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Morgan Stanley, Others to Amend Cloud Peak Energy’s $500MM Credit Facility

January 20, 2014, 07:12 AM
Filed Under: Energy

Cloud Peak Energy Resources LLC. entered into a Commitment Letter, dated January 17, 2014 , with Morgan Stanley Senior Funding, Inc., PNC Bank, National Association, Wells Fargo Bank, N.A., JPMorgan Chase Bank, N.A., Credit Suisse AG, Cayman Islands Branch, Goldman Sachs Bank USA, Royal Bank of Canada, and Credit Agricole Corporate and Investment Bank (collectively, the “Lenders”). Pursuant to the Commitment Letter, the Lenders have agreed, subject to the conditions set forth in the Commitment Letter, to amend the Company’s $500 million senior secured revolving credit facility, which is available for use as loans or letters of credit.

“The amended bank facility will enhance our financial flexibility, increase our available liquidity by modifying certain financial covenants and extend the term of the facility,” said Michael Barrett, Cloud Peak Energy’s Executive Vice President and Chief Financial Officer. “This amendment is part of our ongoing focus to maintain a strong and flexible capital structure while taking advantage of favorable market conditions.”

Upon closing of the amendment, the term of the senior secured revolving credit facility will be extended to mature 180 days prior to the due date of the Company’s 2017 senior notes due December 15, 2017, provided that if such senior notes are refinanced the amended credit facility would then mature five years after the closing of the amendment. The amendment will revise certain financial covenants based on EBITDA (as will be defined in the amended facility), specifically (a) requiring the Company to maintain a ratio of EBITDA to consolidated net cash interest expense equal to or greater than 2.00 to 1, and (b) adjusting the leverage ratio covenant to a net secured leverage ratio, requiring the Company to maintain a ratio of senior secured funded debt, less unrestricted cash and marketable securities (net secured debt) to EBITDA equal to or less than (i) 3.00 to 1 through December 31, 2015, (ii) 2.75 to 1 from January 1, 2016 to December 31, 2016 and (iii) 2.50 to 1 from January 1, 2017 to maturity. The amended credit facility will also revise other covenants, including covenants related to the Company’s ability to incur additional debt or take other corporate activities. The closing of the amendment is conditioned upon entrance into definitive documents and other customary closing conditions. The Company expects to complete and close the amended bank facility in early February.

Cloud Peak Energy Inc. is headquartered in Wyoming and is one of the largest U.S. coal producers and the only pure-play PRB coal company.

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