Arch Coal (NYSE: ACI) announced Dec. 15 that it has elected to exercise the 30-day grace period under its indenture agreements with holders of its 9.875% Senior Notes due 2019, the 7.00% Senior Notes due 2019 and the 7.25% Senior Notes due 2021.
This extends the time period the company has to make the approximately $90 million interest payment due Dec. 15, 2015, without triggering an event of default under the indentures. Events of default will exist under the company’s term loan facility and receivables facility as a result of this election and other recent events, but the company said it is in active discussions with its lenders and does not anticipate the lenders taking any remedial action in respect of any such event of default.
Arch said it intends to use the 30-day grace period to continue constructive discussions with various creditors regarding its ongoing effort to develop and implement a comprehensive plan to restructure its balance sheet.
The company said it has sufficient liquidity to continue normal mining operations and to meet its obligations in the ordinary course. The company had approximately $694.5 million in cash and short term investments as of Sept. 30, 2015. Arch’s operations are strong and reflect the actions it has taken to adapt to rapidly evolving coal markets, including reducing costs and enhancing efficiency across the company, said the company.
Like a number of U.S. coal producers, Arch Coal has been hit by a tough coal market that has lasted an unusually long four years at this point and shows no major signs of improving. Fellow coal producers like Alpha Natural Resources, Walter Energy and Patriot Coal have lately sought bankruptcy.
St. Louis-based Arch Coal is one of the world’s top coal producers for the global steel and power generation industries, serving customers on five continents. Its network of mining complexes is the most diversified in the United States, spanning every major coal basin in the nation. The company controls more than 5 billion tons of high-quality metallurgical and thermal coal reserves, with access to all major railroads, inland waterways and a growing number of seaborne trade channels.