The raise in net loss attributable to common limited partners was because of lower average commodity prices, partly counterbalanced by higher system-wide volumes.
On March 30, 2009, the partnership, pursuant to its right within the class B preferred units certificate of designation, bought an additional 5,000 of Atlas Pipeline Holdings 12% class B preferred units of limited partner interest for cash consideration of $1,000 per class B preferred unit. Atlas Pipeline Holdings used the proceeds from the sale of the class B preferred units for general partnership purposes. The class B preferred units will receive distributions of 12% per annum, paid quarterly to the partnership on the same date as Atlas Pipeline Holdings distribution payment date for its common units.
Additionally, on March 30, 2009, the partnership and Atlas Pipeline Holdings agreed to amend the terms of the class B preferred units certificate of designation to remove the conversion feature, thus the class B preferred units are not convertible into the company’s common units. The amended class B preferred units certificate of designation also gives APL the right at any time to redeem some or all of the outstanding class B preferred Units for cash, or an amount equal to the class B preferred unit liquidation value being redeemed, provided that such redemption must be exercised for no less than the lesser of a) 2,500 class B preferred units or b) the number of remaining outstanding class B preferred units.
On March 31, 2009, Atlas Pipeline Holdings entered into an agreement with a subsidiary of The Williams Companies, Inc. to form a joint venture, Laurel mountain midstream, LLC, which will own and operate the Atlas Pipeline Holdings’ Appalachia basin natural gas gathering system, which comprise gathering and processing assets in the Marcellus shale region in southwestern Pennsylvania, and eliminates Atlas Pipeline Holdings Northern Tennessee operations. The company will receive about $90 million in cash, a preferred equity right to proceeds under a $25.5 million obligation from Williams, and a 49% equity interest in the joint venture.
The obligation amortizes in equal principal installments over a three-year period following the closing of the transaction, and the right to receive accrued principal and interest can be converted at Atlas Pipeline Holdings option into an equivalent sum to pay joint venture capital expenditures Atlas Pipeline Holdings would otherwise be required to fund under the joint venture agreement. The agreement evaluates the initial enterprise value of the system in Pennsylvania, New York, Ohio and West Virginia at $250 million.
The new joint venture intends to be the leading gathering system in the southwestern Pennsylvania portion of the Marcellus shale. Although the system will be operated on a day-to-day basis by Williams, all important decisions will be made jointly by Atlas Pipeline Holdings and Williams. The transaction is anticipated to close during the second quarter of 2009. Atlas Pipeline Holdings will use the $90 million of net proceeds from the transaction to decrease borrowings under its senior secured credit facility.
On April 7, 2009, Atlas Pipeline Holdings entered into a definitive agreement with Spectra Energy Partners, LP to sell its NOARK natural gas gathering and interstate transmission system (NOARK) for about $300 million in cash. The transaction closed on May 4, 2009 and the partnership used the net proceeds from the transaction to decrease borrowings under its senior secured term loan and credit facility.
