Patriot Coal (OTC: PCXCQ) on Dec. 18 emerged from Chapter 11 as a reorganized company, with a strong balance sheet, competitive cost structure, and streamlined operating profile focused on market opportunities that create value.
“Today marks an exciting new beginning for our company and for our employees,” said Patriot President and CEO Bennett Hatfield in a Dec. 18 statement. “We have accomplished the objectives of our reorganization and emerged in a much stronger position to compete in the global energy and steel markets. Importantly, we have also preserved nearly 4,000 jobs, signed new five-year labor agreements with the UMWA, and secured significant funding for retiree healthcare.”
Patriot emerges from Chapter 11 reorganization with a:
- Strong balance sheet – The company has lower debt levels and higher available liquidity, with dramatically reduced legacy liabilities related to retiree healthcare and other post-employment benefits.
- Competitive cost structure – Patriot has significantly reduced its operating costs, achieving more than $200m in estimated annual cash savings.
- Industry-leading assets and reserves – The company, which has current coal mining operations in West Virginia and western Kentucky, has 1.8 billion tons of coal reserves, state-of-the-art mine complexes in three U.S. coal basins, and broad transportation optionality.
- Solid customer base – Patriot has long-standing relationships with prominent U.S. and international utility customers, steel producers, and energy trading companies.
“Having streamlined our operations through the reorganization process, Patriot is poised to respond quickly to changes in the markets. Utilizing our existing mine complexes and the Company’s large coal reserve base, we can add incremental production at competitive costs with modest capital requirements,” said Hatfield.
Patriot completed the final steps in its Chapter 11 restructuring on Dec. 18 by successfully closing $545m in exit financing, with portions of the exit financing led by Barclays Bank PLC and Deutsche Bank Securities Inc., and completing its rights offerings, receiving $250m of junior capital from Knighthead Capital Management LLC and other participating unsecured creditors.
As a result of the effectiveness of the reorganization plan, Patriot is a private company and is no longer subject to the reporting requirements of the U.S. Securities and Exchange Commission. However, Patriot plans to release certain financial results and other information on at least a quarterly basis.
Peabody says this wraps up its issues with Patriot
Also on Dec. 18, Peabody Energy (NYSE: BTU) affirmed that the bankruptcy court has entered an order confirming Patriot Coal’s plan of reorganization. These steps result in the previously announced settlement agreement between Peabody, Patriot Coal and the United Mine Workers of America union becoming effective.
“Peabody is pleased to close this chapter with the settlement now finalized,” said Peabody Energy Chairman and CEO Gregory Boyce. “Peabody continues to advance a strategy begun a decade ago, as we shape our portfolio to target the highest-growth regions both within the United States and internationally.”
Peabody Energy, based in St. Louis like Patriot Coal, is the world’s largest private-sector coal company and a global leader in sustainable mining and clean coal solutions. Patriot was spun off by Peabody in a 2007 IPO.