| Emergence from the Chapter 11 Cases and Fresh Start Reporting | Emergence from the Chapter 11 Cases and Fresh Start Reporting The following is a summary of certain provisions of the Plan, as confirmed by the Bankruptcy Court pursuant to the Confirmation Order, and is not intended to be a complete description of the Plan, which is included in its entirety as Exhibit 2.2 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission (SEC) on March 20, 2017. The consummation of the Plan resulted in the following capital structure on the Effective Date: • Successor Notes - $1,000.0 million first lien senior secured notes • Successor Credit Facility - a first lien credit facility of $950.0 million • Series A Convertible Preferred Stock - $750.0 million for 30.0 million shares of Series A Convertible Preferred Stock • Common Stock and Warrants - $750.0 million for common stock and warrants issued in connection with a Rights Offering (as defined below), resulting in, together with other issuances of common stock, the issuance of 70.9 million shares of a single class of common stock and warrants to purchase 6.2 million shares of common stock The new debt and equity instruments comprising the Successor Company’s capital structure are further described below. Treatment of Classified Claims and Interests The following summarizes the various classes of claimants’ recoveries under the Plan. Undefined capitalized terms used in this section, Treatment of Classified Claims and Interests , are defined in the Plan. First Lien Lender Claims (Classes 1A - 1D) Paid in full in cash. Second Lien Notes Claims (Classes 2A - 2D) A combination of (1) $450 million of cash, first lien debt and/or new second lien notes and (2)(a) new common stock, par value $0.01 per share, of the Reorganized Peabody (Common Stock) and (b) subscription rights in the Rights Offering. Other Secured Claims (Classes 3A - 3E) At the election of the Debtors, (1) reinstatement, (2) payment in full in cash, (3) receipt of the applicable collateral or (4) such other treatment consistent with section 1129(b) of the Bankruptcy Code. Other Priority Claims (Classes 4A - 4E) Paid in full in cash. General Unsecured Claims Class 5A: Against Peabody Energy: a pro rata share of $5 million in cash plus an amount of additional cash (up to $2 million) not otherwise paid to holders of Convenience Claims. Class 5B: Against the Encumbered Guarantor Debtors: (1) Common Stock and subscription rights in the Rights Offering or (2) at the election of the claim holder, cash from a pool of $75 million in cash to be paid by the Debtors and the Reorganized Debtors into a segregated account in accordance with the terms set forth in the Plan. Class 5C: Against the Gold Fields Debtors: units in the Gold Fields Liquidating Trust. Class 5D: Against Peabody Holdings (Gibraltar) Limited: no recoveries. Class 5E: Against the Unencumbered Debtors: cash in the amount of such holder’s allowed claim, less any amounts attributable to late fees, postpetition interest or penalties. Convenience Claims Class 6A: Against Peabody Energy: up to 72.5% of such claim in cash, provided that total payments to Convenience Claims not exceed $2 million. Class 6B: Against the Encumbered Guarantor Debtors: up to 72.5% of such claim in cash, provided that total payments to Convenience Claims not exceed $18 million. United Mine Workers of America 1974 Pension Plan Claim (Classes 7A - 7E) $75 million in cash paid over five years. See Note 6. “Discontinued Operations,” for additional details. Unsecured Subordinated Debentures Claims (Class 8A) (1) Payment of the reasonable and documented fees and expenses of the trustee under the 2066 subordinated indenture up to $350,000; and (2) because this class voted in favor of the Plan and in connection with the settlement of certain potential intercreditor disputes as part of the global settlement embodied therein, and because the trustee under the 2066 subordinated indenture did not object to, and affirmatively supported, the Plan, holders of allowed Unsecured Subordinated Debenture Claims received from specified noteholder co-proponents their pro rata share of penny warrants exercisable for 1.0% of the fully diluted Reorganized Peabody common stock from the pool of penny warrants issued to the noteholder co-proponents under the Rights Offering and/or the terms of the Backstop Commitment Agreement (as defined below). Section 510(b) Claims (Class 10A) No recovery. Peabody Energy Equity Interests (Class 11A) No recovery, as further described under Cancellation of Prior Common Stock below. Cancellation of Prior Common Stock In accordance with the Plan and as previously