U.S. Coal Miner Peabody eyes April Bankruptcy Exit
Peabody Energy Corp , the world's largest private
sector coal producer, said on Thursday it expects to exit its
Chapter 11 bankruptcy in early April after a U.S. judge said he
would approve its plan to slash over $5 billion of
U.S. Bankruptcy Judge Barry Schermer said he was ready to sign an
order to approve Peabody's bankruptcy emergence once language
regarding a late settlement of certain U.S. Department of Justice
complaints had been finalized.
St. Louis-based Peabody will leave bankruptcy amid dramatically
improved short-term prospects for its business compared to a year
ago, when it sought Chapter 11 protection.
"Peabody has accomplished the goals set out nearly a year ago,
against an industry backdrop that has strengthened," Chief
Executive Officer Glenn Kellow said in a statement.
The reorganization plan, which will repay secured lenders in
full, received overwhelming support from its creditors.
Peabody plans to re-list on the stock market, coinciding with
increased demand from Asia and anticipation of eased regulation
under U.S. President Donald Trump that has fuelled investor
enthusiasm for coal.
Coal producer Ramaco Resources Inc recently completed an initial
public offering and Warrior Met Coal has filed to sell shares in
Peabody's plan is being financed through a $1.5 billion sale of
stock, consisting of a $750 million rights offering available to
bondholders and a $750 million private placement of preferred
equity for institutional investors.
A small group of asset managers opposed the plan because they
said it was proposed in bad faith and attacked the private
placement for enriching the select funds that helped negotiate
the company's bankruptcy plan.
"The value of the private placement is truly extraordinary," said
Andrew Leblanc, a lawyer who represented the opponents to the
plan. He said they would appeal the bankruptcy confirmation.
The opponents argued in court papers that the main funds backing
the plan stood to reap hundreds of millions of dollars in profits
because the plan underestimated Peabody's potential.
Hedge funds Elliott Management and Aurelius Capital Management
played a key role in crafting the reorganization plan by urging
Peabody to use an accounting change to weaken the position of the
The dispute went into mediation and eventually formed the basis
for the reorganization plan.
Peabody reached last-minute settlements on a number of objections
to the plan, including one from individual investors who said
they were wrongly blocked from the private stock sale.
Peabody, which owns prime assets in Australia and coal-rich
Wyoming in the United States, also recently settled objections
over its environmental liability policy and a mine workers union
Schermer overruled other objections, including from shareholders
whose stock will be wiped out in the reorganization.
The plan also includes a stock bonus plan for employees and
executives, including about $15 million for CEO Kellow and $3
million to $5 million for five other top executives.
Reporting by Tracy Rucinski
Mar 17, 2017