Foresight Energy LP reached an agreement with its senior lenders to restructure debt, a deal that may allow the struggling U.S. coal miner to avoid bankruptcy.
The company also convinced two-thirds of the holders of its $600 million of 7.875 percent senior unsecured notes maturing 2021 on a debt exchange, according to a Monday regulatory filing. The pact brings to an end a dispute with investors who claimed Foresight had triggered a clause that required it to repay all of the notes at a premium when it agreed to be partially bought by rival Murray Energy Corp. last year.
Foresight is restructuring its debt as America’s coal miners struggle to survive the worst industry downturn in decades. Cheap natural gas, new environmental regulations and weakening demand abroad have driven the country’s largest miners, including Peabody Energy Corp., Arch Coal Inc. and Alpha Natural Resources Inc., into bankruptcy.
The company’s dispute with bondholders began after Murray bought a 50 percent stake in Foresight a year ago. The creditors argued that the acquisition amounted to a change of control, and pushed to be repaid at a premium.
Under the plan announced on Monday, up to $106 million of the company’s notes due in 2021 will be bought out at 100 cents on the dollar. The rest of the bonds will be swapped into secured debt, split into two categories: a $300 million second-lien, convertible, pay-in-kind portion that pays 15 percent interest and a $300 million second-lien share due in August 2021 that pays 9 percent.
Senior lenders also cut the amount available under Foresight’s credit facility by $75 million and will lower it by another $25 million by the end of the year, according to the filing. The lenders also added so-called anti-hoarding provisions that would require the company to repay them with any cash holdings above $35 million.
The lenders have also agreed to waive defaults caused by an interest payment Foresight failed to make in February.