GILLETTE — In a move that could potentially stave off a second Chapter 11 bankruptcy in five years for Peabody Energy Corp., the company has announced an agreement with its creditors to refinance $459 million of debt.
The agreement, made in a Christmas Day a press release, includes all of its revolving lenders and about 65% of its 6% senior secured notes due in 2022. In the release, the company calls the deal a “comprehensive financing solution” to help give it some financial breathing room as it continues to drown in red ink.
"Today's announcement is significant for the company as well as its many stakeholders," said Peabody President and Chief Executive Officer Glenn Kellow in the release. "Closing of the exchange transaction will provide Peabody with the flexibility needed to continue to pursue operational improvements across our operations as well as capture potential seaborne met and thermal market improvements.”
Peabody’s creditors have agreed to extend the 2022 notes another two years while credit lenders also have agreed to convert existing debt into a new loan also due in December 2024. The deal also could satisfy an earlier conflict with its surety bond carrier over alleged insufficient collateral to cover reclamation obligations.
The new capital structure includes $459 million in outstanding principal owed and adds $194 million of new senior secured notes at 10% interest, according to a Peabody filing with the federal Securities and Exchange Commission. A new $324 million letter of credit also is included in the $1.52 billion package.
"We are pleased to have reached a support agreement with a substantial number of our creditors that lays the financial foundation for future success and value creation," said Executive Vice President and Chief Financial Officer Mark Spurbeck in the press release. "This agreement would extend our nearest debt maturity to December 2024, eliminate the restrictive net leverage covenant from our credit agreement and along with the surety collateral standstill, provide a greater line of sight into future liquidity requirements."
The deal caps a particularly turbulent year for Peabody Energy, which operates coal production facilities around the United States and Australia. It’s the largest producer of thermal coal in the Powder River Basin from its three Campbell County mines: North Antelope Rochelle, Rawhide and Caballo.
Between them, the mines employ nearly 1,300 people and produced more than 107 million tons of coal in 2019. This year, the company is on pace for more than 23% less production and has seen its stock plunge. At one point last month, Peabody stock dipped to 83 cents a share. It’s since edged back up to close at $1.72 before Christmas. It had jumped to $2.66 early Monday morning on news of the debt deal.