disclosed, each share of the Company’s common stock outstanding prior to the Effective Date, including all options and warrants to purchase such stock, was extinguished, canceled and discharged, and each such share, option or warrant has no further force or effect as of the Effective Date. Furthermore, all of the Company’s equity award agreements under prior incentive plans, and the awards granted pursuant thereto, were extinguished, canceled and discharged and have no further force or effect as of the Effective Date. Issuance of Equity Securities Section 1145 Securities On the Effective Date and simultaneous with the cancellation of the prior common stock discussed above, in connection with the Company’s emergence from the Chapter 11 Cases and in reliance on the exemption from registration requirements of the Securities Act of 1933 (the Securities Act) provided by Section 1145 of the Bankruptcy Code, the Company issued: • 11.6 million shares of Common Stock to holders of Allowed Claims (as defined in the Plan) in Classes 2A, 2B, 2C, 2D and 5B on account of such claims as provided in the Plan; and • 51.2 million shares of Common Stock and 2.9 million Warrants (the 1145 Warrants) pursuant to the completed Rights Offering to certain holders of the Company’s prepetition indebtedness for total consideration of $704.4 million . Any shares of Common Stock issued pursuant to the exercise of such 1145 Warrants were similarly issued pursuant to the exemption from registration provided by Section 1145 of the Bankruptcy Code. Section 4(a)(2) Securities In addition, on the Effective Date, in connection with the Company’s emergence from the Chapter 11 Cases and in reliance on the exemption from registration requirements of the Securities Act provided by Section 4(a)(2) of the Securities Act, the Company issued: • 30.0 million shares of Series A Convertible Preferred Stock (the Convertible Preferred Stock) to parties to the Private Placement Agreement, dated as of December 22, 2016 (as amended, the Private Placement Agreement), among the Company and the other parties thereto, for total consideration of $750.0 million ; • 3.3 million shares of Common Stock and 0.2 million Warrants (the Private Warrants, and together with the 1145 Warrants, the Warrants) to parties to the Backstop Commitment Agreement, dated as of December 22, 2016 (as amended, the Backstop Commitment Agreement), among the Company and the other parties thereto, on account of their commitments under that agreement, for total consideration of $45.6 million ; and • 4.8 million shares of Common Stock and 3.1 million additional Private Warrants to specified parties to the Private Placement Agreement and Backstop Commitment Agreement on account of commitment premiums contemplated by those agreements. Any shares of Common Stock issued pursuant to the conversion of the Convertible Preferred Stock or the exercise of such Private Warrants were issued pursuant to the exemption from registration provided by Section 3(a)(9) and/or Section 4(a)(2) of the Securities Act. The securities issued in reliance on Section 4(a)(2) of the Securities Act were subject to restrictions on transfer; however, substantially all such shares were registered with the SEC on a resale Form S-1 effective July 14, 2017. Other Forms of Equity Authorized under the Company’s Certificate of Incorporation As noted on the accompanying consolidated balance sheets, the Company’s Fourth Amended and Restated Certificate of Incorporation authorizes the issuances of additional series of preferred stock, as well as series common stock. No series of preferred stock was outstanding as of December 31, 2018 , and other than the Series A Convertible Preferred Stock, no other series of preferred stock was outstanding as of December 31, 2017 . Additionally, as of December 31, 2018 and 2017 , no series common stock was outstanding. A copy of the Company’s Fourth Amended and Restated Certificate of Incorporation is included as Exhibit 3.1 to the Company’s Current Report on Form 8-K filed by the Company with the SEC on April 3, 2017. Convertible Preferred Stock Prior to the Mandatory Conversion (as defined below), the Convertible Preferred Stock accrued dividends at a rate of 8.5% per year, payable in-kind semi-annually on April 30 and October 31 of each year as additional shares of Series A Convertible Preferred Stock, and could be converted into a number of shares of Common Stock as described below. The Convertible Preferred Stock was convertible into Common Stock at any time, at the option of the holders at an initial conversion price of $16.25 , representing a discount of 35% to the equity value assigned to