Illinois coal producer Foresight Energy LP and affiliated Foresight Energy LLC said in an April 18 SEC filing that on the same day they entered into a Transaction Support Agreement with certain lenders under the Partnership’s Second Amended and Restated Credit Agreement dated August 2013.
Under this deal, these lenders have agreed (subject to the terms and conditions of the agreement) to support a proposed global restructuring of the Partnership’s indebtedness, including a proposed amendment and restatement of the Credit Agreement.
This Support Agreement may be terminated at any time by mutual consent of the parties. It can also be terminated automatically upon: the commencement of a voluntary bankruptcy proceeding of the Partnership or the Partnership consenting to the appointment of a liquidator or receiver; failure to consummate the transactions contemplated by the Support Agreement on or before July 15, 2016; or failure to consummate the transactions contemplated by the Support Agreement by an outside date of Nov. 4, 2016.
Foresight noted that the successful consummation of the transactions contemplated by the Support Agreement, which are currently being negotiated with various stakeholders as part of the proposed restructuring, are subject to various conditions, including the successful negotiation of definitive documentation and other conditions that are not within the control of the Partnership or its affiliates.
The company added: “We continue to experience substantial financial, business, operational and reputational risks that threaten our ability to continue as a going concern and could materially affect our present expectations and projections.”
This comes during a period of hard times for the U.S. coal industry, with major coal producers Peabody Energy, Arch Coal and Alpha Natural Resources in Chapter 11 bankruptcy protection.
Foresight Energy LP is a leading producer and marketer of thermal coal controlling over 3 billion tons of coal reserves in the Illinois Basin. Foresight currently owns four mining complexes (Williamson, Sugar Camp, Hillsboro and Macoupin) in Illinois, with four longwall systems, and the Sitran river terminal on the Ohio River.
During calendar years 2015, 2014 and 2013, Foresight generated total revenues of $984.9 million, $1,109.4 million and $957.4 million, respectively. Its primary domestic customers are electric utility companies in the eastern half of the United States. The three largest customers in 2015 were Southern Co., Dayton Power and Light and EDF Trading, representing approximately 21.5%, 11.9% and 10.7% of total tons sold, respectively.