On Aug. 30, Illinois coal producer Foresight Energy LP (NYSE: FELP) completed an out-of-court restructuring of more than $1.4 billion in indebtedness pursuant to the terms of Transaction Support Agreements previously executed by it and Foresight Energy GP LLC (FEGP).
Other participants included its equity sponsors – including founder Chris Cline, Ohio-based coal producer Murray Energy and Foresight Reserves LP – and a majority of its secured bank lenders and holders of the 7.875% Senior Notes due 2021 issued by the Foresight Energy LLC and Foresight Energy Finance Corp. (the “Old Notes”).
This restructuring resolves various defaults and events of default relating to a December 2015 Delaware Chancery Court determination that Foreight’s and FEGP’s April 2015 equity transaction involving Murray Energy and Foresight Reserves constituted a “change of control” of FELP under the terms of the Old Notes. The restructuring was implemented principally through concurrent exchange and tender offers in which holders of 99.98% of the principal amount of the Old Notes participated. Through the tender and exchange offers, Foresight Reserves and certain of its affiliates purchased approximately $105 million of outstanding Old Notes for cash, and FELP exchanged the remaining Old Notes for approximately $349 million of new second lien notes, approximately $299 million of new convertible PIK notes, and warrants to acquire up to 4.5% of the total outstanding units of FELP upon the redemption of the convertible PIK notes.
The restructuring also provides other elements, including an amendment and restatement of FELP’s senior credit facility, and amendments and waivers related to longwall equipment leases and financings. As a result of the restructuring, the change of control litigation will be dismissed with prejudice.
“We are pleased to have completed the debt restructuring,” said Robert D. Moore, President and Chief Executive Officer. “The resulting transaction puts the change of control litigation behind us and allows us to continue to focus on executing our mission of running the safest, most reliable and lowest cost mines in the Illinois Basin.”
Foresight was represented in the restructuring by PJT Partners Inc. as its financial advisor and Paul, Weiss, Rifkind, Wharton & Garrison LLP as its legal advisor.
Foresight Energy LP is one of the largest holders of coal reserves in the United States, and its reserves can support over 100 years of production at its current production levels. The company owns four mining companies in the Illinois Basin.