the Common Stock by the Plan (subject to customary anti-dilution adjustments, the Conversion Price). Beginning on the Effective Date, each outstanding share of Convertible Preferred Stock would automatically convert into a number of shares of Common Stock at the Conversion Price (such conversion, the Mandatory Conversion) if the volume weighted average price of the Common Stock exceeded $32.50 (the Conversion Threshold) for at least 45 trading days in a 60 consecutive trading day period, including each of the last 20 days in such 60 consecutive trading day period (such period, the Mandatory Conversion Period). On January 31, 2018 , the requirements for a Mandatory Conversion were met and all remaining outstanding shares of Convertible Preferred Stock were automatically converted into shares of Common Stock. Upon both the optional and the Mandatory Conversion of the Convertible Preferred Stock, holders of the Convertible Preferred Stock were deemed to have (1) received dividends through the last payment of dividends prior to the conversion, including dividends received on prior dividends, to the extent accrued and not previously paid; and (2) dividends on the shares of Convertible Preferred Stock then outstanding and any shares deemed issued pursuant to the preceding clause accruing from the last dividend date preceding the date of the conversion through, but not including, the three year anniversary of their initial issuance, and all dividends on prior dividends. As of January 31, 2018, all 30.0 million shares of Convertible Preferred Stock issued upon the Effective Date had been converted into 59.3 million shares of Common Stock, which is inclusive of the shares that had been issued for the payable in-kind preferred stock dividends. Rights Offering Pursuant to the Plan and Rights Offering, holders of Allowed Claims in Classes 2A, 2B, 2C, 2D and 5B were offered the opportunity to purchase up to 54.5 million units, each unit being comprised of (1) one share of Common Stock and (2) a fraction of a Warrant. The purchase price for the units offered in the Rights Offering was $13.75 per unit. A total of 51.2 million units were purchased in the Rights Offering. Pursuant to the Backstop Commitment Agreement, the remaining 3.3 million units that were not purchased in the Rights Offering were purchased by the parties to the Backstop Commitment Agreement at the same per-unit price. Registration Rights Agreement On the Effective Date, the Company entered into a registration rights agreement (Registration Rights Agreement) with certain parties (together with any person or entity that became a party to the Registration Rights Agreement, the Holders) that received shares of the Company’s Common Stock and Convertible Preferred Stock in the Company on the Effective Date, as provided in the Plan. The Registration Rights Agreement provided Holders with registration rights for the Holders’ Registrable Securities (as defined in the Registration Rights Agreement). Substantially all of the Holders’ Registrable Securities were registered with the SEC on Form S-1 effective July 14, 2017. Warrant Agreement On the Effective Date, the Company entered into a warrant agreement (the Warrant Agreement) with American Stock Transfer and Trust Company, LLC. In accordance with the Plan, the Company issued 6.2 million warrants to purchase one share of Common Stock each at an exercise price of $0.01 per share to all Noteholder Co-Proponents (as defined in the Plan) and subscribers in the Rights Offering (as defined in the Plan) and related backstop commitment. All Warrants described above under the heading Issuance of Equity Securities were issued under the Warrant Agreement. All unexercised Warrants expired, and the rights of the holders of such Warrants to purchase Common Stock terminated on July 3, 2017, with less than 0.1% of the Warrants unexercised. 6.000% and 6.375% Senior Secured Notes (collectively, the Successor Notes) On February 15, 2017, one of PEC’s subsidiaries entered into an indenture with Wilmington Trust, National Association, as trustee, relating to the issuance by PEC’s subsidiary of $500.0 million aggregate principal amount of 6.000% senior secured notes due 2022 (the 2022 Notes) and $500.0 million aggregate principal amount of 6.375% senior secured notes due 2025 (together with the 2022 Notes, the Successor Notes). The Successor Notes were sold on February 15, 2017 in a private transaction exempt from the registration requirements of the Securities Act. Prior to the Effective Date, PEC’s subsidiary deposited the proceeds of the offering of the Successor Notes into an escrow account pending confirmation of the Plan