Peabody reaches agreement with unsecured lenders on plan of reorganisation

TORONTO (miningweekly.com) – US coal miner Peabody Energy has reached agreement by which the unsecured creditors' committee (UCC) will support its proposed plan of reorganisation, the company said Thursday.

The agreement builds on momentum regarding Peabody's proposed plan, which has received substantial support in recent weeks by holders of first lien debt, second lien notes and senior unsecured notes.

Peabody filed for bankruptcy protection in April last year after a prolonged coal industry downturn that devastated the North American coal industry.

"We are pleased to have reached agreement with the UCC and are encouraged by the support we have received. We look forward to continuing to advance a plan that we believe maximises the value of the enterprise," stated Peabody president and CEO Glenn Kellow.

Under the plan of reorganisation, the bankrupt miner will emerge with a new, sustainable capital structure that significantly reduces the pre-filing debt levels by more than $5-billion, lowers fixed charges and recapitalises the company through a backstopped rights offering of $750-million, a private placement of mandatorily convertible preferred stock of $750-million and the issuance of new common stock to satisfy certain creditor claims. The plan also anticipates that Peabody will emerge with substantial liquidity to satisfy near- and long-term needs.

Peabody, the world's largest private-sector coal company and a Fortune 500 company that serves metallurgical and thermal coal customers in 25 countries on six continents, said the plan of reorganisation remained subject to confirmation by the court, and the related disclosure statement was subject to approval by the court.