Peabody Energy Completes Key Milestone Toward Emergence from Chapter 11
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Peabody Energy has filed its plan of reorganization and disclosure statement with the U.S. Bankruptcy Court for the Eastern District of Missouri, representing another key milestone in the company’s Chapter 11 process.
“Today’s proposed plan is an important achievement in our path toward emergence,” said Glenn Kellow, president and chief executive officer of Peabody Energy.
“The plan charts Peabody’s course forward and reflects an enormous amount of work by the company and multiple creditor groups to advance a proposal that has broad consensus, maximizes the value of the enterprise and paves the way for a sustainable future. We look forward to moving toward confirmation of the plan,” added Kellow.
The plan of reorganization and disclosure statement establish proposed recoveries for key stakeholders and outline other components of the company’s future governance and ownership.
The proposed plan provides for a new, sustainable capital structure that significantly reduces the pre-filing debt levels by more than $5 billion, lowers fixed charges and recapitalizes the company through a backstopped rights offering of $750 million, a private placement of mandatorily convertible preferred stock of $750 million and the issuance of new common stock to satisfy certain creditor claims. The plan also anticipates that Peabody will emerge with substantial liquidity to satisfy near and long-term needs.
Following extensive negotiations, three key stakeholder groups — the first lien creditors, the second lien group and the unsecured noteholder group, reached agreement with the company on a framework that culminated in the plan of reorganization. Peabody currently expects to have a hearing on the disclosure statement on Jan. 26, 2017. Following court approval, Peabody intends to send the plan and disclosure statement to creditors for approval.
“Eight months ago, we set out on a path to strengthen the balance sheet and position the company for long-term success amid historically challenged coal industry fundamentals. While we still have outstanding issues to resolve prior to emergence, this plan demonstrates that Peabody retains an unmatched asset base, leading U.S. platform, substantial Australian thermal and metallurgical coal business, and a team of skilled employees with a fundamental commitment to lasting values. We’re pleased to reach this important step as we move to the next phase of Peabody’s Chapter 11 process. And we appreciate all of our employees’ actions in continuing to manage safe, low-cost operations and deliver the results that can best ensure our success,” concluded Kellow.
Given recent changes in the industry and company, Peabody also elected to provide updated projections for 2016 through 2021, incorporating changes to the company’s industry views and financial performance/outlook as of October 2016, and will make these projections public. Revisions to the August 2016 business plan mostly impact early years based on changes in near-term pricing and currency, along with the planned sale of the Metropolitan Mine targeted for the first quarter of 2017, subject to clearance by the Australian Competition and Consumer Commission. In addition, Peabody is preparing updated financial statements to reflect the impact of actual performance, and these will be filed as a supplement ahead of the disclosure statement hearing. These filings follow the announcement that the company repaid its debtor-in-possession financing facility.
The company notes that it is possible that changes will continue to be made to the plan of reorganization and disclosure statement prior to final creditor and court approval. Peabody is targeting emergence around the beginning of the second quarter of 2017.
About Peabody Energy
Peabody Energy is the world’s largest private-sector coal company and a Fortune 500 company. The company serves metallurgical and thermal coal customers in 25 countries on six continents.
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