and certain other conditions being satisfied. On the Effective Date, the proceeds from the Successor Notes were used to repay the predecessor first lien obligations. The Successor Notes are further described in Note 14. “Long-term Debt.” Successor Credit Agreement In connection with an exit facility commitment letter, on the Effective Date, the Company entered into a credit agreement, dated as of April 3, 2017, among the Company, as Borrower, Goldman Sachs Bank USA, as Administrative Agent, and other lenders party thereto (the Successor Credit Agreement). The Successor Credit Agreement originally provided for a $950.0 million senior secured term loan, which prior to the amendments described in Note 14. “Long-term Debt,” matured in 2022 and bore interest at LIBOR plus 4.50% per annum with a 1.00% LIBOR floor. Following the amendments the loan matures in 2025 and bears interest at LIBOR plus 2.75% per annum. On the Effective Date, the proceeds from the Successor Credit Agreement were used to repay the predecessor first lien obligations. Securitization Facility In connection with a receivables securitization program commitment letter, on the Effective Date, the Company entered into the Sixth Amended and Restated Receivables Purchase Agreement, as amended, dated as of April 3, 2017 (Receivables Purchase Agreement), among P&L Receivables Company, LLC (P&L Receivables), as the Seller, the Company, as the Servicer, the sub-servicers party thereto, the various purchasers and purchaser agents party thereto and PNC Bank, National Association (PNC), as administrator. The Receivables Purchase Agreement extends the receivables securitization facility previously in place and expands that facility to include certain receivables from the Company’s Australian operations. The Receivables Purchase Agreement is further described in Note 25. “Financial Instruments, Guarantees With Off-Balance-Sheet Risk and Other Guarantees.” Cancellation of Prepetition Obligations In accordance with the Plan, on the Effective Date all of the obligations of the Debtors with respect to the following debt instruments were canceled: • Indenture governing $1,000.0 million outstanding aggregate principal amount of the Company’s 10.00% Senior Secured Second Lien Notes due 2022, dated as of March 16, 2015, among the Company, U.S. Bank National Association (U.S. Bank), as trustee and collateral agent, and the guarantors named therein, as supplemented; • Indenture governing $650.0 million outstanding aggregate principal amount of the Company’s 6.50% Senior Notes due 2020, dated as of March 19, 2004, among the Company, U.S. Bank, as trustee, and the guarantors named therein, as supplemented; • Indenture governing $1,518.8 million outstanding aggregate principal amount of the Company’s 6.00% Senior Notes due 2018, dated as of November 15, 2011, among the Company, U.S. Bank, as trustee, and the guarantors named therein, as supplemented; • Indenture governing $1,339.6 million outstanding aggregate principal amount of the Company’s 6.25% Senior Notes due 2021, dated as of November 15, 2011, by and among the Company, U.S. Bank, as trustee, and the guarantors named therein, as supplemented; • Indenture governing $250.0 million outstanding aggregate principal amount of the Company’s 7.875% Senior Notes due 2026, dated as of March 19, 2004, among the Company, U.S. Bank, as trustee, and the guarantors named therein, as supplemented; • Subordinated Indenture governing $732.5 million outstanding aggregate principal amount of the Company’s Convertible Junior Subordinated Debentures due 2066, dated as of December 20, 2006, among the Company and U.S. Bank, as trustee, as supplemented; and • Amended and Restated Credit Agreement, as amended and restated as of September 24, 2013 (the 2013 Credit Facility), related to $1,170.0 million outstanding aggregate principal amount of term loans under a term loan facility (the 2013 Term Loan Facility) and $1,650.0 million under a revolving credit facility (the 2013 Revolver), which includes approximately $675.0 million of posted but undrawn letters of credit and approximately $947.0 million in outstanding borrowings, by and among the Company, Citibank, N.A., as administrative agent, swing line lender and letter of credit issuer, Citigroup Global Markets, Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated, BNP Paribas Securities Corp., Crédit Agricole Corporate and Investment Bank, HSBC Securities (USA) Inc., Morgan Stanley Senior Funding, Inc., PNC Capital Markets LLC and RBS Securities Inc., as joint lead arrangers and joint book managers, and the lender parties thereto, as amended by that certain Omnibus Amendment Agreement, dated as of February 5, 2015. 