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Cloud Peak Energy Files Chapter 11 with DIP Commitment from Centerview Partners

May 14, 2019, 09:05 AM
Filed Under: Energy

Cloud Peak Energy Inc., the only pure-play Powder River Basin (PRB) coal company, announced today that it has filed voluntary petitions under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware.

Cloud Peak Energy intends to continue a marketing process for all of its assets. Cloud Peak Energy expects its mines will continue normal operations throughout the process, safely and efficiently meeting all customer commitments.

Colin Marshall, President and Chief Executive Officer of Cloud Peak Energy, commented, “Over the past several months, Cloud Peak Energy has thoroughly evaluated strategic alternatives to address the challenging market conditions in our industry. We believe, at this time, that a sale process in Chapter 11 will provide the best opportunity to maximize value for Cloud Peak Energy.”

Mr. Marshall continued, “While we undertake this process, Cloud Peak Energy remains a reliable source of high-quality coal for customers. We thank our employees for their continued hard work and dedication, and appreciate the cooperation of our business partners and support of our customers as we work through this process.”

In conjunction with the filing, and subject to court approval, Cloud Peak Energy has received a commitment for approximately $35 million in debtor-in-possession (“DIP”) financing from certain of the Company’s prepetition secured noteholders. The Company expects $10 million of the total DIP financing will be available on an interim basis. The DIP financing, combined with the Company’s cash on hand and funds generated from ongoing operations, are expected to provide sufficient liquidity for the Company to continue operating in the ordinary course during the sale process.

The Company also announced that it has entered into an Amended and Restated Sale and Plan Support Agreement (the “Support Agreement”) with holders of approximately 62% in dollar amount of the Company’s secured notes due 2021 (the “2021 Notes”) and more than 50% in dollar amount of the Company’s unsecured notes due 2024. The Support Agreement reflects, among other things, the support from two of the Company’s key creditor constituencies for the Company’s sale process, as well as the consent of the holders of the 2021 Notes to the Company’s use of cash collateral and priming liens to allow for the DIP financing.

Cloud Peak Energy has filed a number of customary motions with the court seeking authorization to support its operations while this process is ongoing, including authority to continue payment of employee wages, salaries and benefits without interruption. The Company intends, subject to court approval, to pay vendors, suppliers and other providers essential to the Company’s business in full for goods and services provided after the filing date. The Company also expects to continue entering into and fulfilling orders under sales contracts with customers in the ordinary course of business. 

Vinson & Elkins LLP is serving as legal advisor, Centerview Partners LLC is serving as investment banker and FTI Consulting, Inc. is serving as financial advisor to Cloud Peak Energy. Davis Polk & Wardwell LLP is serving as legal advisor and Houlihan Lokey, Inc. is serving as financial advisor to the ad hoc group of holders of 2021 Notes and the DIP lenders.

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