Ahead of a Sept. 13 confirmation hearing, Arch Coal filed arguments Sept. 12 at its bankruptcy court in support of a plan of reorganization that would see the company, one of the nation’s largest coal producers, emerge largely intact and owned by certain creditors.
Said Arch in a Sept. 12 brief filed at the U.S. Bankruptcy Court for the Eastern District of Missouri: “The Plan’s main feature is the right-sizing of the Debtors’ capital structure. By eliminating the Debtors’ estimated $3.2 billion of prepetition unsecured and second-lien bond debt, and by reducing the Debtors’ prepetition first lien debt from approximately $1.9 billion to $326.5 million, the Plan ensures that the Debtors have the sustainable capital structure that they need to compete effectively in a challenging marketplace.
“In addition to this improved capital structure, the Reorganized Debtors will benefit from substantial sources of liquidity. On the Effective Date, the Debtors will amend and extend their existing $200 million Securitization Facility, which will continue to support the issuance of letters of credit and will also reinstate the Debtors’ ability to request cash advances as existed prior to the Petition Date. Moreover, the Debtors will have sufficient cash upon emergence to meet all of their obligations under the Plan and project to have sufficient cash flow to service their debt obligations and fund operations.
“In the only eight months since the Petition Date, the Debtors have not only transformed their balance sheet, but also continued to improve their operations, in particular through rejecting nearly 390 executory contracts that were not beneficial to the Debtors’ estates. On the strength of their recapitalization and operational restructuring, the Debtors are well-positioned to emerge from the Chapter 11 Cases and continue to prosper as a leader in the U.S. coal markets for decades to come.
“The Debtors have garnered overwhelming consensus for the Plan, which is the culmination of the Debtors’ intensive reorganization and rehabilitation efforts and is the product of extensive good faith, arm’s-length negotiations among the Debtors and a great many parties, including the Creditors’ Committee, the ad hoc committee of the First Lien Lenders and certain prepetition noteholders, and has the support of all of these parties. Of the 188 Classes entitled to vote on the Plan, 185 Classes have voted to accept the Plan pursuant to the Approval Order. Overall, 3,500 ballots were cast, and 96.66% of those ballots represented votes to accept the Plan, representing over $4.4 billion of voting Claims.
“Notably, the Debtors’ largest Class of voting Creditors, holders of approximately $3.2 billion of Notes, voted to accept the Plan by an overwhelming 97.32% in number and 98.98% in amount. The consensus surrounding the Plan and these Chapter 11 Cases has led to a virtually uncontested confirmation hearing with respect to all economic parties in interest. The Debtors received only seven limited objections to confirmation of the Plan, a remarkable result considering that there are more than 40,000 parties in interest and more than 7,000 claims have been filed or scheduled in these Chapter 11 Cases.”
John T. Drexler, a Senior Vice President and the Chief Financial Officer of Arch Coal, noted in supporting testimony that Arch filed initial versions of the Plan and Disclosure Statement with the court on May 5. It filed modified versions of the Plan and Disclosure Statement on June 14, July 1 and July 6. It filed a further modified Plan on Sept. 11.