TORONTO (miningweekly.com) – Eastern US-focused coal producer Patriot Coal on Wednesday announced that it had emerged from an 18-month long Chapter 11 reorganisation as a well-capitalised private company, with a competitive cost structure and a streamlined operating profile.
Patriot said it had completed the final steps in its Chapter 11 restructuring on Wednesday, by successfully closing $545-million in exit financing, with portions of the exit financing led by Barclays Bank and Deutsche Bank Securities, and completed its rights offerings, for which it received $250-million of junior capital from Knighthead Capital Management, and other participating unsecured creditors.
"Today marks an exciting new beginning for our company and for our employees. We have accomplished the objectives of our reorganisation and emerged in a much stronger position to compete in the global energy and steel markets.
“Importantly, we have also preserved nearly 4 000 jobs, signed new five-year labour agreements with the UMWA [United Mine Workers of America], and secured significant funding for retiree healthcare,” Patriot president and CEO Bennett Hatfield said.
He noted that having streamlined the operations through the reorganisation process, Patriot was poised to respond quickly to changes in the markets.
“Utilising our existing mine complexes and the company's large coal reserve base, we can add incremental production at competitive costs with modest capital requirements,” he said.
Patriot said it had filed the notice of efficacy of its plan of reorganisation with the US Bankruptcy Court for the Eastern District of Missouri, after a judge had approved its restructuring plan on Tuesday, paving the way for the coal-mining company to exit bankruptcy.
Under the restructuring plan senior bondholders indebted $250-million, and holders of $24.75-billion in bond guarantee claims against Patriot's subsidiaries, would receive 60% of Patriot's new common shares. They would also be eligible to participate in the rights offering.
The holders of $200-million in convertible bond debt, as well as Patriot's general unsecured creditors, would get 5% of the new common stock as well as the ability to participate in the rights offering.
All previously issued and outstanding shares of Patriot common stock were cancelled, as were all other previously issued and outstanding equity interests and bonds.
Patriot expected to make initial distributions to unsecured claim holders in the first quarter of 2014.
The plan also contained two settlements with Arch Coal and Peabody Energy, which spun off the mining units that constituted Patriot. The deals resolved hostilities over who was responsible for the liabilities Patriot took on as a result of the spinoffs.
Peabody had agreed to contribute $310-million to fund retiree health benefits through 2017 under one settlement, and another deal would see Arch pay $5-million to settle claims related to the 2005 sale of coal operations that Patriot later acquired.
As a result of the restructuring plan being in effect, Patriot was a private company and was no longer subject to the reporting requirements of the US Securities and Exchange Commission. However, the company said it planned to release certain financial results and other information on at least a quarterly basis.
Patriot, which mines for coal throughout Appalachia and the Illinois Basin, sought Chapter 11 protection in July 2012.