Patriot Coal granted interim access to $677 million of DIP financing

By Caroline Salls

Pittsburgh, July 11 - Patriot Coal Corp. has received interim access to $677 million of its $802 million of debtor-in-possession financing from joint lead arrangers Citigroup Global Markets Inc., Barclays Bank plc and Bank of America Merrill Lynch, according to a news release.

The company said the DIP financing and cash from its ongoing operations will provide Patriot with financial flexibility to operate its business in the ordinary course, including funding post-bankruptcy payments to suppliers and meeting other customary business obligations during the reorganization process.

As previously reported, the $802 million facility consists of a $125 million super-priority senior secured DIP borrowing base facility offered under first-out DIP documents, a $375 million super-priority senior secured term loan facility offered under the first-out DIP documents and roll-up of letters of credit in a total face amount of about $302 million issued under a pre-bankruptcy credit agreement to a second-out facility.

Citibank, NA is the administrative agent and collateral agent for the first-out facility, and Bank of America, NA is the administrative agent and collateral agent for the second-out facility.

The first-out and second-out facilities will mature 450 days after the bankruptcy filing or, if an extension date has occurred, on Dec. 31, 2013.

Interest on first-out revolving loans will be either Libor plus 325 basis points with a 150 bps Libor floor or Base rate plus 250 bps. Interest on the first-out facility term loan and the second-out facility will be either Libor plus 800 bps with a 150 bps Libor floor or Base rate plus 700 bps.

The first-out facilities carry a 75 bps commitment fee, and the second-out facility has a 450 bps letter-of-credit fee.

Patriot Coal sought interim access to $677 million of the facility, including $250 million of term loan borrowings, $125 million in revolver availability and the roll-up of $302 million of the letters of credit into a second-out facility.

The final DIP loan hearing is scheduled for Aug. 2.

In addition, the U.S. Bankruptcy Court for the Southern District of New York granted interim approval for Patriot to continue to pay wages and provide health care and other benefits to employees, use existing cash management systems and take other actions to help ensure that the company's mining operations and customer shipments continue in the ordinary course.

Patriot Coal, a St. Louis-based miner, producer and seller of thermal coal primarily to electricity generators, filed for bankruptcy on July 9. The Chapter 11 case number is 12-12900.

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