James River Coal Co.’s unsecured creditors committee told a judge the fees associated with the company’s proposed bankruptcy financing are “extraordinarily expensive” and the loan shouldn’t be approved in its current form.
James River is seeking permission to borrow as much as $110 million from a syndicate of lenders including Cantor Fitzgerald Securities as administrative agent and Deutsche Bank AG (DBK) as arranger. The company received interim approval to borrow as much as $80 million in “debtor-in-possession” financing on April 9.
“The cost of the DIP financing facility, when you include the interest rate and the excessive fees, is over 21 percent per annum,” the committee said in court papers filed May 2 in U.S. Bankruptcy Court in Richmond, Virginia. The fees are about 12 percent of the cost of the facility on an annualized basis, the committee said.
The committee is asking the court to deny final approval unless the credit agreement is modified.
James River, which operates in the U.S. Midwest and Appalachia, filed for bankruptcy for a second time, listing $818.7 million in debt, after declining prices caused it to idle a dozen mines.
The case is In re James River Coal Co. (JRCCQ), 14-bk-31848, U.S. Bankruptcy Court, Eastern District of Virginia (Richmond).
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