2017 Incentive Compensation Plan In accordance with the Plan, the Peabody Energy Corporation 2017 Incentive Plan (the 2017 Incentive Plan) became effective as of the Effective Date. The 2017 Incentive Plan is intended to, among other things, help attract and retain employees and directors upon whom, in large measure, the Company depends for sustained progress, growth and profitability. The 2017 Incentive Plan also permits awards to consultants. Unless otherwise determined by the Company’s Board of Directors (the Board), the compensation committee of the Board will administer the 2017 Incentive Plan. The 2017 Incentive Plan generally provides for the following types of awards: • options (including non-qualified stock options and incentive stock options); • stock appreciation rights; • restricted stock; • restricted stock units; • deferred stock; • performance units; • dividend equivalents; and • cash incentive awards. The aggregate number of shares of Common Stock reserved for issuance pursuant to the 2017 Incentive Plan was approximately 14.0 million . The 2017 Incentive Plan will remain in effect, subject to the right of the Board to terminate the 2017 Incentive Plan at any time, subject to certain restrictions, until the earlier to occur of (a) the date all shares of Common Stock subject to the 2017 Incentive Plan are purchased or acquired and the restrictions on all restricted stock granted under the 2017 Incentive Plan have lapsed, according to the 2017 Incentive Plan’s provisions, and (b) ten years from the Effective Date. Reorganization Value Fresh start reporting provides, among other things, for a determination of the value to be assigned to the equity of the emerging company as of a date selected for financial reporting purposes. In conjunction with the bankruptcy proceedings, a third-party financial advisor provided an enterprise value of the Company of approximately $4.2 billion to $4.9 billion . The final equity value of $3,081.0 million was based upon the approximate low end of the enterprise value established by the third-party valuation and cash held by the Successor company in connection with the emergence from the Chapter 11 Cases, less the fair value of Successor debt issued on the Effective Date as described above. The final equity value equated to a per share value of $22.03 per equivalent common share issued in accordance with the Plan. The enterprise value of the Company was estimated using two primary valuation methods: a comparable public company analysis and a discounted cash flow (DCF) analysis. The comparable public company analysis is based on the enterprise value of selected publicly traded companies that have operating and financial characteristics comparable in certain respects to the Company, for example, operational requirements and risk and profitability characteristics. Selected companies were comprised of coal mining companies with primary operations in the United States. Under this methodology, certain financial multiples and ratios that measure financial performance and value were calculated for each selected company and then applied to the Company’s financials to imply an enterprise value for the Company. The DCF analysis is a forward-looking enterprise valuation methodology that estimates the value of an asset or business by calculating the present value of expected future cash flows by that asset or business. The basis of the DCF analysis was the Company’s prepared projections which included a variety of estimates and assumptions, such as pricing and demand for coal. The Company’s pricing was based on its view of the market taking into account third-party forward pricing curves adjusted for the quality of products sold by the Company. While the Company considers such estimates and assumptions reasonable, they are inherently subject to significant business, economic and competitive uncertainties, many of which are beyond the Company’s control and, therefore, may not be realized. Changes in these estimates and assumptions may have a significant effect on the determination of the Company’s enterprise value. The assumptions used in the calculations for the DCF analysis included projected revenue, cost and cash flows for the nine months ending December 31, 2017 through each respective mine life and represented the Company’s best estimates at the time the analysis was prepared. The DCF analysis was completed using discount rates ranging from 11% to 14.5% . The DCF analysis involves complex considerations and judgments concerning appropriate discount rates. Due to the unobservable inputs to the valuation, the fair value