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Gold/Mining/Energy : Big Dog's Boom Boom Room -- Ignore unavailable to you. Want to Upgrade?

To: kodiak_bull who wrote (44062)	8/3/2005 8:32:23 PM
From: Ed Ajootian	Respond to of 206326

ATP Oil & Gas (ATPG) -- They just announced the terms of their preferred stock financing. Its quite an interesting security: 13.5% dividend rate, PIK for 6 years (or when term loan is paid off if earlier), then payable in cash. No maturity, yet can be redeemed at the company's option starting in February. There is probably some declining schedule of redemption premiums, but that was not provided in the PR. So if you look at it from the downside perspective, if all hell breaks loose, don't sweat the program, the security never has to get paid back and the dividends on it don't have to be paid for 6 years. If everything goes great --- the company's Gomez project comes in as planned in the GOM, the Tors comes in at the North Sea, and they get to book enough reserves in their Emerald project in the North Sea to double their total reserves at year-end '05 --- the stock will be over $50 by February and they just do a quick common stock offering and pay off this preferred issue. Al Reese (the ATP CFO) never fails to amaze me. I've known him now for about 3 years, he always gives the impression (and describes himself) as being a simple man, yet he comes up with some truly creative and powerful financial structures. I wonder whether other E&P companies will try to copy this financing technique. See full PR below: ATP Oil & Gas Corporation Expands Offering and Closes $175 Million Private Placement of Preferred Stock Wednesday August 3, 7:42 pm ET HOUSTON, Aug. 3 /PRNewswire-FirstCall/ -- ATP Oil & Gas Corporation (Nasdaq: ATPG - News) today announced that it has upsized and closed its previously announced private placement of non-convertible, perpetual preferred stock. The issue has been expanded to $175 million and closed today, August 3. The Series A Cumulative Perpetual Preferred Stock carries a non-cash dividend of 13.5%. The Company intends to use the net proceeds from this offering to accelerate the development of selected properties both in the North Sea and Gulf of Mexico, add properties to its 2005 development program, and for acquisitions and general corporate purposes. By structuring the issue with a non-cash dividend, ATP is able to utilize the Company's future cash flow for accelerated and added development, the primary use of proceeds from the offering. More specific details of the expanded capital program will be included in the Company's second quarter earnings release, which is expected later this week. The issue has no stated maturity, there is no common share dilution to existing shareholders as the issue is not convertible into common shares of the Company, there is no added debt to impact lenders and the issue can be redeemed at the Company's option after February 2006. The dividend becomes payable in cash after April 2011 or after the repayment of the current outstanding term loan, whichever comes first.