Peabody’s Difficulty Selling Mines ‘Doesn’t Bode Well’

first_imgPeabody’s Difficulty Selling Mines ‘Doesn’t Bode Well’ FacebookTwitterLinkedInEmailPrint分享Jacob Barker for the St. Louis Post-Dispatch:Peabody Energy’s survival looks increasingly tied to its sale of two coal mines in New Mexico and one in Colorado, a transaction announced Nov. 20 that Peabody expects to close by the end of March.Without the $358 million in cash Bowie Resource Partners would put up for the mines and the $105 million it would assume in Peabody liabilities, Peabody “believes there is substantial doubt as to whether the Company can comply with its financial covenants under its 2013 Credit Facility,” the company said in a regulatory filing Monday.Last month, Peabody drew down the remainder of a $1.65 billion revolving credit facility. It also had $1.17 billion in principal as of Sept. 30 on a $1.2 billion term loan governed by the 2013 credit agreement.Those secured lenders are concerned that Peabody isn’t pursuing a bankruptcy restructuring, Peabody disclosed in a separate filing Monday.But Peabody wants to negotiate debt swaps with its unsecured bondholders and second lien bondholders. It’s in talks with holders of roughly $5 billion in bonds, who stand to be paid after Peabody’s creditors under the 2013 financing agreement in the event the coal miner files for bankruptcy.Without closing the Bowie deal, however, Peabody’s adjusted earnings before interest, taxes, depreciation and amortization could fall below its net cash interest charges, causing a breach of the 2013 credit agreement. If that happens, Peabody would have to ask those lenders, who want it to go into bankruptcy, to give it a waiver of that provision to avoid a default.The Bowie deal contains a $20 million penalty if the coal miner with operations in Utah and Colorado can’t obtain financing to close the deal. When the deal was announced, Louisville, Ky.-based Bowie said it already had equity financing from an undisclosed partner. Four weeks later, Bowie said it would refinance its existing debt as part of the financing package to acquire Peabody’s mines.Bloomberg reported last month, citing anonymous sources, that the deal was on hold while Bowie tried to renegotiate the terms.This doesn’t bode well for Peabody’s ability to sell other assets in the future.“The hope for monetizing anything else is a bit weaker if you couldn’t do this,” said Kris Inton, an analyst at Morningstar in Chicago.Full article: Peabody’s survival hinges on sale of three coal mineslast_img read more

Read More »