Peabody Energy Sues Bowie Over Failed Mine Sale
June 02 2016 - 12:10PM
Dow Jones News
Peabody Energy Corp. is suing Bowie Resource Holdings LLC over
the collapse of its $358 million offer to acquire Peabody's
Colorado and New Mexico mines, which preceded Peabody's bankruptcy
filing.
The lawsuit, filed Wednesday in the U.S. Bankruptcy Court in St.
Louis, seeks to collect a $20 million termination fee from Bowie,
plus interest, costs and expenses, court papers show.
According to Peabody, the deal fell apart when Bowie failed to
line up financing for the cash purchase price. It says Bowie—a unit
of Louisville, Ky.-based coal mining company Bowie Resource
Partners LLC—has so far refused to pay the termination fee that was
negotiated in connection with the sale.
A Bowie representative couldn't be reached for comment on
Thursday.
The proposed sale, announced in November, of Peabody's
Twentymile mine in Colorado and its El Segundo and Lee Ranch mines
in New Mexico came in connection with other cost-cutting efforts as
Peabody last year sought to restructure its debt without a
bankruptcy filing.
In its announcement of the deal, Bowie touted the acquisition as
doubling the size of its coal output to 25 million tons a year. The
company already operates mines in Utah and Colorado.
The sale was to have closed in the first quarter of this year.
Peabody said that Bowie had agreed to "use its reasonable best
efforts" to arrange the financing needed to close the sale—no easy
task in light of widespread distress in the coal markets—but made
it clear nothing was guaranteed.
The sale was a condition of a bond exchange Peabody was hoping
to use to restructure its debt outside of bankruptcy court. In
court papers, the company cited the failed sale, along with other
pressing challenges, as being among the reasons it sought chapter
11 protection in April.
Since the bankruptcy filing, Peabody has secured court approval
for an $800 million financing package to see it through its
restructuring. It hasn't yet proposed restructuring terms, as it
must first contend with a looming battle between its senior and
junior creditors.
Peabody is hoping to resolve the dispute by early fall, so it
can be on a path to emerge from bankruptcy in April 2017.
Peg Brickley contributed to this article.
Write to Jacqueline Palank at jacqueline.palank@wsj.com
(END) Dow Jones Newswires
June 02, 2016 11:55 ET (15:55 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.