Money and Investing Thoughts

Atlas Energy Resources – News and Press Releases.

The press release above announces the merger of Atlas Energy Resources (ATN: 0.00 N/A N/A) into Atlas America Inc (ATLS: 25.79 -0.40 -1.53%). The new company will be known as Atlas Energy. This merger raises some interesting possibilities and questions. The questions are more of a organizational nature:

• Will the merged company be listed on the NASDAQ or NYSE?
• What happens to the LLC structure and distribution policy of ATN?

The press release states that ATN shareholders will get 1.16 shares of the new Atlas Energy for each share owned. Also, that ATN distributions will be suspended until the merger goes through. ATN historically has paid a distribution right about now so I guess we can kiss that one goodbye.

Overall, I think this is a good move for ATN shareholders. ATLS is the owner of the ATN general partner and the GP in these types of businesses siphon off a significant chunk of cash flow of MLP type businesses. ATLS also owns significant stakes in Atlas Pipeline Holdings (AHD: 0.00 N/A N/A) and Atlas Pipeline Partners (APL: 37.07 -0.31 -0.83%). I think these holdings are currently very undervalued by the market now ATN shareholders will have exposure to the hopefully realization of those values.

The managements of the various Atlas companies have been saying they want to find ways to realize share holder value. This merger seems to me to be a very good step.

Note: I own a personal position in ATN.

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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: 37.07 -0.31 -0.83%) to deleverage the company. When the company released their 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.

I currently own some Atlas Energy (ATN: 0.00 N/A N/A) and I am now taking a close look at APL.