Alta Mesa's Buyer Backpedals as Financing Dries Up

Alta Mesa's Buyer Backpedals as Financing Dries Up
Alta Mesa has asked the court to force BCE-Mach III LLC to go through with the deal.

Volatile energy markets have created roadblocks for Alta Mesa Resources’ $320 million bankruptcy sale of Alta Mesa Resources Inc.

In late January, BCE-Mach III LLC, the third partnership between Bayou City Energy Management LLC and Mach Resources LLC, agreed to buy substantially all of the upstream oil and gas assets of Alta Mesa Holdings LP and its subsidiaries, and the midstream assets of Kingfisher Midstream LLC and its subsidiaries as part of the sellers’ Chapter 11 bankruptcies.

However, the buyer has now said financing via UBS AG fell through due to plummeting oil prices, according to papers filed March 10 in Houston’s U.S. Bankruptcy Court.

On March 9, BCE-Mach III stated that it “no longer believes in good faith that it will be able to obtain all of the financing contemplated by the commitment on the terms described therein [and expressed its need] to obtain alternative financing from alternative sources in an amount sufficient to enable the buyer to perform its obligations…, ” according to court filings.

However, Alta Mesa indicated BCE-Mach III’s offer did not include a “financing out”.

“Meaning, the buyer is either choosing not to use cash available to it to close the court-approved sale; or, worse, the buyer did not have the ability to consummate the transactions contemplated by the purchase and sale agreements it represented it had at the time the parties entered into the PSAs,” the court document stated.

In addition to the financing breach, the company said the delayed closing is harming Alta Mesa’s  business operations and challenging its ability to preserve and maximize the value of its assets.

“For example, employees are leaving the company given the uncertainty surrounding the timing of the sale, and there are likely to be more departures as the uncertainty drags on, all of which negatively impacts the company’s operations,” the court document stated.

Alta Mesa has asked the court to force BCE-Mach III LLC to go through with the deal.

To contact the author, email bertie.taylor@rigzone.com.



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