The $185 million term facility consists of two five-year loans. The first $150 million loan has a first lien with the collateral and carries an initial interest rate of 10.5%. The second $35 million loan has a second lien with the collateral and carries an initial interest rate of 12.0%. After six months, the interest rate on the $150 million loan increases 1%.
In consideration for the new term loan facility, the Company issued 2,452,366 six-year warrants with a strike price of $7.25 to holders of the second lien loan. The Company has repurchased from its former lender all of its 750,000 five-year warrants with a strike price of $6.75 for $750,000.
The $185 million term facility, net of fees and expenses, has improved the Company's liquidity and working capital position by approximately $56 million, allowing it to comfortably execute its 2004 capital program. This program includes the development of proved undeveloped reserves (PUDs) on nine properties, three of which have already been brought to production in the first quarter of 2004. In addition, the long-term nature of the facility coupled with the new liquidity will allow ATP to focus on its next major project, Mississippi Canyon 711 with gross proved reserves over 100 Bcfe. ATP intends to reenter, complete and test the first of four previously drilled wells later this year. First production is expected in late 2005. ATP operates MC 711 and has a 99% working interest.
T. Paul Bulmahn, Chairman & President of ATP Oil & Gas Corporation stated, "The new term facility provides the financial resources to perform all of the development operations that ATP has planned for 2004 as well as launch our pre-development activities for our 2005 - 2007 development program. This term facility also represents an important change in the Company's debt structure, as borrowings and scheduled amortization were set at closing and will not be subject to the periodic redeterminations associated with traditional revolving credit facilities."
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