would be considered Level 3 in the fair value hierarchy. Grant of Emergence Awards On the Effective Date, the Company granted restricted stock units under the 2017 Incentive Plan and the terms of the relevant restricted stock unit agreement to all employees, including its executive officers (the Emergence Awards). The fair value of the Emergence Awards on the Effective Date was approximately $80 million . The Emergence Awards granted to the Company’s executive officers generally will vest ratably on each of the first three anniversaries of the Effective Date, subject to, among other things, each such executive officer’s continued employment with the Company. The Emergence Awards will become fully vested upon each such executive officer’s termination of employment by the Company and its subsidiaries without Cause or by the executive for Good Reason (each, as defined in the 2017 Incentive Plan or award agreement) or due to a termination of employment with the Company and its subsidiaries by reason of death or Disability (as defined in the 2017 Incentive Plan or award agreement). In order to receive the Emergence Awards, the executive officers were required to execute restrictive covenant agreements protecting the Company’s interests. Effect of Plan and Fresh Start Reporting Adjustments The following balance sheet illustrates the impacts of the implementation of the Plan and the application of fresh start reporting, which results in the opening balance sheet of the Successor company. As of April 1, 2017 Predecessor (a) Effect of Plan (b) Fresh Start Adjustments (c) Successor (Dollars in millions) ASSETS Current assets Cash and cash equivalents $ 1,068.1 $ (14.4 ) (d) $ — $ 1,053.7 Restricted cash 80.7 (54.7 ) (d) — 26.0 Successor Notes issuance proceeds - restricted cash 1,000.0 (1,000.0 ) (d) — — Accounts receivable, net 312.1 — — 312.1 Inventories 250.8 — 70.1 (k) 320.9 Other current assets 494.5 (18.1 ) (e) (333.0 ) (l) 143.4 Total current assets 3,206.2 (1,087.2 ) (262.9 ) 1,856.1 Property, plant, equipment and mine development, net 8,653.9 — (3,461.4 ) (m) 5,192.5 Investments and other assets 976.4 3.9 (f) 238.0 (n) 1,218.3 Total assets $ 12,836.5 $ (1,083.3 ) $ (3,486.3 ) $ 8,266.9 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities Current portion of long-term debt $ 18.2 $ 9.5 (g) $ — $ 27.7 Accounts payable and accrued expenses 968.0 257.6 (h) 14.8 (o) 1,240.4 Total current liabilities 986.2 267.1 14.8 1,268.1 Long-term debt, less current portion 950.5 903.2 (g) — 1,853.7 Deferred income taxes 179.2 — (177.8 ) (p) 1.4 Asset retirement obligations 707.0 — (73.9 ) (q) 633.1 Accrued postretirement benefit costs 753.9 — (6.9 ) (r) 747.0 Other noncurrent liabilities 511.1 — 120.6 (s) 631.7 Total liabilities not subject to compromise 4,087.9 1,170.3 (123.2 ) 5,135.0 Liabilities subject to compromise 8,416.7 (8,416.7 ) (i) — — Total liabilities 12,504.6 (7,246.4 ) (123.2 ) 5,135.0 Stockholders’ equity Common Stock (Predecessor) 0.2 (0.2 ) (j) — — Common Stock (Successor) — 0.7 (b) — 0.7 Series A Preferred Stock (Successor) — 1,305.4 (b) — 1,305.4 Additional paid-in capital (Predecessor) 2,423.9 (2,423.9 ) (j) — — Additional paid-in capital (Successor) — 1,774.9 (b) — 1,774.9 Treasury stock, at cost (371.9 ) 371.9 (j) — — Accumulated deficit (1,284.1 ) 5,134.3 (j) (3,850.2 ) (t) — Accumulated other comprehensive loss (448.5 ) — 448.5 (t) — Peabody Energy Corporation stockholders’ equity 319.6 6,163.1 (3,401.7 ) 3,081.0 Noncontrolling interests 12.3 — 38.6 (u) 50.9 Total stockholders’ equity 331.9 6,163.1 (3,363.1 ) 3,131.9 Total liabilities and stockholders’ equity $ 12,836.5 $ (1,083.3 ) $ (3,486.3 ) $ 8,266.9 (a) Represents the Predecessor consolidated balance sheet at April 1, 2017. (b) Represents amounts recorded for the implementation of the Plan on the Effective Date. This includes the settlement of liabilities subject to compromise through a combination of cash payments, the issuance of new common stock and warrants and the issuance of new debt. The following is the calculation of the total pre-tax gain on the settlement of the liabilities subject to compromise. (Dollars in millions) Liabilities subject to compromise $ 8,416.7 Less amounts issued to settle claims: Successor Common Stock (at par) (0.7 ) Successor Series A Convertible Preferred Stock (1,305.4 ) Successor Additional paid-in capital (1,774.9 ) Issuance of Successor Notes (1,000.0 ) Issuance of Successor Term Loan (950.0 ) Cash payments and accruals for claims and professional fees (336.4 ) Other: Write-off of Predecessor debt issuance costs, see also (e) below (18.1 ) Total pre-tax gain on plan effects, see also (j) below $ 