March 1, 2016 Read More →

Filings Indicate Peabody May No Longer Be a Going Concern

Taylor Kuykendall for SNL:

New securities filings from Peabody Energy Corp. illustrate ongoing stress and the danger of a potential bankruptcy, a path that has become well-trodden by large coal producers in recent years.

In one Feb. 29 filing, Peabody said it believes an independent registered public accounting firm may likely be required to issue an audit opinion with a paragraph expressing doubt as to the company’s ability to continue as a going concern. The inclusion of such an uncertainty paragraph would constitute an event of default under the company’s 2013 credit facility agreement.

In a separate filing, Peabody disclosed it has engaged in discussions with one of the first lien lenders under its senior secured credit agreement. According to that filing, Peabody’s preference is to pursue liability management transactions, such as proposed debt exchanges, but the lender “expressed its concern that Peabody was not pursuing an in-court restructuring.”

The basis of the potential going concern paragraph hinges on whether Peabody can complete a transaction with Bowie Resource Partners LLC. Peabody agreed to sell its El Segundo and Lee Ranch mines in New Mexico and its Twentymile mine in Colorado, but Bowie has had difficulty obtaining financing.

Peabody’s struggle has caused “unexpected delays” in filing its annual report for 2015. The company had previously disclosed it accessed the full capacity of its $1.65 billion revolving credit facility.

Full article ($): Peabody discloses going concern risk; lender pushing for restructuring in court


IEEFA FEBRUARY 2016 REPORT: PEABODY’S STRATEGIES FOR SURVIVAL IGNORE MARKET REALITIES AND RISK BACKFIRING

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