ST. LOUIS, April 13, 2016 /PRNewswire/ -- Taking a
major step to strengthen liquidity and reduce debt amid an
unprecedented industry downturn, Peabody Energy Corporation (NYSE:
BTU) today voluntarily filed petitions under Chapter 11 for the
majority of its U.S. entities in the
United States Bankruptcy Court for the Eastern District of
Missouri.1
Through this process, the company intends to reduce its overall
debt level, lower fixed charges, improve operating cash flow and
position the company for long-term success, while continuing to
operate under the protection of the court process.
All of the company's mines and offices are continuing to operate
in the ordinary course of business and are expected to continue
doing so for the duration of the process. No Australian
entities are included in the filings, and Australian operations are
continuing as usual.
"This was a difficult decision, but it is the right path forward
for Peabody. We begin today to build a highly successful
global leader for tomorrow," said Peabody President and Chief
Executive Officer Glenn
Kellow. "Through today's action, we will seek an
in-court solution to Peabody's substantial debt burden amid a
historically challenged industry backdrop. This process
enables us to strengthen liquidity and reduce debt, build upon the
significant operational achievements we've made in recent years and
lay the foundation for long-term stability and success in the
future."
In connection with the process, Peabody has obtained
$800 million in debtor-in-possession
financing facilities, which were arranged by Citigroup and include
participation of a number of the company's secured lenders and
unsecured noteholders. The facilities include a $500 million term loan, a $200 million bonding accommodation facility and a
cash collateralized $100 million
letter of credit facility, and are subject to court approval as
well as limitations as set out in the company's filings. In
addition to the company's existing cash position, Peabody believes
that it has sufficient liquidity to operate its business worldwide
post-petition and to continue the flow of goods and services to its
customers in the ordinary course.
Peabody also announced today that the planned sale of the
company's New Mexico and
Colorado assets was terminated
after the buyer was unable to complete the transaction.
The factors affecting the global coal industry in recent years
have been unprecedented. Industry pressures in recent years
include a dramatic drop in the price of metallurgical coal,
weakness in the Chinese economy, overproduction of domestic shale
gas and ongoing regulatory challenges.
Still, multiple third-party estimates project that both the U.S.
and global coal demand will stabilize. U.S. gas prices are
projected to rebound from recent lows. Globally, thermal coal
is expected to continue to fuel hundreds of existing coal
generating plants as well as scores more that are under
construction. Coal currently fuels approximately 40 percent
of global electricity and is expected to be an essential source of
global electricity generation and steel making for many decades to
come.
"A company like Peabody with safe, efficient operations will be
well positioned to serve coal demand that will continue in
the United States and around the
world," said Kellow. "We are a leading producer and reserve
holder in our core regions of the Powder River Basin, Illinois Basin and Australia. Peabody
has a new management team, outstanding workforce, unmatched asset
base and strong underlying operational performance that represent a
key driver in the company's future success."
In 2015, all of Peabody's U.S. operations were cash-flow
positive, the Australian platform earned more than the prior year
despite lower prices for coal and the company's administrative
expenses and capital investments were at the lowest levels in
nearly a decade.
Kellow noted that, throughout this process, the company will
continue to be guided by its mission and values that include
safety, customer focus, leadership, people, excellence, integrity
and sustainability. The company also continues to take
aggressive steps to improve the business with actions consistent
with its core priorities in the operational, financial and
portfolio areas.
This process does not change Peabody's approach toward best
practices in mining and its focus on sustainability to create
high-quality land restoration for generations that follow.
The company sees its land restoration as an essential part of the
mining process, takes great pride in the work it does and has been
consistently recognized for these programs. In addition,
Peabody intends to continue to work with the applicable state
governments and federal agencies to meet its reclamation
obligations.
Peabody has filed pleadings, referred to as "first day" motions,
with the U.S. Bankruptcy Court. These motions are expected to
enable the company to continue, among other things, paying employee
wages and providing healthcare and other benefits without
interruption.
Also, as required under New York Stock Exchange regulations,
trading in shares of the company stock on the NYSE is expected to
be suspended immediately.
The company also has established a call center for questions:
866-967-1783 if calling from within the U.S. or 310-751-2683 if
calling from outside the U.S. or Canada. If calling from Australia: 1300 386 742 and +61 3 9415 4613 if
calling from outside of Australia.
Peabody is committed to communicating with stakeholders during
this process. Additional information on the process can be
found at PeabodyEnergy.com on the Chapter 11 Protection tab.
Information about the claims process, as well as copies of the
court petitions and first day motions (which contain information
that has not previously been made public), will be available at
www.kccllc.net/Peabody, which can also be linked through our
website. In addition, we are posting on our website a
declaration of our chief financial officer in support of our first
day motions. This declaration includes, among other things,
information about: our capital structure, including our current
debt, employee and other obligations; our recent financial
performance and the events leading to the filing; discussions with
creditors and our current liquidity. Additional information
regarding the voluntary filings, as well as an Australian
intercompany credit facility, is described in our Current Report on
Form 8-K filed with the Securities and Exchange Commission and is
expected to be available the morning of April 13, 2016.
