ATP Oil & Gas Corp. bondholders (ATPG:US) are organizing a group to represent their interests in a potential restructuring, according to two people familiar with the matter.
The investors interviewed potential advisers this week, said one of the people, who declined to be identified because he’s involved in the process, which isn’t public. ATP Chief Financial Officer Albert Reese and Isabel Plume, a spokeswoman for the Houston-based company, didn’t immediately return calls for comment.
“ATP has grappled with numerous timing issues, and yet we have not missed an interest payment on our debt,” Paul Bulmahn, the company’s founder and executive chairman, said last month on a conference call.
ATP’s $1.5 billion of 11.875 percent notes due May 2015 fell 0.5 cent to 38.25 cents on the dollar, the lowest ever, as of 4:33 p.m. in New York, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. The bonds traded as high as 77.5 cents on April 26.
ATP has been battered by production delays, missed output targets and a cash crunch that jeopardized its ability to cover debt payments. Last month, the company announced the hiring of former Dynamic Offshore Resources LLC Chief Executive Officer Matt McCarroll as CEO, then said six days later that he resigned after failing to reach a “mutually agreeable” employment agreement.
“We expect either bankruptcy or an announcement of some sort from somebody on a potential reorganization,” Bob Bruce, manager of the $350 million Bruce Fund Inc., which held about $9 million of the 11.875 percent notes as of March, said in a telephone interview. “We just keep our fingers crossed that a miracle will happen.”
Bruce said he hadn’t heard from any bondholder group or advisers.
ATP’s stock has dropped 74 percent this year to $1.95 in Nasdaq trading.
The company may run out of cash in the third quarter, Kenneth Duffel, an analyst at Montpelier, Vermont-based KDP Investment Advisors, wrote in a May report. ATP hired investment bank Jefferies Group Inc. to help manage its cash flow, the financial newsletter Debtwire reported. Richard Khaleel, a Jefferies spokesman, declined to comment.
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