Atlas America, Atlas Energy Resources Agree to Merger

Atlas America, Inc. and Atlas Energy Resources, LLC jointly announced that they executed a definitive merger agreement, pursuant to which a newly formed subsidiary of Atlas America will merge with and into Atlas Energy, with Atlas Energy surviving as a wholly owned subsidiary of Atlas America. In the merger, each Class B common unit of Atlas Energy not currently held by Atlas America will be converted into 1.16 shares of Atlas America common stock, and Atlas America will be renamed "Atlas Energy, Inc."

The Atlas America board of directors has approved the merger agreement and has resolved to recommend that the Atlas America stockholders vote in favor of the transactions contemplated by the merger agreement. The Atlas Energy board of directors and a special committee of Atlas Energy directors comprised entirely of independent directors have also approved the merger agreement and have resolved to recommend that the Atlas Energy stockholders vote in favor of the merger.

"As one of the leading producers in the Marcellus Shale with control of over 550,000 acres in its fairway, it is imperative that we redirect our Company’s cash flow to fully realize the potential value of these assets for our existing unitholders," stated Richard D. Weber, President of Atlas Energy. "We believe that, by merging with Atlas America, we will create a new entity that will have the financial resources to accelerate and expand the development of our Marcellus Shale assets where we have already identified 4 to 6 trillion cubic feet of additional reserves."

Edward E. Cohen, Chairman and Chief Executive Officer of Atlas America, said that "the merger transaction should significantly enhance the value of the combined enterprise for investors in both Atlas America and Atlas Energy. The merger will allow the combined companies to sharply accelerate expansion and development of its Marcellus Shale position by reinvesting a far greater portion of its combined cash flow in America's greatest natural gas play. And the other benefits are enormous."

  • The merger is expected to simplify the organizational structure of the Atlas companies and create a more attractive investment opportunity with a larger public float. In addition, the merger is expected to enhance value to Atlas Energy by eliminating the effects on the public stockholders of the block represented by Atlas America’s approximate 48% common unit ownership and management incentive interests in Atlas Energy;
  • The transaction is also expected to create a stronger balance sheet and capital structure at the combined entity, along with a lower cost of capital. The net debt outstanding at Atlas Energy will be reduced by cash on hand at Atlas America. Furthermore, liquidity should be greatly improved from the larger, newly combined company. The retention and investment of future cash flows will also reduce the need to raise capital from outside sources under unfavorable market conditions similar to those that currently exist.

In addition, pending consummation of the merger, Atlas Energy will suspend distributions to its common unitholders.

The combination of Atlas America and Atlas Energy will result in a single class of equity with one board of directors. The board of directors of the combined entity will consist of the ten independent directors of Atlas America and Atlas Energy serving at the time the merger is consummated, as well as Edward E. Cohen and Jonathan Z. Cohen, Chief Executive Officer and Vice Chairman, respectively, of both Atlas America and Atlas Energy.

The transaction will be subject to approval by holders of a majority of the outstanding Atlas America common stock and a majority of the outstanding Atlas Energy Class B units, consent of a majority of the lenders under the Atlas Energy credit agreement and other customary closing conditions.

JPMorgan Securities, Inc. served as financial advisor, and Wachtell, Lipton, Rosen & Katz acted as legal counsel, to Atlas America. UBS Investment Bank acted as financial advisor, and K&L Gates acted as legal counsel, to the Special Committee to the Board of Directors of Atlas Energy. Jones Day acted as legal counsel to Atlas Energy and its board of directors.


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