Patriot Coal (NYSE: PCX), which sought Chapter 11 bankruptcy protection on July 9, said July 10 that the U.S. Bankruptcy Court for the Southern District of New York granted Patriot interim approval of its $802m debtor-in-possession (DIP) financing from Citigroup Global Markets Inc., Barclays Bank PLC and Merrill Lynch, Pierce, Fenner & Smith Inc. as joint lead arrangers
The court also granted Patriot interim authorization to access immediately $677m of the DIP financing. The DIP financing and cash from the company’s ongoing operations in western Kentucky and West Virginia will provide Patriot with financial flexibility to operate its business in the ordinary course, including funding post-petition payments to suppliers and meeting other customary business obligations, during the reorganization process.
In addition, the court granted interim authorization for Patriot to continue to pay wages and provide health care and other benefits to employees, use existing cash management systems, and take certain other actions to help ensure that Patriot’s mining operations and customer shipments continue in the ordinary course. The court also approved the joint administration of the Chapter 11 cases of Patriot and its various related companies in bankruptcy.
Patriot is a producer and marketer of coal in the eastern U.S., with 12 active mining complexes in Appalachia and western Kentucky. The company ships to domestic and international electricity generators, industrial users and metallurgical coal customers, and controls about 1.9 billion tons of proven and probable coal reserves. In 2011, Patriot sold 31.1 million tons of coal, of which 76% was sold to domestic and global electricity generators and industrial customers, and 24% was sold to domestic and global steel and coke producers.