ATP Oil & Gas Corp. (ATPG), the oil explorer whose new chief executive officer quit after less than a week in June, arranged loan financing ahead of a possible bankruptcy filing, said two people with direct knowledge of the matter.
The so-called debtor-in-possession loan of $600 million is being provided by Credit Suisse Group AG (CSGN), said the people, who asked not to be identified as the process is private. A filing may come as soon as today, according to one of the people.
ATP, which faces an $89 million interest payment in November, deteriorated as it missed production targets and stumbled executing marquee offshore oil developments. Founder and CEO Paul Bulmahn hired Matt McCarroll to replace him June 1, making himself executive chairman. McCarroll quit by June 7 after being “unable to reach a mutually agreeable employment agreement,” according to the company.
McCarroll’s departure came after strategic disagreements with Bulmahn, according to two people familiar with the circumstances of his tenure. Houston-based ATP buys and develops natural gas and oil reserves in the Gulf of Mexico and North Sea.
ATP’s stock had lost 98 percent of its value from its peak at the end of October 2007 through yesterday. The shares fell as much as 62 percent to 50 cents in New York and were halted at least once after triggering a circuit breaker.
Representatives at ATP didn’t immediately respond to several calls or e-mails seeking comment. A spokesman at Credit Suisse didn’t immediately respond to a call seeking comment.
ATP has $1.5 billion of 11.875 percent notes due May 2015. In downgrading the firm’s credit rating to CCC on Aug. 1, Standard & Poor’s said ATP won’t have money for its next coupon payment and other planned spending unless it obtains outside financing.
ATP had $224.7 million in cash and cash equivalents on March 31, according to a May regulatory filing. The driller may have had only $50 million by the end of June after interest payments and costs of developing more wells, Oliver Corlett, a New York-based analyst for R.W. Pressprich & Co., estimated in an Aug. 2 phone interview.
First-lien bondholders have organized a group and hired Houlihan Lokey to represent them in a potential restructuring, one of the people said. ATP’s $1.5 billion of 11.875 percent bonds fell 2 cents to 34.8 cents on the dollar at 1:49 p.m. in New York, according to Trace, the bond price reporting system of the Financial Industry Regulatory Authority. The debt has dropped from 76.5 cents on the dollar May 1.
In better times, like 2006, Bulmahn rewarded employees with new Volvo S60s after exceeding production and reserves-growth goals. Two years later, Bulmahn announced the “Home Sweet Home” incentive program that promised to pay the home mortgages of each of its 66 employees for a year if the company met targets to reduce debt and reached other technical milestones.