3,031.2 At the Effective Date, 70.9 million shares of Common Stock were issued and outstanding at a par value of $0.01 per share. Convertible Preferred Stock was recorded at fair value and was based upon the $750.0 million cash raised upon emergence from bankruptcy through the Private Placement Agreement, plus a premium to account for the fair value of the Convertible Preferred Stocks’ conversion and dividend features. Each share of Convertible Preferred Stock was convertible, at the holder’s election or upon the occurrence of certain triggering events, into shares of Common Stock at a 35% discount relative to the initial per share purchase price of $25.00 and provided for three years of guaranteed paid-in-kind dividends, payable semiannually, at a rate of 8.5% per annum. The 46.2 million shares of Common Stock issuable upon conversion of the Convertible Preferred Stock issued under the Plan and an additional 13.1 million shares of Common Stock attributable to such Convertible Preferred Stocks’ guaranteed paid-in-kind dividend feature constituted approximately 42% ownership of the Plan Equity Value (as defined in the Plan) of $3,105.0 million in the reorganized Company, and thus had a fair value of $1,305.4 million . Successor Additional paid-in capital was recorded at the Plan Equity Value less the amounts recorded for par value of the Common Stock, the fair value of the Convertible Preferred Stock, and certain fees incurred associated with the Registration Rights Agreement. (c) Represents the fresh start reporting adjustments required to record the assets and liabilities of the Company at fair value. (d) The following table reflects the sources and uses of cash and restricted cash at emergence: (Dollars in millions) Sources: Private placement and rights offering $ 1,500.0 Net proceeds from Senior Secured Term Loan 912.7 Escrowed interest from Successor Notes offering 8.0 Net impact on collateral requirements 11.6 Uses: Payments to secured lenders (3,489.2 ) Professional fees (8.3 ) Securitization facility deferred financing costs (3.9 ) Total cash outflow at emergence $ (1,069.1 ) (e) Primarily represents the write off of deferred financing costs associated with the cancellation and discharge of Predecessor revolving debt obligations. (f) Represents the payment of deferred financing costs associated with the Receivables Purchase Agreement. (g) Represents a $950.0 million Senior Secured Term Loan, net of an original issue discount and deferred financing costs of $37.3 million , as contemplated by the Plan. Under the Plan, the Company also issued $1.0 billion of Successor Notes, net of $49.5 million of deferred financing costs. The Successor Notes and the related proceeds held in escrow were included on the Company’s unaudited condensed consolidated balance sheet at March 31, 2017. The debt instruments issued in accordance with the Plan, and the subsequent amendments, are further described in Note 14. “Long-term Debt.” (h) Represents an accrual to account for amounts paid subsequent to the Effective Date for professional fees and certain unsecured claims and settlements set forth in the Plan. (i) Liabilities subject to compromise included secured and unsecured liabilities incurred prior to the Petition Date. These liabilities represented the amounts expected to be allowed on known or potential claims to be resolved through the Chapter 11 Cases and remained subject to future adjustments based on negotiated settlements with claimants, actions of the Bankruptcy Court, rejection of executory contracts, proofs of claims or other events. Additionally, liabilities subject to compromise also included certain items that were assumed under the Plan, and as such, were subsequently reclassified to liabilities not subject to compromise. Generally, actions to enforce or otherwise effect payment of prepetition liabilities were subject to the injunction provisions set forth in the Plan. Liabilities subject to compromise consisted of the following immediately prior to emergence: Predecessor April 1, 2017 (Dollars in millions) Debt (1) $ 8,077.4 Interest payable 172.6 Environmental liabilities 61.9 Trade payables 55.2 Postretirement benefit obligations (2) 23.0 Other accrued liabilities 26.6 Liabilities subject to compromise $ 8,416.7 (1) Includes $7,768.3 million of first lien, second lien and unsecured debt, $257.3 million of derivative contract terminations, and $51.8 million of liabilities secured by prepetition letters of credit at April 1, 2017. (2) Includes liabilities for unfunded non-qualified pension plans, all the participants of which are former employees. (j) Reflects the impacts of the reorganization ad |
