Peabody to Draw Down Rest of Revolving Loan
11 February 2016 - 12:40PM
Dow Jones News
Peabody Energy Corp. is planning to draw down the remaining
available balance of its $1.65 billion revolving credit facility, a
move that would give the company much-needed cash to weather the
coal industry's deep downturn.
The St. Louis company, which has been in talks with bondholders
to reduce its $6.3 billion debt load, may max out the loan as soon
as this week, according to people familiar with the matter.
As of Nov. 5, Peabody had $1.2 billion available under its
revolving loan, which was provided by lenders led by Citigroup
Inc., according to a regulatory filing.
Companies typically use revolving loans to fund small or
infrequent expenses they expect to repay with cash or long-term
debt like bonds. Fully drawing down on a revolving loan can signal
a company is building up its cash reserves ahead of a bankruptcy
filing or that it is worried lenders may at some point cut off
access to credit.
Last summer, Peabody rival Alpha Natural Resources Inc. drew the
balance of its revolver a little more than a month before filing
for chapter 11 bankruptcy protection. A handful of heavily indebted
oil-and-gas producers also have tapped their credit lines in recent
weeks.
Peabody hasn't abandoned efforts to avoid bankruptcy and is
still trying to reach a deal with creditors out of court, according
to people familiar with the matter. The company has been working
with restructuring advisers from Lazard Ltd. and Jones Day since
last year, some of the people said.
Peabody and other coal companies are struggling as power plants
opt for less expensive natural gas and demand falls for the type of
coal used in steelmaking. The industry slide has driven several
coal companies, including Alpha, Arch Coal Inc. and Patriot Coal
Corp., into bankruptcy over the past year.
Peabody's shares have fallen 97% over the past year, closing
Wednesday at $3.36. The company's market value currently stands at
around $63 million, according to FactSet, and much of its debt
trades at distressed levels. Some $1 billion of bonds Peabody sold
in March 2015 recently traded at less than 10 cents on the dollar,
according to MarketAxess.
The company, which is scheduled to release fourth-quarter
financial results Thursday, had $334.3 million in cash as of Sept.
30.
Write to Matt Jarzemsky at matthew.jarzemsky@wsj.com
(END) Dow Jones Newswires
February 10, 2016 20:25 ET (01:25 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
Citigroup (NYSE:C)
Historical Stock Chart
From Apr 2024 to May 2024
Citigroup (NYSE:C)
Historical Stock Chart
From May 2023 to May 2024