Arch Coal files Chapter 11 bankruptcy - WVVA TV Bluefield Beckley WV News, Weather and Sports

Arch Coal files Chapter 11 bankruptcy

Posted:

NEWS RELEASE:

ST. LOUIS, Jan. 11, 2016 /PRNewswire/ -- Arch Coal, Inc. ("Arch" or the "company") (NYSE: ACI) today announced that it has reached an agreement with a majority of the lenders under its $1.9 billion first lien financing facility to significantly restructure the company's debt load. Arch has entered into a restructuring support agreement with the members of an ad hoc group of lenders that hold more than 50% of the company's first lien debt. Under the terms of the agreement, the lenders have agreed to support a restructuring transaction that will eliminate more than $4.5 billion in debt from Arch's balance sheet and position the company for long-term success. 

In order to facilitate this financial restructuring, Arch and substantially all of its wholly-owned domestic subsidiaries have today filed voluntary petitions for reorganization under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the Eastern District of Missouri. The company and the ad hoc group have agreed to the principal terms of a Chapter 11 plan of reorganization, which will be subject to approval by the Bankruptcy Court. 

Arch expects its mining operations and customer shipments to continue uninterrupted throughout the reorganization process. 

"Today's announcement represents another significant step in our ongoing efforts to position the company for long-term success," said John W. Eaves, Arch's chairman and CEO. "After carefully evaluating our options, we determined that implementing these agreements through a court-supervised process represents the best way to solidify our financial position and strengthen our balance sheet.  We are confident that this comprehensive financial restructuring will further enhance Arch's position as a large-scale, low-cost operator."

"Since the market downturn, we have taken many steps to enhance the efficiency of our operations and to strengthen our asset base," Eaves continued. "As a result, all of our operating segments were cash flow positive during the first three quarters of 2015. We will continue to provide our customers with exceptional service as we move through this process, while maintaining and further reinforcing our position as an industry leader in safety, environmental stewardship and productivity."

The company believes it has sufficient liquidity to continue its normal mining activities and to meet its obligations in the ordinary course. Arch had more than $600 million in cash and short-term investments as of January 11, 2016, and expects to receive $275 million in debtor-in-possession (DIP) financing from members of the ad hoc group of lenders on terms and conditions set forth in the DIP term sheet and DIP credit agreement filed with the Bankruptcy Court and contemplated by the restructuring support agreement among the company and the lenders. In addition, Arch expects that its securitization financing providers will continue the company's $200 million trade accounts receivable securitization facility, subject to customary conditions, which supports Arch's letters of credit program. Upon approval by the Bankruptcy Court and satisfaction of customary conditions, these financings, as well as the company's existing liquidity and cash generated from ongoing operations, will be used to support the business during the restructuring process.

MORE COAL INDUSTRY NEWS

Arch Coal has filed various motions with the Bankruptcy Court in support of its reorganization. The company intends to continue to pay employee wages and provide healthcare and other benefits without interruption in the ordinary course of business and to pay suppliers and vendors in full under normal terms for goods and services provided on or after the Chapter 11 filing date. The company expects to receive Bankruptcy Court approval for these requests. 

Additional information is available on Arch's website at www.archcoal.com/restructuring or by calling Arch's Restructuring Hotline, toll-free in the U.S., at 1-844-242-7478.  (For calls originating outside the U.S., please dial 1-929-477-8086). In addition, court filings and other documents related to the reorganization proceedings are available on a separate website administered by Arch's claims and noticing agent, Prime Clerk, at https://cases.primeclerk.com/archcoal

Davis Polk & Wardwell LLP is serving as legal advisor to Arch Coal, and PJT Partners is serving as financial advisor.

U.S.-based Arch Coal, Inc. is one of the world's top coal producers for the global steel and power generation industries, serving customers on five continents. Its network of mining complexes is the most diversified in the United States, spanning every major coal basin in the nation. The company controls more than 5 billion tons of high-quality metallurgical and thermal coal reserves, with access to all major railroads, inland waterways and a growing number of seaborne trade channels. For more information, visit www.archcoal.com

Forward-Looking Statements

This press release contains "forward-looking statements" – that is, statements related to future, not past, events. In this context, forward-looking statements often address our expected future business and financial performance, and often contain words such as "expects," "anticipates," "intends," "plans," "believes," "seeks," or "will." Forward-looking statements by their nature address matters that are, to different degrees, uncertain. For us, particular uncertainties arise from changes in the demand for our coal by the domestic electric generation industry; from legislation and regulations relating to the Clean Air Act and other environmental initiatives; from operational, geological, permit, labor and weather-related factors; from fluctuations in the amount of cash we generate from operations; from potential demands for additional collateral for self-bonding; from future integration of acquired businesses; and from numerous other matters of national, regional and global scale, including those of a political, economic, business, competitive or regulatory nature. These uncertainties may cause our actual future results to be materially different than those expressed in our forward-looking statements. We do not undertake to update our forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by law.  For a description of some of the risks and uncertainties that may affect our future results, you should see the risk factors described from time to time in the reports we file with theSecurities and Exchange Commission.

-----

Copy of letter given to ArchCoal employees:

January 11, 2016

 Dear Fellow Employee,

As you know, the coal industry is facing the most challenging time in its history. Through your hard work and dedication, we have responded aggressively to address these market conditions head on, and have capitalized on opportunities to enhance and streamline our operating portfolio.

Today, we are announcing the next step in our efforts to further position the company for longterm success. Following careful consideration and deliberation, we have reached an agreement with the majority of our senior lenders on the terms of a financial restructuring that will reduce our long-term debt by more than $4.5 billion. To facilitate this financial restructuring, we have elected to file for reorganization under Chapter 11 of the Bankruptcy Code. We are confident that this court-supervised process is the best way to solidify Arch’s financial position.

Here are some key points to keep in mind as we move forward. ?

  • Today’s announcement won’t have any impact on your pay or your health and welfare benefits. You are still an Arch employee, and your contribution is and will continue to be valued. ?
  • With our world-class operations and exceptional workforce, Arch is one of the strongest U.S. coal producers. During the first nine months of 2015, we generated strong cash margins in all of our operating segments – a claim few competitors can make. But our high level of debt needs to be addressed. We believe the court-supervised process we are beginning today is the best way to strengthen our financial foundation and reinforce our position as a leader and large-scale, low-cost operator. ?
  • Arch is open for business, and our mining operations will continue without interruption. This is a financial restructuring and we will continue to operate our mines today and tomorrow as we did yesterday – safely, responsibly and efficiently. With your strong support, our customers can and will continue to rely on our high-quality products and superior service.

Although industry-wide challenges persist, we are confident coal will play a critical role in supplying the world with energy and steel for decades to come. The industry is undergoing great change, but our strong operations, exceptional workforce, and agreement with our lenders will further equip Arch to navigate through current challenges. We are confident in Arch’s future outlook, and believe that we are uniquely positioned to emerge a stronger and more competitive company.

We understand this announcement may cause some unease, and it’s our objective to keep you well-informed throughout this process. Attached you will find an FAQ with additional information about today’s filing. You can also find updates and additional information on a special section of our website, www.archcoal.com/restructuring. As always, I encourage you to talk to your senior manager if you have any questions.

In closing, let me express my thanks for your great contributions. I am constantly inspired by your resilience, dedication and energy. Arch is fortunate to have such a talented and loyal team. I know you will join me as we redouble our commitment to Arch’s core principles – safety, environmental stewardship and highly efficient operations. Thank you for your ongoing trust, patience and support.

Sincerely,

John W. Eaves

Chairman and CEO

Powered by Frankly