Peabody Energy Corp. won final bankruptcy-court approval for an $800 million financing package after lenders made concessions to appease creditors.

Peabody said final approval on the chapter 11 financial arrangements ensures the company can continue operating as usual while it works through a load of debt that it can't support given the declines in coal demand and prices.

Existing lenders have offered to fund the turnaround of one of the world's largest coal-mining operations, but the terms of the deal had junior creditors up in arms.

Peabody was surrendering too much and getting too little under the financing, according to the official committee that represents unsecured creditors.

In court papers, Peabody defended the financing, saying all the benefits of the financing justified the cost of the deal. Creditors reckoned that fees and interests on the financing meant Peabody was getting minimal new money.

Peabody's bankruptcy financing includes a $500 million term loan, $200 million earmarked to cover environmental obligations and a $100 million letter of credit.

In the face of criticism, senior lenders agreed to consider changes to the financing, including more time for Peabody to stabilize in bankruptcy before having to face financial tests. Unsecured creditors will have more time and a bigger budget to investigate the validity of Peabody's top-ranking loans under the agreed changes.

Peabody also gets more time to put together a chapter 11 exit scheme once the bankruptcy judge rules on a key issue involving claims to the company's coal mines and other assets.

In addition to its prebankruptcy senior loans, Peabody is carrying $1 billion in second-lien bond debt and $4.5 billion in unsecured bond debt, part of a total debt load of about $10 billion, as reported at the end of 2015.

(Dow Jones Daily Bankruptcy Review covers news about distressed companies and those under bankruptcy protection. Go to http://dbr.dowjones.com)

Write to Peg Brickley at peg.brickley@wsj.com

(END) Dow Jones Newswires

May 17, 2016 17:05 ET (21:05 GMT)

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