Corporate Finance

Peabody’s Financing Plan Gains Creditor Support

The mining company says its Chapter 11 reorganization has received "substantial incremental support" in recent days.
Matthew HellerDecember 29, 2016
Peabody’s Financing Plan Gains Creditor Support

Peabody Energy said Thursday its bankruptcy reorganization plan has been gaining support among creditors and it had extended the deadline for other noteholders to come on board.

The plan would eliminate more than $5 billion of debt and raise capital from creditors with a $750 million private placement and a $750 million rights offering. The world’s largest private-sector coal company filed for bankruptcy protection in April, citing the prolonged slump in commodity prices.

In a statement Thursday, Peabody said holders of 65% of its second-lien notes and 65% of its unsecured notes have so far signed on to the financing deals.

A Better Way to Do Ecommerce

A Better Way to Do Ecommerce

Learn how Precision Medical leveraged OneWorld to cut the cost of billing in half and added $2.5M in annual revenue.

A portion of those deals were reserved for other noteholders if they agreed to back Peabody’s plan by Wednesday. That deadline has now been extended to Friday.

“We are very pleased by the substantial incremental support our plan has received over the past few days,” Peabody CFO Amy B. Schwetz said. “The plan has gained significant additional consensus among Peabody’s senior bondholders as we continue to move toward confirmation.”

A judge has also extended the deadline to Jan. 6 for a group of large investors holding about $444 million of the company’s securities who had filed a lawsuit to halt the financing process.

As Reuters reports, the investors — Appaloosa Management, Latigo Partners, Capital Ventures International and Venor Capital Management — said they needed more time to review Peabody’s financing plans.

Peabody filed Chapter 11 with $10.1 billion in debt, much of it resulting from its acquisition in 2011 of Australia’s Macarthur Coal for $5.1 billion, which was meant to position it as a supplier of metallurgical coal for Asian steel mills.