requirements, and in the event of certain breaches by the parties under the Restructuring Support Agreement. There can be no assurance that the restructuring
transactions will be consummated.
The foregoing description of the Restructuring Support Agreement and the Plan does not purport to be
complete and is qualified in its entirety by reference to the Restructuring Support Agreement and the Plan, which are filed as Exhibit 99.1 and Exhibit A to Exhibit 99.2, respectively, to this Current Report on Form 8-K and are incorporated by
reference into this Item 8.01, and the other definitive documents which will be entered into in connection with the Restructuring. Interested parties should also read the Partnerships Current Report on Form 8-K filed the date hereof and
its other public filings, including those regarding the Restructuring, the Restructuring Support Agreement and the Plan.
Forward-Looking Statements
Certain statements contained in this Current Report on Form 8-K and in the documents incorporated by reference are, and other written and oral
statements made by the Partnerships and ATLSs representatives may be, forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of
1934, as amended. These forward-looking statements are based upon information presently available to the Partnership and ATLS and assumptions that it believes to be reasonable. Risks, assumptions and uncertainties that could cause actual results to
materially differ from the forward-looking statements include, but are not limited to, risks and uncertainties associated with bankruptcy proceedings, including the ability to consummate the Plan on the time frame contemplated therein; the potential
adverse effects of Chapter 11 proceedings on the Partnerships liquidity or results of operations; the ability to operate the business during the Chapter 11 proceedings; the effects of a bankruptcy filing on the Partnerships business and
the interests of various creditors, equity holders and other constituents; the length of time the Partnership will operate under Chapter 11; risks associated with third party motions in the Chapter 11 cases, which may interfere with the
Partnerships ability to develop and consummate the Restructuring; those associated with general economic and business conditions; changes in commodity prices and hedge positions; changes in the costs and results of drilling operations;
uncertainties about estimates of reserves and resource potential; the impact of the Partnerships and ATLSs securities being quoted on the OTCQX rather than listed on the New York Stock Exchange; inability to obtain capital needed for
operations; changes in government environmental policies and other environmental risks; the availability of drilling equipment and the timing of production; tax consequences of business transactions; and other risks, assumptions and uncertainties
detailed from time to time in the Partnerships and ATLSs reports filed with the SEC, including Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and Annual Reports on Form 10-K. Investors are cautioned that all such statements
involve risks and uncertainties. Forward-looking statements speak only as of the date hereof, and neither the Partnership nor ATLS assume any obligation to update such statements, except as may be required by applicable law.