Foresight Energy files bankruptcy; lenders, noteholders ink deal

By Caroline Salls

Pittsburgh, March 10 – Foresight Energy LP and general partner Foresight Energy GP LLC filed Chapter 11 bankruptcy on Tuesday in the U.S. Bankruptcy Court for the Eastern District of Missouri to implement a restructuring support agreement reached with lender groups holding more than 73% of $1.4 billion in claims under the partnership’s first-lien credit agreement and second-lien notes, according to a news release.

The bankruptcy filing also includes all of the partnership’s subsidiaries, including those operating the Williamson, Sugar Camp and Hillsboro operations and the Sitran River Terminal.

Foresight said it intends to finance its operations throughout Chapter 11 with cash on hand and access to a $100 million new-money debtor-in-possession facility, subject to court approval. The DIP financing also includes a $75 million term loan facility, which, upon entry of the final order, will convert or refinance the first-lien claims of the DIP lenders into the DIP facility based on the lenders’ new-money commitments.

Cortland Capital Market Services LLC is the DIP agent.

The DIP financing will mature 180 days from the bankruptcy filing date.

Interest will accrue at the Base rate plus 1,000 basis points with a 2% floor or Eurodollar plus 1,100 bps with a 1% floor.

A total of $55 million of the new-money financing will be available on an interim basis.

Lenders that are parties to the support agreement have committed to provide the full amount of the DIP facility, the proceeds of which will be used to support ordinary course operations and payments to employees and suppliers throughout the restructuring process.

Support agreement

Under the restructuring support agreement, substantially all of the partnership’s pre-bankruptcy funded debt will be equitized.

The agreement also provides for a seven-year $225 million exit financing facility, backstopped by the lenders. The exit facility is expected to provide a reorganized Foresight Energy with funds sufficient to repay the DIP facility and retain cash on hand to perform in the ordinary course of business upon emergence from its Chapter 11 cases.

The exit facility will bear interest at Libor plus 800 basis points, subject to a 1.5% floor.

Creditor treatment

According to an 8-K filed with the Securities and Exchange Commission, holders of Foresight’s outstanding senior secured first-priority credit facility will receive a share of 92.75% of the equity securities of the reorganized company.

Holders of senior secured notes will receive a share of 7.25% of the new common equity.

Holders of general unsecured claims will receive a share of a cash pool, provided that the size of the pool may vary depending on whether holders of general unsecured debt vote as a class to accept the plan and provided, further that the company, with the approval of consenting first-lien lenders holding more than 60% in principal amount of the first-lien claims may classify any general unsecured debt below a dollar threshold into a convenience class.

Equity and voting interests and all incentive distribution rights will be cancelled, and holders will receive no recovery on account of those interests.

Robert D. Moore will continue to be chairman of the board of a reorganized Foresight Energy. The Partnership has agreed to comply with certain milestones related to implementing its Chapter 11 plan and related restructuring process under the DIP facility and RSA.

“As we enter this process, I am confident the DIP facility provides the partnership with adequate liquidity to get payments to our valued trade partners and continue operating in the normal course of business without any anticipated impact to production levels,” Moore said in the release.

Debt details

According to court documents, Foresight has $2,385,563,000 in assets and $1,877,628,000 of debt.

The company’s largest unsecured creditors are Wilmington Trust, NA of Minneapolis, with a $472.12 million bond debt claim; Joy Global Underground Mining LLC of St. Louis, with a $12.01 million trade claim; Jennchem Mid-West of Charlotte, N.C., with a $6.73 million trade claim; Jennchem of West Kentucky Inc. of Charlotte, N.C., with a $5.92 million trade claim; Fabick Mining Inc. of Atlanta, with a $4.43 million trade claim; Natural Resource Partners LLP of Herrin, Ill., with a $3.67 million royalty claim; International Belt Sales LLC of Pepper Pike, Ohio, with a $3.36 million trade claim; BankDirect Capital Finance of Hillsboro, Ill., with a $3.21 million insurance claim; United Central Industrial Supply of Chicago, with a $2.55 million trade claim; and Dewind One Pass Trenching LLC of Zeeland, Mich., with a $2.32 million trade claim.

Paul, Weiss, Rifkind, Wharton & Garrison LLP is acting as legal counsel to Foresight Energy, Jefferies Group is acting as investment banker and FTI Consulting, Inc. is acting as financial adviser.

Foresight Energy is a St. Louis-based producer and marketer of thermal coal. The Chapter 11 case number is 20-41308.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.