CHICAGO Dec 22 Leading global coal producer
Peabody Energy said on Thursday its main creditors
support a plan to wipe more than $5 billion of debt from its
balance sheet and exit the largest energy-related U.S.
bankruptcy this year.
Under a reorganization plan filed with the U.S. Bankruptcy
Court in St. Louis, Peabody said it expects to cut its debt to
$1.95 billion from more than $8 billion when it emerges from
Chapter 11 in the second quarter of 2017.
Peabody filed for bankruptcy in April.
Miners that account for about 45 percent of U.S. coal output
have filed for bankruptcy in recent years due to falling prices
and billions of dollars in debt taken on to finance mergers.
Peabody calls itself the world's largest private-sector coal
miner and accounts for about 20 percent of U.S. coal production,
according to the U.S. Energy Information Administration.
The company's plan contemplates a $750 million rights
offering, a $750 million private placement and the issuance of
new common stock. The company said it has the support of the
vast majority of its creditors.
Lenders with $3.1 billion of secured debt will receive a
full recovery in the form of cash and debt. Under a complex
distribution scale, investors holding other forms of secured and
unsecured debt will receive below par in a mixture of cash, debt
or stock in the company when it emerges from bankruptcy.
"The plan charts Peabody's course forward and reflects an
enormous amount of work by the company and multiple creditor
groups to advance a proposal that has broad consensus, maximizes
the value of the enterprise and paves the way for a sustainable
future," Peabody Chief Executive Glenn Kellow said in a
The plan does not provide any recovery for shareholders, who
are likely to oppose it. Shareholders such as hedge fund
Mangrove Partners have argued that rising coal prices created
value for equity holders, who normally lose their investment in
Prices for coal used to generate power and make steel have
surged in recent months, particularly in Australia, where
Peabody expanded with the $5.1 billion acquisition of
Australia's Macarthur Coal in 2011.
The coal rally sent Peabody's shares to a 52-week high of
$18.75 in over-the-counter trading in October and closed at
$8.25 in OTC trading on Thursday.
Peabody plans to cancel its currently traded stock and list
shares of the reorganized company on the New York Stock Exchange
after it emerges from bankruptcy.
Shares in the second-largest U.S. coal producer Arch Coal
, have risen about 25 percent since exiting its Chapter
11 bankruptcy in October after eliminating virtually all of its
debt. Investors have scooped up coal stocks in anticipation of
more lax regulations under a Trump administration.
The reorganized Peabody will have a nine-member board
including the CEO and three directors chosen by the main
creditor groups. Peabody will choose a fifth director. The
remaining four directors will be selected through a search
(Reporting by Tracy Rucinski; Editing by Jonathan Oatis)