Foresight Energy secures notes forbearance deal tied to court opinion

By Caroline Salls

Pittsburgh, Dec. 21 – Foresight Energy LP and some of its subsidiaries entered into a forbearance agreement with the indenture trustee for the 7 7/8% senior notes due 2021 issued by Foresight Energy LLC and Foresight Energy Finance Corp., according to an 8-K filed Monday with the Securities and Exchange Commission.

The forbearing noteholders hold more than 75% of the total principal amount of the notes.

Under the forbearance agreement, the noteholders will not exercise default-related rights arising from transactions referenced in a Dec. 4 Delaware Chancery Court opinion.

The forbearance period runs through Jan. 18.

In addition, the Foresight entities agreed not to enter into specified transactions outside of the ordinary course of business, as well as to pay fees and expenses of the trustee and the consenting noteholders.

Foresight said the forbearance agreement is intended to give it an opportunity to negotiate a debt restructuring transaction with the noteholders and secured lenders.

The company said it plans to seek similar forbearance agreements from the lenders under its secured credit facilities as part of negotiations to restructure the notes.

If it is not able to negotiate and complete a debt restructuring transaction, Foresight said it will explore other available restructuring and reorganization alternatives.

As previously reported, Foresight Energy LLC received a notice of default from its credit agreement administrative agent related to an opinion of the Delaware Chancery Court.

Foresight Energy LP was notified of an adverse opinion in litigation filed in May 2015 in the Delaware Court of Chancery by the trustee for the bondholders of the 2021 senior notes.

The litigation alleges that Murray Energy’s acquisition of a 34% non-controlling interest in Foresight and of an option to purchase an additional 46% interest in Foresight triggered a change of control under the notes’ indenture, thereby requiring the issuer to make an offer to purchase the notes at 101 plus accrued interest.

Foresight said the court sided with the bond trustee.

Foresight is a coal producer based in St. Louis.

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