Peabody Energy secures $1.5 billion to exit Chapter 11
Peabody Energy said that a group of banks has pledged a combined $1.5 billion in loans to help the coal producer exit bankruptcy in the coming months.
Bankruptcy Providing a strong foundation
Peabody, with 6.3 billion tons of proven and probable coal reserves, joined other U.S. coal producers in bankruptcy last year when falling prices left it unable to service billions of dollars in debt taken on to finance expansion in Australia.
The company expects to exit Chapter 11 in the second quarter of this year with a plan, supported by most of its creditors, to cut more than $5 billion of debt and raise new capital through a $750 million private placement and a $750 million rights offering.
Peabody has not yet explained how it will guarantee about $1 billion in future mine cleanup costs previously covered by "self-bonding," a federal program that exempt large miners from setting aside cash or collateral to ensure mined land is returned to its natural setting, as required by law. ■