Related to these activities, Peabody has retained Jones Day as its legal advisor, Lazard Fréres
& Co. LLC as its investment banker and financial advisor and
FTI Consulting Inc. as its restructuring advisor.
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. For further information, visit
PeabodyEnergy.com.
Certain statements included on this release are forward-looking
as defined in the Private Securities Litigation Reform Act of 1995.
The company uses words such as "anticipate," "believe," "expect,"
"may," "forecast," "project," "should," "estimate," "plan,"
"outlook," "target," "likely," "will," "to be" or other similar
words to identify forward-looking statements. These forward-looking
statements are made as of the date the release was filed and are
based on numerous assumptions that the company believes are
reasonable, but these assumptions are open to a wide range of
uncertainties and business risks that may cause actual results to
differ materially from expectations. These factors are difficult to
accurately predict and may be beyond the company's control. Factors
that could affect the company's results include, but are not
limited to: supply and demand for the company's coal products;
sustained depressed levels or further declines in coal prices;
competition in coal markets; price volatility, particularly in
international seaborne products and in the company's trading and
brokerage businesses; the company's ability to continue as a going
concern, including the company's ability to confirm a plan of
reorganization that restructures our debt obligations to address
the company's liquidity issues and allow emergence from the Chapter
11 proceedings; the company's ability to access adequate
debtor-in-possession financing or use cash collateral; the court's
rulings in the Chapter 11 proceedings and the outcome of the
Chapter 11 process in general; the effect of the Chapter 11 filings
on the company's relationships with third parties, regulatory
authorities and employees; the potential adverse effects of the
Chapter 11 process on the company's liquidity, results of
operations, or business prospects; the company's ability to execute
its business and restructuring plan; increased administrative and
legal costs related to the Chapter 11 process and other litigation
and the inherent risks involved in a bankruptcy process; risks
associated with third-party motions in the Chapter 11 proceedings,
which may interfere with the company's plan of reorganization and
restructuring generally; our ability to successfully consummate the
planned divestiture of our interest in the Prairie State Energy
Campus; the cost, availability and access to capital and financial
markets, including the ability to secure new financing after
emerging from the Chapter 11 process; the risk that the Chapter 11
filing will disrupt or impede our operations in Australia; our ability to appropriately secure
our obligations for reclamation, federal and state workers'
compensation, federal coal leases and other obligations related to
our operations, including our ability to utilize self-bonding
and/or successfully access the commercial surety bond market;
customer procurement practices and contract duration; the impact of
alternative energy sources, including natural gas and renewables;
global steel demand and the downstream impact on metallurgical coal
prices; lower demand for our products by electric power generators;
the impact of weather and natural disasters on demand, production
and transportation; reductions and/or deferrals of purchases by
major customers and the company's ability to renew sales contracts;
credit and performance risks associated with customers, suppliers,
contract miners, co-shippers, and trading, bank and other financial
counterparties; geologic, equipment, permitting, site access,
operational risks and new technologies related to mining;
transportation availability, performance and costs; availability,
timing of delivery and costs of key supplies, capital equipment or
commodities such as diesel fuel, steel, explosives and tires;
impact of take-or-pay arrangements for rail and port commitments
for the delivery of coal; successful implementation of business
strategies, including, without limitation, the actions we are
implementing to improve our organization and respond to current
market conditions; negotiation of labor contracts, employee
relations and workforce availability, including, without
limitation, attracting and retaining key personnel; changes in
postretirement benefit and pension obligations and their related
funding requirements; replacement and development of coal reserves;
effects of changes in interest rates and currency exchange rates
(primarily the Australian dollar); effects of acquisitions or
divestitures; economic strength and political stability of
countries in which the company has operations or serves customers;
legislation, regulations and court decisions or other government
actions, including, but not limited to, new environmental and mine
safety requirements, changes in income tax regulations,
sales-related royalties, or other regulatory taxes and changes in
derivative laws and regulations; our ability to obtain and renew
permits necessary for our operations; litigation or other dispute
resolution, including, but not limited to, claims not yet asserted;
any additional liabilities or obligations that the company may have
as a result of the bankruptcy of Patriot Coal Corporation,
including, without limitation, as a result of litigation filed by
third parties in relation to that bankruptcy; litigation, including
claims not yet asserted; terrorist attacks or security threats,
including, but not limited to, cybersecurity threats; impacts of
pandemic illnesses; and other risks detailed in the company's
reports filed with the SEC. The company does not undertake an
obligation to update its forward-looking statements except as
required by law.
1Including the following international entity:
Peabody Holdings (Gibraltar)
LTD.
CONTACT:
U.S. / International
Beth Sutton
+1 (314) 342-4351
Australia
Michelle Constantine
+61 7 3333 5670
Audio -
http://origin-qps.onstreammedia.com/origin/multivu_archive/ENR/354733-new-recording-3.wma
Logo - http://photos.prnewswire.com/prnh/20160413/354727
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/amid-prolonged-industry-downturn-peabody-energy-takes-major-step-to-strengthen-liquidity-and-reduce-debt-through-chapter-11-protection-300250678.html
SOURCE Peabody Energy Corporation