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Court Approves Peabody Energy’s First Day Motions

April 15, 2016, 07:38 AM
Filed Under: Bankruptcy

Peabody Energy Corporation announced that first day motions to help facilitate continued operations in the ordinary course of business while the company operates under Chapter 11 protection were approved by Judge Barry S. Schermer of the U.S. Bankruptcy Court for the Eastern District of Missouri.

As part of the court's approval of first-day motions, Peabody received authorization from the court to:

  • Pay employees in the usual manner and to continue their healthcare and other benefits programs without disruption;
  • Pay certain prepetition wages and reimbursable U.S. employee expenses; and
  • Continue to use existing cash management systems and maintain existing bank accounts.

The Court's approvals also affirmed on an interim basis the $800 million in Debtor-in-Possession (DIP) financing facilities by a lender group led by Citigroup that includes participation of a number of the company's secured lenders and unsecured noteholders. Those facilities include a $500 million term loan, of which $200 million is now available to the company, a $200 million bonding accommodation facility and a cash-collateralized $100 million letter of credit facility.

The Court will hold hearings in May to issue the final orders regarding Peabody's first-day motions including the final approval of the DIP financing.

All of the company's mines and offices are continuing to operate in the ordinary course of business.  No Australian entities are included in the filings, and Australian operations are also continuing as usual.

"We are pleased with this first positive step forward in our Chapter 11 process, and the support we have received since our filing from our employees, customers, suppliers and many other stakeholders has been highly encouraging," said Peabody President and Chief Executive Officer Glenn Kellow.

In its remarks to the Court the company noted that the DIP financing, involving both secured and unsecured lenders, provides sufficient liquidity to enable Peabody to operate in the normal course of business, and the opportunity for the company to maximize value to the estate through this process. The company also welcomed the comments to the Court from certain unsecured lenders that they believe in the company, in its assets and its people.

As previously announced, Peabody voluntarily filed petitions under Chapter 11 for the majority of its U.S. entities[1]  in the U.S. Bankruptcy Court for the Eastern District of Missouri, taking a major step to strengthen its liquidity and reduce debt amid an unprecedented industry downturn.

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.

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